Healthcare sector would face further consolidation

Due to the strict rules in the regulatory environment, the healthcare sector is expected to see further consolidation by the end of 2019. It would remain difficult for small companies to remain or exist in the present highly competitive market.

The players in the industry are looking for more partnerships in 2019 especially in the private and public sector in the healthcare industry. The players are feeling that they are underinvested.

IHH Healthcare of Malaysia has summed 31.1% stake in Fortis for about Rs.4000 crores due to intense competition. It is still in the process of obtaining the remaining 26% stake.

The healthcare sector in India has chances to touch US$ 280 billion at the end of 2020. Greater health awareness, rising income level, enhanced access to insurance and improved preference of lifestyle diseases are the main contributors to growth. Moreover, it is expected that the healthcare sector generates about 40 million jobs by 2030 in India.

The private sector is said to be developed as a strong force in the healthcare industry of India. It has gained both international and national reputation. It has found that the total healthcare expenditure of the country accounts for about 74%. In India, telemedicine is becoming a fast developing trend. Several leading hospitals like NarayanaHrudayalaya, AIIMS and Apollo have launched telemedicine services. They have also entered into several PPP that is public-private partnerships.

Moreover, due to several skilled medical professionals and world-class hospitals, it has completely supported India’s position. It is the reason it has become a favorite place for medical tourism.

The future healthcare is expected to be in high volume and low margin venture. It will be progressing towards universal health care. The government would play an active role in the government and rise of the healthcare sector. It will also remain as a highly controlled accountable system. The organizations and people who are not adopting the new philosophies would not remain in the industry for a long time.

As per these situations, there are chances for closure of certain individually supported smaller facilities and merging of healthcare by major chains. The five leading contenders planning to invest in Fortis are as follows: Radiant Life, Fosun International (Chinese investor), IHH Healthcare Berhad and Manipal Group, all of them are backed up a global private equity company KKR and also the Munjals of Hero Company and Burmans that owns Dabur.

The mergence company will acquire about 3200 beds for the 16 hospitals established across India. The healthcare infrastructure is still in the development phase. There has been a shortage of nurses and doctors. Several other challenges still remain are poor access to quality and primary healthcare, price and GST regulations, changing disease patterns. These are some of the areas that remain in debate and in unplanned stage.

It is expected that the pharmacy sector would see a good recovery in the domestic sector. There are chances to see growth in the Indian pharmacy sector. It is expected to see double digits and the launch of new products very soon.

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