The Asia-Pacific healthcare markets are expanding swiftly thus there are great prospects for growth. In their report, Bain & Company stated that although the private equity deals in North America are slowing down, the Asia-Pacific region seems to be headed the other way.
In fact, the region is seeing its slice of global healthcare private equity deals rise from 26 per cent in 2022 to 34 per cent in 2023. India has remained a key driver of this upsurge as it explained almost 30 per cent of the deal value in this part of the region during this period.
The best choice right now is the Indian healthcare market for any investor who wants diversification with returns added to their portfolio. It’s clear that the country is one of the key players in the Asia-Pacific region that has a steadily increasing share of global healthcare investments.
Now investors may wonder where to invest in the healthcare sector. To help them out, here are some key trends that they should monitor closely as they consider tapping into the healthcare sector.
Must-Watch Trends for Healthcare Investors
The industry analysts have estimated that the digital healthcare market of India may reach $37 billion by 2030. Almost all of these sectors in the healthcare market will continue to experience growth. There are opportunities for new investments in telemedicine platforms, building digital health infrastructure, health fintech solutions, and remote patient monitoring systems.
Let us discuss some of the prominent trends in the Indian healthcare industry that are worth the investment in more detail.
1. Digital Health and Telemedicine
The world is witnessing technological advancements in all sectors. Plus, there are advances in internet connectivity globally. As a result, the market for telemedicine is set to rise for investors.
In 2022, India’s telemedicine market was valued at approximately $1.10 billion, and it is anticipated to grow at a CAGR of 21.2% from 2022 to 2030, therefore potentially reaching $5.15 billion by the end of the decade. This happened because the COVID-19 pandemic pushed the Indian e-health market to shift towards telemedicine. Nevertheless, this trend brought innumerable investment opportunities in the healthcare sector.
Today, there is tremendous scope for investment in telemedicine platforms, remote patient monitoring applications, and the health technology structure. Further, government support like the National Digital Health Mission increases the chances of growth in this segment.
Taking into account the tendencies of market growth and the further changes in the urban infrastructure of healthcare in India, the integral role of telemedicine is predicted. Consequently, investors have a favorable ground to lock their horns and enjoy high returns from this sector.
2. Pharma and Biotech
India’s journey in the global pharmaceutical world is nothing short of remarkable. If you dive into the numbers, you’ll find that this country has secured its spot as the third-largest producer by volume and stands at 14th in value on the world stage.
The industry’s growth has been impressive, and there’s no sign of it slowing down. Predictions suggest that by 2030, the Indian pharmaceutical market could balloon to $130 billion. And it’s not just about scale. India has over 80 pharma clusters and 10,500 manufacturing facilities. Therefore, its infrastructure is well-equipped to handle this growing industry.
Biotech is another area where India is making waves. The country is set to play an even bigger role in the near future after being ranked among the top 12 biotech destinations globally. By 2025, the biotech industry in India could be contributing around 19% to the global market. The biologics market alone can potentially reach $12 billion.
Simply put, it’s the best time to invest in companies involved in the research and development of innovative therapies and biologics. Similarly, India’s large generic drug manufacturing base is also offering tons of investment opportunities.
List of some of the top Indian pharma companies that have demonstrated strong financial performance with impressive returns on capital employed.
| Company Name | Return on Capital Employed |
|---|---|
|
Cipla |
22.8% |
|
Sun Pharma Industries |
17.32% |
|
Dr Reddy's Laboratories |
26.5% |
|
Abbott India |
51% |
|
Mankind Pharmaceuticals |
24.5% |
3. Diagnostic Tools and Medical Devices
India’s medical device industry is set for remarkable expansion, with projections estimating it will reach $50 billion by 2030. A rising demand for advanced medical devices and diagnostic tools propels this growth.
The need for sophisticated medical devices and diagnostic tools is becoming more critical as India faces a surge in the following:
⦁ Lifestyle disorders
⦁ Cardiovascular diseases
⦁ Respiratory conditions
Also, the elderly population needs more professional attention which in turn makes demand further high for innovative health solutions. They are further evidenced by the attempts of the government to enhance the sphere of healthcare in many regions of the country.
However, for investors, it is a very promising sphere. Firms in the diagnostic and health screening segment and those creating diagnostic tools and point-of-care testing equipment are at the spearhead of this growth.
Continuing with the ‘Make in India’ policy, both incentives and support are provided to those companies who are involved in medical device manufacturing in India.
The Financial Backbone of Healthcare Investments
How do financial services drive innovation and expansion in the healthcare industry? The answer lies in the essential roles played by investment banking, private equity, venture capital, and various financial services. These elements form the financial backbone of healthcare investments, providing crucial funding and expertise.
Investment banking, for example, is instrumental in facilitating mergers and capital raising. These services are vital for healthcare companies looking to scale and innovate. It helps these firms secure the necessary capital and strategic guidance to improve their market positions and drive sector growth.
On the other hand, venture capital fuels innovation by funding startups working on groundbreaking health technologies. A support like this allows these startups to move from development to market-ready solutions.
Additionally, lending, insurance, and asset management services play a crucial role in expanding and modernizing healthcare infrastructure. These financial services provide the capital needed for new technologies, facility upgrades, improved patient care, and other needs. Thus, ultimately making sure that the sector continues to develop and meet the growing needs effectively.
The Key Takeaway for Investors
For investors eyeing India’s healthcare sector, it’s essential to focus on the financial trends driving the industry like developments in investment banking and venture capital. Additionally, keeping an eye on regulatory shifts and policy changes will help uncover new opportunities and manage risks.
Additionally, targeting investments in companies that are addressing infrastructure and technology gaps, especially those aligned with the government’s ‘Make in India’ initiative, will position investors advantageously.
In short, for those investing in India’s healthcare sector, they must:
⦁ Capitalize on financial trends emerging in the healthcare sector.
⦁ Monitor regulatory and policy changes very closely.
⦁ Assess gaps in healthcare infrastructure and invest in companies that address them.
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