Health care in India: an investment that works
responsAbility study about investments in the Indian health care market
In their latest study, responsAbility’s economic experts explore the social and economic impact of investments in the Indian health care market. India’s fast- growing population with its increasing purchasing power provides for a sustained increase in demand for affordable health care services. At the same time, more and more companies are offering such service solutions, creating a great opportunity for investors to participate in the growth of the Indian health care industry while generating positive social impact.
India’s fast-growing population and increasing levels of personal income mean that demand for affordable health care services continues to grow. India is already the world’s second most populous country, with more than 1.21 billion people, and expected to surpass top-ranked China by 2025. At the same time, a large part of the population currently has no or very limited access to basic health care (see figure 1). However, this situation is expected to change substantially over the coming years.
Attractive growth prospects for companies
Health care spending in India is estimated to increase from around 9% of household expenditure in 2015 to 13% by 2025. Growing demand for health care services in urban areas and hitherto underserved rural areas is creating enormous potential for private enterprises, above all those offering low-cost, low-asset base models that make health care affordable for people at the base of the pyramid. This group currently comprises roughly 835 million people with a nominal household income of less than USD 4.26 per day whose average annual spending on health care totals around USD 25 billion. responsAbility’s economists expect demand for health care services among this segment of the population to at least match the 15% annual rate of increase for the country as a whole.
Financial and social return potential
As it is, India’s health care market offers a wide range of equity investment opportunities in companies at various stages of development across practically all market segments. India’s health care sector saw more than USD 400 million in private equity investments in 2009 and 2010 alone, and USD 7 billion in mergers and acquisitions. The resulting expansion of efficient, low-cost health care services provides people at the base of the pyramid with better access to health care services. This can bring substantial improvements to their quality of life, offering investors the opportunity to generate financial returns as well as a positive social impact.
Health care access indicators
responsAbility Investments AG
Ulli Janett, Media Relations
Telephone: +41 44 403 06 33
ulli.janett [at] responsAbility.com (e-mail: )