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Rediff.com  » Business » Healthcare sector seeks infrastructure status

Healthcare sector seeks infrastructure status

By Capital Market
July 01, 2009 11:29 IST
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Hospitals are major component of the Indian Healthcare sector (includes Pharmaceuticals, Diagnostics, Health Insurance & Medical Equipment) contributing to 50% of sector revenues. According to industry sources, it is estimated that Indian Hospital industry is USD 25.2 billion in 2008 and expected to reach USD 32.7 billion by 2010, growing at 14% per annum.

Indian hospital industry was fragmented with a large number of independent, privately run hospital and healthcare centers. Industry is witnessing lack of doctors and nurses. The current demand for doctors in the industry is 12 lakhs but the supply is only 7 lakhs, while the demand for nurses is 32 lakhs and supply is only 8 lakhs. Demand for healthcare is far exceeds supply due to depressing performance by the government.

Private sector dominates with 78% market share, led by leading players like Apollo, Fortis, Wockhardt and Max Healthcare. In addition in domestic demand, medical tourism is generating additional revenue for high quality private Health Care. It is expected revenues from Medical tourism would touch USD 2 billion by 2010. The demand and supply in the sector is high. In this condition, government should take some preventive measures to boost the Hospital sector.

Pre budget expectation of the industry

  • Award infrastructure status to healthcare industry
  • Grant tax holiday for specialty ambulatory healthcare
  • Launch "Healthcare up-gradation and new investment" fund
  • Ease land procurement for health infrastructure and medical education
  • Mandate preventive health checkups in existing preventive health programs
  • Align government healthcare reimbursements with market prices
  • Provide impetus for indigenous manufacture of medical equipment
  • Accelerate group insurance for SME's through tax incentives
  • Boost health savings plans for preventive & curative care
  • Trigger growth in health insurance through attractive tax benefits to citizens.
  • Private Public partnership should be there in healthcare.
  • Government should take certain steps to increase resources.

Analyst expectations

Hospital industry should be granted infrastructure status. Complete tax deduction in profits for operating and maintaining Health Care in rural area to be extended from 31st March 2008 to 31st March 2012. Customs duty on advanced medical equipments recommended to be reduced to 5%. Increase in allocation on healthcare infrastructure and HIV eradication, etc.

Scrips to watch

Apollo Hospitals Enterprises, Fortis Healthcare

Outlook

We expect the Union budget 2009-10 to be a positive for Health care sector. The grant of Infrastructure status would give half relief to the industry. This status would not only increase the pace of investment into the industry by existing players but also facilitate new entities into the industry.

The industry is not impacted in big way by terrorist attack in Mumbai but the inflow of foreign tourist for treatment has been delayed.  With the increase in domestic and international demand, the gap between demand and supply is slowly increasing. We expect government to take some key initiatives which would help Health Care sector.

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