By 2028, India’s health tech sector is expected to treble in value. Investors worldwide are prioritizing enterprises that can survive economic downturns.
Deep Dive into Healthcare Innovation
Bain & Company, a worldwide management consulting firm, recently examined the Indian healthcare innovation market, segmenting it into pharmaceutical services (CDMOs, CROs, pharma IT), health tech, biotechnology, and medical technology. Bain & Company’s collaboration with Indian healthcare startup fund HealthQuad illuminates this changing landscape.
Health Tech Leads Market
Health tech accounts for $7 billion of the $30 billion Indian healthcare innovation market as of 2023. The market is expected to treble to $60 billion by 2028, with health tech potentially grabbing 35% of the market, worth $21 billion.
Growth Drivers for Future
Health tech’s rapid rise is due to three trends:
- Horizontal and Vertical Integration: Hybrid digital-physical company strategies combine physical and online services to extend offers and boost profits.
- Global Expansion: Health tech enterprises can expand their customer base by entering international marketplaces.
- Acquisition Disruption: Acquisitions help established players reach more people and use new business models, increasing health tech concentration and innovation.
Money Going to Resilient Models
Investors have invested over 55% of deal volume in health tech since 2019, according to the research. For instance, PharmEasy raised $2 billion after 10 fundraising rounds, and HealthifyMe raised $110 million.
A significant investment emphasis change is emerging. Business models with “lower risk and higher positive-unit economics” (more revenue than consumer costs) are now most appealing. Thus, enterprise-focused startups like Medikabazaar and THB that address operational inefficiencies or supply chain challenges are intriguing. Due to broad addressable markets and consumer acceptability, many enterprises demonstrate promising long-term growth even during economic downturns.
Convenience and Quality Care Meet Consumer Demand
A previous Bain poll found that Indians are increasingly using digital health apps, with 5% to 10% annual increase in telemedicine, e-pharmacy, and wellness services. Consumers prefer “convenience” and “quality care” in proactive health management. The study says, “These consumer demands will drive the continued growth of health tech products and services to help consumers better and more conveniently manage their health and wellness.”
Navigating Growth: The Way Forward
The expected expansion will bring structural changes like:
- Consolidation: Underfunded companies may consolidate or cut back.
- Profitability: Enterprise-facing and AI-powered enterprises will profit.
- Global Focus: Health tech will increasingly focus on international markets.
Partnerships are key to entering this profitable sector, according to the report. Collaboration with established players or fellow innovators is “key to efficiently building a seamless consumer journey.”
The Bigger Digital Health Transformation
India’s digital health transition is reflected in the growing health tech sector. This shift is driven by more digital tools and solutions. Bain & Company surveyed Indian healthcare leaders and found that this change depends on:
- Early Adoption: Healthcare facilities must adopt new technologies quickly.
- Effective Training: Technology use requires effective training.
- Incentives: These technologies can be used more effectively with incentives.
A successful digital health revolution requires partnerships. In 2021, Philips surveyed healthcare professionals and announced their desire to work with private hospitals and healthcare facilities to enable this digital transition.
India’s health IT business is growing rapidly due to investor interest, desire for convenient and high-quality healthcare, and government backing. The Indian health IT business may improve healthcare by encouraging innovation, strategic alliances, and user-centricity.
