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The Indian healthtech market is projected to reach $25 billion by 2025, representing a doubling in size on account of factors such as rising internet penetration, the demand for enhanced accessibility, and the increasing prevalence of chronic diseases in the country, according to a report by LoEstro Advisors.
In addition to the growth drivers, the Indian government is actively working towards establishing the country as a global hub for healthcare services.
The National Health Authority of India launched the National Health Stack, a newly introduced digital health infrastructure aimed at serving as a foundational component for digitising the healthcare sector in the country. The four layers that form the National Health Stack are user applications, a unified health interface, health data exchange, and other digital public goods.
According to NITI Aayog, the National Digital Health Mission (NDHM) will spur a fundamental transformation in India’s healthcare system and unlock economic value worth over $200 billion by 2030.
Health technology can be segmented into two broad sectors: curative care and preventive care. As part of curative care, e-pharmacies and e-diagnostics account for the largest market size of $7,500 million.
E-pharmacy market
Furthermore, the report projects that the Indian e-pharmacy market is expected to rise at a 22 per cent CAGR and reach $1.1 billion in market value. E-pharmacies are acquiring a major stake in the pharma retail value chain, with the major growth drivers being: the unorganised nature of traditional pharma retail, governmental support, value and convenience offered, and tremendous potential untapped in Tier II and Tier III cities, stated the report.
Although at a nascent stage compared to developed countries such as the USA, the Indian telemedicine market is expected to rise at a 21 per cent CAGR to $5 billion in market value.
Similarly, the rehab-tech market, which includes nursing, caregiving, physiotherapy, occupational therapy, and medical aid equipment, is also expected to double to a $17 billion opportunity in the next five years. Currently, the hospital and local unorganised players are the major providers of rehab in the country.
Decline in healthtech funding
However, investor activity shows that the total funding of the healthtech companies plunged 55 per cent from $3.2 billion in 2021 to $1.4 billion in 2022. According to the report, the drop in healthtech funding was mainly due to a massive decline (75 per cent) in late-stage investments from $2.4 billion in 2021 to $606 million in 2022.
Investors across the globe became cautious amid the funding crisis, current macroeconomic conditions, and rising interest rates. While early-stage funding saw an increase of 26 per cent YoY to $743 million in 2022, seed-stage funding for the sector fell 52 per cent YoY to $75.2 million in 2022, noted the report.
Another issue, that the sector continues to suffer from, is poor infrastructure. The report stated that despite allocating 91 per cent of funds to curative healthcare, it still faces significant drawbacks and limitations. “Lack of healthcare infrastructure, such as the shortage of physical infrastructure, including hospitals and beds, remains a challenge in the healthcare system. Both primary and tertiary healthcare centers are limited in number, exacerbating the issue,” it added.
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