Opportunity-in-Private Sector Hospitals in India

For decades, Hospitals in India have been an under-appreciated cog of the healthcare system. Due to perennial low investments, India has only 14-15 beds per 10000 people vs the world average of 29. The total annual hospital spending in the country is USD 70 billion (over Rs 5.7 lac crores). Compare that to the pharmaceuticals sector with revenues of USD 40 billion per annum (including exports), and diagnostics which account for USD 10 billion. Interestingly, the largest pharma company in the country is making profits of USD 1 billion vs the largest hospital company in the country making profits of less than USD 150 million. While comparing both businesses is like comparing chalk and cheese, the profitability of the largest players vs the scale of business opportunity highlights the long runway for growth that hospitals can have. Our fund manager and sector expert Dhaval Shah takes a deeper look at the potential of this industry and its growth levers.