India’s Healthcare sector which includes hospitals, pharmacies, laboratories, medical devices & equipment, clinical trials, outsourcing, telemedicine, medical tourism and health insurance, is one of the largest sector in India in terms of revenue and employment both. Indian healthcare system is divided into two parts – Public and Private. Public healthcare system focuses mainly on primary care in rural areas and secondary & tertiary care in key cities whereas Private healthcare system focuses on mainly secondary, tertiary and quaternary services in metros, tier I & II cities. In FY26, healthcare expenditure is expected to be 1.9% of the GDP which was 2.5% of the GDP in FY25. An outlay of $ 1.08 billion is announced for PM-JAY scheme in union budget FY26, 28.8% increase compared to FY25.

Key Growth Drivers

• India has witnessed an economic growth during the past decades which causes rise in the middle class income which in line increases the demand for quality healthcare services.
• India’s population is increasing especially the working-population which can boost the Indian economy and also the demand for healthcare services, not compromising the quality. Moreover, the demographic profile of the company is also shifting, as of 2011, 8% of the population was aged 60 or above and projections say that by 2026, it will grow to 12.5% and by 2036, it reach to 15%, which indicates more specialised healthcare services and infrastructure.
• Indian Govt. is trying healthcare services to be accessible and affordable throughout the nation but India still lags the Global standards. Private healthcare service providers get stuck to Tier I and Tier II cities so, there is an underserved market which is still to be  penetrated.

Risks

• Regulatory Risks: Operating in a highly regulated industry impacts the operations and growth of that industry. Implementing price ceilings on private hospitals and obligation to provide free or concessional medical treatment affects operating margins. Moreover, some services are price controlled by the regulatory bodies which put extra amount of discomfort on operations. For example, in FY17 – 18, Govt. capped the price of services such as cardiac stents and knee implants which impacted profitability and also in FY20, Govt. put a price cap on Covid related services.
• Input & Operational Costs: The input cost viz. land, staff, equipment etc continues their price increase trend due to inflationary pressure and competition for implementing new technologies also inflates the input costs higher. On the other hand, the regulatory compliance put good among downward pressure on profitability.
• Intense Industry Competition: The industry is carrying intense competition itself because of growing demand from both side organised and unorganised. The foreign investors are also keeping eyes across the healthcare sector for investments. The new entities offers services at low prices which triggers intense competition and overcapacity leads to constrained growth and profitability.