India’s multi-billion-dollar healthcare industry has had a remarkable year marked by notable mergers and acquisitions, consolidation, private equity investments, record surge in stock prices, and improving financial performance.   

The country’s healthcare industry, which comprises hospitals, medical devices and equipment, health insurance, clinical trials, telemedicine, and medical tourism, has been growing at a compound annual growth rate of around 22 per cent since 2016 and was estimated to reach $372 billion in 2022.   

According to EY, in 2023, the healthcare sector’s investments mainly centered around hospitals and health tech start-ups. Hospitals received the majority share of 62 per cent of all PE/VC investments in healthcare, followed by health tech with a 23 per cent share.  

One of the biggest deals this year was Temasek’s acquisition of a 41 per cent stake in Manipal Health for a substantial $2 billion, subsequently raising its overall ownership to 59 per cent, states a EY report. This is the largest deal in the sector in India. However, despite the significant deals, healthcare (offline) saw an overall investment of $216.1 million this year, marking a significant drop, compared to $2.1 billion in 2022, according to data from Tracxn.  

“India is home to more than 12.5k companies in the healthcare (offline) sector, and has witnessed investments of more than $12 billion till date. The funding raised in 2023 is comparatively lower than the amounts raised in 2022 and 2021, due to the ongoing economic slowdown and increased interest rates impacting investments across industries,” said Neha Singh, co-founder of Tracxn.   

Consolidation 

 Stakeholders observe a certain level of consolidation within the sector, which is expected to continue in the coming years. 

 Post-Covid, with a continued focus on enhancing capabilities across the country, several smaller hospitals, regional hospitals, labs, and standalone hospitals merged into a larger network. The coming year is expected to witness more of such deals.   

During the September quarter, the top seven healthcare companies achieved a 14.32 per cent year-on-year revenue increase and 27.18 per cent profit improvement. Meanwhile, the sector’s average revenue and net profit growth y-o-y were 10.21 per cent and 30.83 per cent, respectively. 

Stock performance 

Topping the investments and improving financial performance, inflows this year also saw a major surge in the stock prices of leading hospital chains and healthcare services companies. On average, the script of the top 7 players (Narayana Health, Aster DM, Max Healthcare, Global Healthcare, Fortis, Apollo Hospitals, and Rainbow Children’s Medicare) saw over 50 per cent year-to-date improvement this year.   

IPOs  

The year saw new the emergence of IPO hotspot markets, outpacing traditional IPO powerhouses with India being one of them. The number of IPOs in India went up by 86 per cent compared to a five-year average, according to the EY report. The healthcare sector recorded 14 IPOs in 2023, a marginal increase over the 12 in 2022. Globally, the IPO market ended 2023 with 1,298 IPOs, raising $123.2 billion. 

Govt push    

Further, post-pandemic, the government prioritised healthcare, increased the budget, implemented Ayushman Bharat, and funded medical R&D through ICMR. To boost the medical devices industry, a scheme for four MedTech parks at ₹400-crore investment was launched, along with a Production Linked Incentive Scheme offering ₹3,420 crore (approximately $400 million). 

These initiatives reflect the government’s commitment to elevating the medical devices industry from its current $11 billion valuation to $50 billion by 2030. 

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