**[investwise]** KPMG: Health & Healthcare Sector Will Double By 2012, Quadruple By 2017

 

KPMG Health Care: Blue Skies Scenario Against a world average of around four hospital beds per 1000 population, India lags behind at just over 0.72. This is a clear indication of the insufficiency of healthcare infrastructure in India.   With a population of over a billion, the coordination and strategic choices concerning expenditures on healthcare infrastructures are of vital importance. These are especially challenging given the complex migration patterns typically seen within emerging economies. It remains to be seen how the policies currently in place will shape the Indian healthcare infrastructure market in the future.   Private healthcare capacity in India is already significant. Given the anticipated incentives to be offered by the government, including the use of user fee financed  provision and the opportunities for Public Private Partnerships (PPP), it is believed that the private sector market will attract further foreign investment.   Additionally, the recent election victory of the United Progressive Alliance (UPA) with a stable majority, may help provide a mandate to push through major social infrastructure improvements for this emerging global economic power.   The Indian healthcare industry is estimated to double in value by 2012 and more than quadruple by 2017. The main factors propelling this growth are rising income levels, changing demographics and illness profiles, with a shift from chronic to lifestyle diseases. This is likely to result in considerable infrastructure challenges and opportunities.   • There is growing appreciation for the role private involvement may have in meeting public demand, and government are looking into the use of PPP models to help improve infrastructure and healthcare provision. The government is also exploring setting up state funded healthcare insurance schemes to support healthcare delivery for the poorer sections of the population. For investment to be effective, the provision of healthcare infrastructure and insurance should be strategically coordinated.   • Unlike in developed markets, where there is a focus on generating specialized healthcare facilities and innovations to drive improvements in health services, the Indian healthcare delivery model (including use of PPP) has to date only had success in the provision of more healthcare services in relatively small segments.   The challenge remains to develop scalable and sustainable healthcare delivery models to deal with India's diversity and changing socio-economic population profiles. The major innovation in Indian healthcare delivery models needs to be focused on developing and delivering low cost, affordable, basic healthcare services.    Model Outputs   • Based on the outputs of our econometric model expenditure on healthcare infrastructure across the Indian states is projected to grow by an average of 5.8 percent per annum between 2009 and 2013, taking the total expenditure in 2013 to US$14.2 billion.   • Of the 32 states considered, the six states of Maharashtra, Rajasthan, West Bengal, Uttar Pradesh, Tamil Nadu and Andra Pradesh are forecast to represent approximately 50 percent of the expenditures for the 2009-2013 period   • Of the larger states, expenditure on healthcare infrastructure is expected to grow the fastest in Kerala, Rajasthan, and West Bengal.   • The Indian healthcare industry is estimated to double in value by 2012 and more than quadruple by 2017. The main factors propelling this growth are rising income levels, changing demographics and illness profiles with a shift from chronic to lifestyle diseases.   This is likely to result in considerable infrastructure challenges and opportunities.   • Indian healthcare infrastructure over the last decade has not kept pace with growth in population. The available capacity has increased but not in line with rising demand. This is likely to be in part due to lack of capacity building in semi urban and rural areas.   • The Indian healthcare system is controlled by respective state authorities, presenting an opportunity to improve responsiveness to healthcare needs at a more local level.   Our analysis suggests that there is uneven focus on healthcare infrastructure in India. The variety of organizational structures and processes in healthcare delivery may result in greater inequalities between geographical areas.   • There is a growing agenda to deal with the issues of urban healthcare infrastructure as rural to urban migration has significantly increased demand for these services.   • The healthcare sector in India is undergoing considerable reform prompted by the continuing phase of rapid economic growth. Emerging markets, such as diagnostic chains and medical device manufacturers, are attracting increasing amounts of  investment.   • There is growing appreciation for the role private involvement may have in meeting public demand and government is piloting the use of PPP models to help improve infrastructure and healthcare provision.       Safe Harbor Statement: Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints. Nothing in this article is, or should be construed as, investment advice.

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