India an Attractive Market for Foreign Hospital Business

It’s been a long wait for Singapore-based firm Parkway Pantai –two years– as it awaits the necessary permits to open a 450-bed hospital in India.

In order to launch a new facility, the firms must try to get about 70 clearances, both from the local and federal authorities. The private hospital market is valued at US$55 (S$78 billion) billion a year.

A report from the bank of America Merrill Lynch (BofA-ML) Global Research explains that India’s private healthcare market is rapidly expanding, and it’s expected to grow at a rate of sixteen percent every year, and may reach US4120 billion by the year 2020.

 
 

For the hospitals to grow rapidly in India, acquiring and expanding has become a key practice. With the healthcare system in India which is overburdened, the demands of private hospitals have increased manifold.

However, this massive growth may not put an end to the woes. The number of beds in the hospitals is still a problem, and so is the cost of the medicines. Many promises were made before the elections by the current prime minister of India Narendra Modi, promised to resolve all the problems.

But the problems still persist and the solutions are nowhere seen. For those who wish to see the problems themselves, they may walk into the government hospitals and listen to the patients, if their eyes deceive them.

 
 

Looking at the figures by the World Health Organisation (WHO), they aren’t  much satisfying. For every 10,000 people, India has seven hospital beds.  China and south-east Asia have 38 and 10, respectively.  

“Acquisitions are good for the industry, but can have worrying long-term implications for infrastructure development in the sector,” said healthcare head Rana Mehta at consultants PwC India.

Learning from the past and looking at the current scenario, it may be widely concluded that starting a hospital from the ground up isn’t as lucrative as growing it through acquisition. The prices fall too. Data by BofA-ML says that the companies may have to pay up to US$150,000 to set up a new bed, as compared to US$60,000 for buying an existing bed.

Compared to other countries, acquisition in India is cheaper –in part due to the currency exchange. The reports say that buying a bed in Singapore costs US$41.5 million, and it costs US$4100,000 in South Africa.

 

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