07 Oct 13 Uncovering opportunities in the healthcare sector in India

There are many opportunities for companies selling products and services to the healthcare sector in India. However, creating a go-to-market strategy for tapping these, is a challenge…

The Indian healthcare market is currently estimated at USD 80 billion and is expected to grow to USD 280 billion by 2020. According to the Investment Commission of India, the healthcare industry in India has experienced a remarkable growth of 12% per year during the last 4 years.

The key driver for growth is the huge demand-supply gap in healthcare services. Rising population, disposable incomes and literacy; increasing incidence of lifestyle diseases; increasing penetration of health insurance provided by private companies as well as state governments; and medical tourism have all contributed to the rise in demand for  healthcare. On the supply side, there is an acute shortage of hospital beds, doctors and nurses. India’s healthcare compares poorly not only with developed nations, but also other emerging economies.

Indicators

India

Brazil

China

US

UK

Hospital beds (per 10,000 population)

12

24

30

31

39

Doctors (per 10,000 population)

6

17

14

27

21

Nurses (per 10,000 population)

13

30

10

98

60

Healthcare expenditure as % of GDP

4

8

4

15

9

 While urban India’s healthcare infrastructure metrics are somewhat acceptable, the shortage is acute in the semi urban and rural areas.

The government has woken up to this, and has taken several initiatives to encourage investment in healthcare. Some of the initiatives include tax holidays for setting up hospitals in tier II and tier III cities, tax deduction on investment in hospital infrastructure for hospitals with more than 100 beds, higher rates of depreciation on life saving medical equipment, lower customs duty on import of certain medical equipment, increased support for public-private-partnerships (PPP), among others.

This scenario has created opportunities for various providers of products and services to the healthcare sector – medical services (hospitals,/clinics), medical infrastructure, medical equipment and devices, medical consumables, health insurance, pharmaceuticals and drugs, pathology laboratories, and so on.

While all the aspirants in the industry recognise the opportunities, most of them are not able to clearly formulate their strategies for capturing business due to a lack of clear understanding of the market. They are shooting in the dark. What products or services should they sell? Where should they sell? What messaging should they use? How to structure the pricing? Who are the decision makers? What are their budgets? These and other similar critical questions are unanswered.

So why is the market difficult to fathom? A large part of the healthcare sector is unorganised and highly fragmented. Additionally, since healthcare is a state subject, data on is dispersed, disparate and non-uniform. While some states have good documentation, others have close to none.

There are around 40,000 hospitals in the country (no-one knows the exact number) of which around 13,000 are in the public sector and around 27,000 are in the private sector. Together, they house around 11 lakh beds. Some private sector entities have tried creating databases of hospitals, but these databases provide only very basic information such as the name and address, and are of little use to the industry players. For example, a company that makes cardiac equipment is interested to know which hospitals have cardiology departments. Having a list of all hospitals is of little use.

Having a list of potential buyers is the first step. In order to formulate an effective go-to-market strategy, companies also need to understand their customers. What are the key important parameters in the buying decision? How important is price? Who are the decision makers? What is the decision making process? Who are the key influencers?  What are their perceptions and key pain-points? Answers to these will vary across different types (public/private), sizes, and locations (metro/ urban/ semi urban/rural) of hospitals.  While most established industry players have managed to reach out to the players in the metros and tier I cities, future growth will come from the smaller tier II and III cities, whose needs and characteristics are likely to be different.

Unless providers of services and products to the healthcare sector in India need to gain an understanding of these issues, the opportunities for them will remain elusive.

Varsha Chitale
Varsha Chitale

Varsha led the competitive intelligence practice at ValueNotes. As part of her drive to educate India Inc. on the merits of competitive intelligence, she often conducted webinars and seminars on CI for senior executives of Indian companies.

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