“Significant leap” expected in India’s healthcare innovation landscape: Report

Investor sentiment in healthcare has been stable over the last five years, with investments in innovation ranging between $ 1.5 billion to $ 2 billion annually, a report from Bain & Company and HealthQuad said.

“Healthtech consistently attracted interest, netting more than 55 per cent of overall deal volume across the last four to five years,” a note on the report said, highlighting a shift in investor focus towards higher unit economics and growing interest in pharma services, for instance.

In fact, the report projected a “significant leap” in India’s healthcare innovation landscape, with its market potential expected to double to approximately $60 billion by FY28.

“Pharma services and health tech are anticipated to drive about 80 per cent of this growth, maintaining their positions as the largest segments in the market,” the report f said. “This growth will be driven by rising consumerisation of health, reconfigurations to the global healthcare value chain, a deepening of Indian scientific and technological expertise and regulatory tailwinds,” it added.

The overall Indian healthcare market, valued at about $180 billion in FY23, is projected to grow at approximately 10–12 per cent to reach $320 billion by FY28, the note said. Healthcare innovation is a rapidly growing segment currently valued at $30 billion and accounts for 15 per cent of the overall market, it added. This segment is dominated by pharma services (Contract development and manufacturing organisations, contract research organisations and pharma IT) and health tech with vaccines and biotech and medtech emerging as green shoots, it said.

“From cutting-edge pharma services to disruptive health tech and medtech advancements, India’s healthcare innovation landscape is experiencing a remarkable transformation,” said Aarthi Rao, Partner at Bain & Company (a global consultant firm).

Robust growth

Indian pharma services account for approximately 50 per cent of the healthcare innovation market, valued at $16 billion in FY23, the note said. “The CDMO segment saw the highest growth, driven by global supply chains shifting away from China and improvement in capacity, capability and quality by Indian players. Pharma IT also showed robust growth, led by growing global price pressures and demand for omnichannel transformation. International pharma companies are setting up technology ‘innovation hubs’ and global capability centres (GCCs) driven by India’s growing technological expertise.”

India’s health tech market, the next prominent segment within healthcare innovations, witnessed strong growth, as it more than doubled from $3 billion in 2020 to $7 billion in FY23, the note said. “This growth, fueled by both the Covid-19 pandemic and efficiency needs in healthcare, has seen healthtech claim roughly 25 per cent of the overall healthcare innovation space.”

“Indian health tech entrepreneurs have served more than 400 million patients by providing access to high quality affordable care thereby creating a $7 billion market in India,” said Charles-Antoine Jannsen, Managing Partner, HealthQuad. (HealthQuad is a healthcare transformation fund backing innovative models to improve healthcare access, affordability and quality of care by leveraging technology.)

India’s vaccines and biotech sector, valued at $4 billion in FY23 contributed 15 per cent to the healthcare innovation market, it said. Besides, medtech was evolving from an import-reliant industry to one capable of producing innovative, new-to-the-world products. This $11 billion market, currently dominated by imports (75-80 per cent), witnessed Indian players contribute roughly $2.5 billion in FY23, the note on the report said.

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