Chennai: The Indian healthcare sector is projected to reach $638 billion by 2025 with hospitals, pharmaceuticals and diagnostics seeing faster growth post the pandemic.
Valued at $110 billion in 2016, the Indian healthcare market reached $372 billion in 2023, marking a 22.5 per cent CAGR growth and is expected to touch $638 billion in 2025. The sector has seen a 17.5 per cent CAGR growth over the past 10 years, primarily driven by large-scale innovation in hospitals, pharmaceuticals, diagnostics and other industries, according to Bajaj Finserv AMC.
The sector has experienced a massive surge in private healthcare spending during and post-COVID-19, with the hospital market size growing from $62 billion in 2020 to $132 billion in 2023. In pharmaceuticals, India emerged as a global vaccine hub, led by organizations like the Serum Institute and Bharat Biotech. In diagnostics, a core shift occurred towards digital diagnostics, while demand for home testing kits accelerated post pandemic.
“Further, the functional foods and personalized nutrition market is growing at a 16 per cent CAGR and is expected to reach $12 billion by 2027. Meanwhile, the fitness and wellness industry is projected to grow at a 27 per cent CAGR, reaching $12 billion by 2025,” said Sorbh Gupta, Senior Fund Manager - Equities, Bajaj Finserv AMC.
However, the sector still has a long runway for growth. Three million beds are needed to meet the 3 per 1,000 target by 2025, and 1.54 million doctors and 2.4 million nurses are required to meet the rising demand.
Health insurance is also underpenetrated with out-of-pocket expenditure at 54.8 per cent, as compared to 17.1 per cent in the UK, 11.3 per cent in the US, 35.2 per cent in China, and 12.9 per cent in Japan. However, the market is expected to expand from Rs 91,000 crore in 2024 to Rs 1.5 lakh crore in 2029.
