Healthcare is one of the Indian economy’s major sectors contributing heavily to both revenue and employment areas. With a mix of public and private players, the sector has been experiencing brisk growth as it widens its coverage across the country apart from expanding services through heavy investments.
The nation’s healthcare sector has been witnessing a shift from the traditional healthcare systems to better engagement with users, better products, and enhanced care services, The sector is also seeing integration with technology companies for faster and improved diagnosis as well as early detection of health issues.
Here’s a detailed look at the healthcare sector in India.
Healthcare and India’s competitive advantage
India’s healthcare sector enjoys a competitive advantage due to the following reasons:
- It has a vast pool of trained professionals in this sector
- It offers cost competitiveness vis-à-vis other Asian and Western nations
- The healthcare sector in India is highly digitized and has technologically advanced integrated automation
- Enhanced healthcare delivery and drug innovation
As seen in the COVID-19 pandemic, the country’s healthcare organizations demonstrated resilience, agility, and innovation using digitally enhanced business solutions. Due to the heightened urgency of healthcare needs during the epidemic, the digital enhancement in the country’s healthcare sector got accelerated further.
Did you know?
In India, the cost of surgery is only one-tenth that charged in the US. However, India stands at rank 145 among a total of 195 nations with regard to healthcare service quality and accessibility.
Growth opportunities in Indian healthcare sector
As the Covid-19 pandemic has subsided, the Indian healthcare sector may have lost steam for the moment. Here’s what should investors expect from this sector in the near future:
- India has a population of about 27 crores in the 50+ age group. This size is the fourth largest in the world in terms of age category. Thus, medical products and service consumption in this age group is one of the major factors that will create a huge potential for the sector.
- Currently, the country’s hospital segment is under-invested. It has the potential for significant investment and expansion. The hospital infrastructure utilisation levels will aid in enhanced profitability in this sector.
- The COVID-triggered health-insurance demand for enhanced medical cover is also an added plus for this sector.
- Apart from pharma chains, diagnostic companies may also see strong growth considering the rising demand for the same.
Factors that will drive growth in the healthcare sector
Some of the factors that are likely to drive growth in the healthcare sector are:
- India has already emerged as a competitive hub for global pharma manufacturing, as evidenced by the Covid-19 vaccine supply. This will give a boost to India’s global market share, especially in the US and European markets.
- Today, the Indian pharma sector exports to more than 100 countries. Thus, the sector’s global market share will continue to rise and allow the country to enjoy a competitive advantage through quality and scale.
- There is an enhanced backward integration seen in the sector for improving the strength of the supply chain. This is seen to be primarily driven by the government’s Production Linked Incentive scheme benefits that encourage investments in the sector.
Possible hindrances to growth in healthcare sector
Some of the roadblocks faced by the sector in its growth journey include insufficient medical personnel, especially in rural India, a meagre health budget sponsored by the government, infrastructural issues, a crumbling public healthcare system, and poor insurance penetration.
Top stocks in the Indian healthcare sector based on market capitalisation
Apollo Hospitals
Apollo Hospitals is a leading private sector healthcare player that has a vast network with a large chain of hospitals in India. It was established In 1983 and today it has close to 2000 beds across its hospitals in the country. It is known for pioneering the corporate healthcare delivery concept in India. It also owns and manages a network of retail pharmacy outlets and offers consultancy services towards establishing and managing speciality hospitals. The key details of Apollo Hospitals are tabled below.
| Category | Details |
| Market Capitalization | Rs. 53,984 crores |
| PE Ratio | 51.11 |
| Return on Equity | 18.69 (June’22) |
| Debt Equity Ratio | 0.47 (June’22) |
| Promotor’s Holdings | 29.33% |
| Share price | Rs. 3756 (20 June 2022) |
| Dividend Yield | 0.31% |
Max Healthcare Institute Ltd.
