The Growth of the Healthcare Industry in India
Even before the historic Portugal-to-India trade corridor in the 15th century, India fired the minds of traders and merchants.
Today, the healthcare industry is feeling the allure of the subcontinent.
- India has become the largest vaccine supplier in the world, producing 62 per cent of the global supply.
- It ranks as the third biggest pharma manufacturer, with 3,000 companies operating 10,500 manufacturing units. Pharma exports topped $19 billion in 2021, with growth projected at a fifteen per cent compound annual growth rate (CAGR) through 2035.1
- India also provides more generics than any other country.2
- In 2021 alone, India's commitment of $2 billion U.S. led to 49 pharmaceutical and 21 medical-device companies rushing to the country.3
Breaking China
Some of India's development as a global healthcare giant is coming at the expense of its chief rival in Asia.
Cracks have appeared in the great economic wall of China.
- A trade war shortly before the pandemic disrupted global supply chains depending on China.
- This merely previewed greater havoc to come as the coronavirus jolted China’s manufacturing and logistics.
- Symptoms of the world's over-reliance on China showed up first in shortages of personal protective equipment ... then in issues with port shutdowns, labour shortages, quarantines, and much else.
- The pandemic laid bare the world economy's overdependence on the Asian giant.
Some healthcare players see India as an opportunity to de-risk operations.
India is closer to growing Western markets, so speed-to-market improves ... and so does the management of complexity, compliance, and consumption of fuels at a time when companies put a growing emphasis on Environmental Sustainability Governance (ESG) goals.
Some companies, unhappy with the standards of protection for intellectual property in China, see India as safer for R&D and development.
After six decades of significant growth, China's population fell in 2021. For companies with long-term plans there, it is a red flag for potential labour force and domestic consumption issues.
Meanwhile, India's population surges. As confirmed by the United Nations and relayed by multiple media sources, in April 2023 India's population surpassed China's.4 A CNN story projected India will have 50 per cent more consumers than China by 2064.5
A class act
The growing population in hard-working India means a flourishing middle class.
This continued growth along with an enterprising healthcare vision for the country, makes India as alluring today as it was centuries ago.
Consider these statistical attractions for healthcare firms eyeing India operations:
- India's GDP growth was 8.9 per cent in 2021. That is strong any year, but for a coronavirus year ... dynamic and powerful.
- Direct foreign investment in India has topped $19 billion U.S.
- India has 69,000 hospitals and more than a half million pharmacy stores.
- A growing number of global healthcare giants and multinational corporations have set up R&D and manufacturing facilities in India for the long term.
- The pharma market is projected to grow at 17% CAGR until 2030. The medical device market is even more robust, with 37 per cent projected growth during that time.
- A crucial facet of pharma manufacturing is the API (active pharmaceutical ingredient) sector. The Indian government is currently investing $1.3 billion to improve API production in India and foster more independence from imports.6
Finally ... a driver of the rise of India as a healthcare superpower ... is the projection that India will emerge in the next 10 to 15 years as a top three economic power.
The future depends on the present
What does all this mean for healthcare companies?
We will see more and more of them join Amazon, Coca-Cola, Microsoft, Johnson & Johnson, and other U.S. companies and a host of other international ones already doing business in India.
Healthcare is turning eyes to India once again in a search for prosperity and discovery. Leaders sense new opportunities in one of the richest human civilizations.
Mahatma Gandhi once said, "The future depends on what you do in the present."
As revelations from the pandemic disrupt thinking about markets and accessibility ... and as new technology recasts the entire healthcare environment ... it is more and more clear that for healthcare companies, the future includes being present in India.
Sources:
1. Frost & Sullivan, "India Expansion: Where to Play? Where to Win?" report, August 2022, p 4
2. India Brand Equity Foundation (IBEW), Introduction to Pharmaceuticals Industry Report, February 2023, https://www.ibef.org/industry/pharmaceutical-india
3. Frost & Sullivan, "India Expansion: Where to Play? Where to Win?" report, August 2022, p 4
4. United Nations Department of Economic and Social Affairs, Policy Brief No. 153: India overtakes China as the world's most populous country, April 2023, https://www.un.org/development/desa/dpad/publication/un-desa-policy-brief-no-153-india-overtakes-china-as-the-worlds-most-populous-country/#:~:text=In%20April%202023%2C%20India's%20population,to%20grow%20for%20several%20decades.
5. CNN, "Opinion: Asia is Hurtling Toward a Tectonic Power Shift," 23 January 2023, https://www.cnn.com/2023/01/23/opinions/china-india-population-shift-west-andelman/index.html
6. Frost & Sullivan, "India Expansion: Where to Play? Where to Win?" report, August 2022, p 4
