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Healthcare innovation in India, currently valued at $30 billion, is expected to double by FY28, according to a recent report by Bain & Company and HealthQuad.
Pegged at $180 billion in FY23, India’s overall healthcare market is projected to grow at a compound annual growth rate (CAGR) of 12 per cent to $320 billion by the same time, it said.
The report titled ‘Healthcare Innovation in India’ said that healthcare innovation accounts for about 15 per cent ($30 billion) of the overall healthcare market in India, of which around 55 per cent is export-led.
Aarthi Rao, partner at Bain & Company, anticipates a significant expansion. “We see the $30 billion healthcare innovation market reaching $60 billion by 2028,” she said.
She emphasises that this growth will not only stem from value-engineering but also from business innovation, particularly in biotech, vaccines, and med-tech sectors.
She also predicts substantial growth in health-tech and pharma services, which would contribute to this expansion.
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Healthcare innovation has almost doubled over the past three years from a baseline of $17 billion in FY20.
There are four key segments in the healthcare innovation space — pharma services, which includes contract development and manufacturing organisation (CDMO), contract research organisation (CRO), pharma IT (apart from healthtech, vaccines and biotech), and medtech.
Speaking to Business Standard, Charles-Antoine Jannsen, managing partner of healthcare-focused venture capital fund HealthQuad said, “Ten years ago, India was particularly strong in chemistry and active pharmaceutical ingredient (API) production of new chemical entities (NCEs). But it was not present at all in the biologics space.”
Expansion of capacities
Janssen added that during the pandemic, India became the world’s second-largest exporter of Covid vaccines and nearly 50 per cent of the global vaccine exports came out of India.
“This led to two capacities that India did not historically have — discovery abilities on the biological side in order to develop and scale up these vaccines. Also, high quality and low-cost biological manufacturing skill sets to serve gigantic volumes,” he said.
India is thus moving up the value chain. “World-class research and manufacturing are coming out of India not only in biosimilars but new biological entities, which have transformative potential for India in low-cost markets and also some high-cost markets,” Jannsen said.
Vaccines and biotech market
The report also highlighted that the Indian vaccines and biotech market, which was valued at $4 billion in FY23, accounting for 15 per cent of the innovation market, has quickly grown from $1.2 billion in FY20.
Roughly half of this revenue surge is driven by exports. India remains a vaccine powerhouse catering to around 60 per cent of global vaccine demand.
Biotech startups are also starting to use new technologies like cell and gene therapy, oligonucleotide therapy, protein biologics, gene editing, and next-gen sequencing to develop innovative products with large potential markets.
Healthtech innovations
Healthtech has witnessed strong growth since 2020. It accounted for roughly 25 per cent of the healthcare innovation market in FY23, having more than doubled from about $3 billion in FY20 to about $7 billion in FY23. The healthtech market is split equally between consumer-facing solutions (like telemedicine, e-pharmacy, e-diagnostics, and wellness) and enterprise-facing solutions (like B2B e-commerce and SaaS-based hospital, clinic, and pharmacy management solutions).
“Encompassing more than 10,000 startups, healthtech continues to be a hub of innovation in India. The pandemic provided a significant growth impetus for consumer-facing segments,” the report said.
Jannsen observes that the health-tech sector has benefited from the impact of Covid-19. There has been an accelerated adoption by patients and doctors, surpassing previous forecasts by at least two years. “People had no option but telemedicine, e-pharmacies,” he said.
Growth in pharma services
Pharma services, however, account for around 50 per cent of the healthcare innovation market. The Indian pharma services market was valued at about $16 billion in FY23, up from about $11 billion in FY20, with 85-90 per cent of revenue driven by exports. India is currently the second-largest CDMO player globally, after China, for small molecules. As BigPharma moved away from China due to supply chain disruptions, India’s significance has grown in the last three years.
“The presence of a higher number of US FDA-approved manufacturing plants in India compared to China, fewer FDA warnings for Indian manufacturing compared to Chinese counterparts, and the availability of a robust Indian workforce exceeding 1.8 million science graduates have further supported this shift,” the report said.