Max Healthcare Institute Ltd. is the country’s second-largest hospital chain operator. The company specialises in cancer care treatment, cardiac science, liver transplant, neurosciences, kidney transplant, and various other surgeries. It also offers health and wellness services at the doorstep through its Max@Home program. The company has plans to invest $450 million spread across the next few years to increase the capacity of the country’s health care facilities. The key details of Max Healthcare are tabled below.
| Category | Details |
| Market Capitalization | Rs. 34,776 crores |
| PE Ratio | 57.57 |
| Return on Equity | 10.15 (June’22) |
| Debt Equity Ratio | 0.15 (June’22) |
| Promotor’s Holdings | 50.64% |
| Share price | Rs. 360.85 (20 June 2022) |
| Dividend Yield | – |
Fortis Healthcare Ltd.
Fortis Healthcare Ltd runs a chain of hospitals in India using state-of-the-art technology. It has a large network of Super Speciality Hospitals that focus on offering one or more specialities. Apart from an efficient telemedicine network for linking the company’s different facilities, it is known to allow easy patient access to expert care. Some of the facilities offered by Fortis include ER management, OPD management, ICU management, radiology, pathology, as well as healthcare training and education. The key details of Fortis Healthcare are tabled below.
| Category | Details |
| Market Capitalization | Rs. 16,707 crores |
| PE Ratio | 30.11 |
| Return on Equity | 8.98 (June’22) |
| Debt Equity Ratio | 0.20 (June’22) |
| Promotor’s Holdings | 31.17% |
| Share price | Rs. 221.35 (20 June 2022) |
| Dividend Yield | – |
Dr Lal PathLabs
Dr Lal PathLabs offers diagnostic and healthcare test services in India. It also has a network of laboratories focused on pathological investigations across areas like biochemistry, microbiology, haematology, etc. The company is known for its test offerings for various conditions like diabetes, heart ailments, allergies, cancer, muscle disorders, etc. The key details of Dr Lal PathLabs are tabled below.
| Category | Details |
| Market Capitalization | Rs. 16,347 crores |
| PE Ratio | 47.47 |
| Return on Equity | 25.05 (June’22) |
| Debt Equity Ratio | 0.35 (June’22) |
| Promotor’s Holdings | 55.23% |
| Share price | Rs. 1,995 (20 June 2022) |
| Dividend Yield | 0.61% |
Narayana Hrudayalaya Ltd.
Narayana Hrudayalaya Pvt Ltd owns and operates a chain of hospitals across India offering medical services with specialities in areas like cardiac, oncology, diagnostics, surgery and support services. The company has close to 20 multispecialty hospitals and super-speciality centres. It also boasts of 19 primary health care facilities and 4 heart centres. The key details of Narayana Hrudayala Ltd. are tabled below.
| Category | Details |
| Market Capitalization | Rs. 12,970 crores |
| PE Ratio | 37.71 |
| Return on Equity | 26.21 (June’22) |
| Debt Equity Ratio | 0.49 (June’22) |
| Promotor’s Holdings | 63.85% |
| Share price | Rs. 637.25 (20 June 2022) |
| Dividend Yield | 0.16% |
Conclusion
While all other sectors experienced a major slowdown since the start of the Covid-19 pandemic, the healthcare sector has got a further boost to its growth story. The pandemic has changed the way the healthcare sector functions in the country with enhanced infrastructure, better diagnostic facilities, and investment in the latest equipment. Investors must, therefore, keep a close eye on this sector to gain from this growth story.
FAQs
Telemedicine involves the use of technology to connect healthcare professionals with patients for offering healthcare support and diagnosis services.
The Indian healthcare sector has achieved a CAGR (compounded annual growth rate) of nearly 22% in the last 5 years. (source- https://www.niti.gov.in/sites/default/files/2021-03/InvestmentOpportunities_HealthcareSector_0.pdf)
Medical insurance can be considered part of both healthcare and insurance sectors since it is dependent on healthcare needs and innovations in insurance.
Yes, India is expected to emerge as a major player in medical tourism in the near future. Although this was marred by the Covid-19 pandemic, the segment is seeing positive traction with international borders opening up.
