Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Healthcare: A bright horizon - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Jun 20, 2002

    Healthcare: A bright horizon

    The Indian healthcare industry may just be the next sunrise industry considering the innate potential of the sector. CMIE estimates the industry to be worth Rs 730 bn (US$ 15 bn) and expects it grow by 13% - 15% going forward. A good estimate of the growth potential is that while the World Health Organisation (WHO) has recommends a population to bed ratio of 1 bed per 300 patients the current ratio in India is about 1 bed per 1,000 patients.

    Considering that the number of hospital beds available in the country is approximately 5.5 m, the requirement is for nearly 6 - 6.5 m beds. The huge gap in supply and demand has created a potential for additional 75,000 to 100,000 beds to be set up in the country. Another driver for growth in this sector is the burgeoning middle class in the country. According to CMIE estimates the middle and higher income population as a proportion of total population has grown to 22% in 2000 from 14% in 1990. Health insurance will make healthcare affordable to a large number of people. Opening up of the insurance sector is going to benefit the industry further.

    The healthcare sector was recognized as an industry in the mid 1980s. Consequently, allowance of long term funding by financial institutions and reduced import duty on medical equipment and technology were some of the benefits provided by the government. While the prospects for the industry are encouraging, all has not been rosy for the industry. Fundamentally, fragmentation and poor of insurance penetration in the country plague the industry in India. The domestic healthcare sector is dominated by small hospitals run by trusts and the government. Long gestation periods and high capital investment are also deterrents to investments in this industry.

    The major players in the industry include the Apollo Group, Fortis Health Care, Max India, Escorts and Wockhardt & Duncans Gleneagles International of these Apollo Hospitals and Max India are listed on the stock markets. Apollo Hospitals not only the largest player in India but also one of the largest in Asia. The Apollo group has nearly 2,600 beds under its management. The closest competitors to the Apollo group are Max India and Escorts. The other players are very small in size. Apollo Hospitals is the only dedicated healthcare company listed on the bourses and has annual revenues of nearly Rs 4 bn (US$ 80 m).

    The health care industry is a very specialized industry and only the serious players are likely to sustain in the future. The Indian health care industry has traditionally been dominated by hospitals run by the government and private trusts but slowly the scenario is changing with the entry of serious players like Apollo hospitals, Max India and Escorts.

    With a growing middle class population and increased insurance cover for individuals the health care industry in India is on the verge of turning a new corner. The healthcare sector may very well offer an investment alternative for investors. Having said that it is very important not to get enamoured by numbers. But to conduct a through analysis of the company, its business proposition and its management and thus, consider it as an investment opportunity.



    Equitymaster requests your view! Post a comment on "Healthcare: A bright horizon". Click here!


    More Views on News

    Tejas Networks Ltd. (IPO)

    Jun 14, 2017

    Should you subscribe to the IPO of Tejas Networks Ltd?

    Discover the Secrets of Hidden Smallcaps From These AGMs (The 5 Minute Wrapup)

    May 26, 2017

    Don't be surprised to come across some Super Investors there!

    A Trader's Nightmare. A Business Owner's Delight. (The 5 Minute Wrapup)

    May 19, 2017

    Not all small-cap investors see themselves as traders. Some see themselves as business owners.

    Securities & Intelligence Services Ltd. (IPO)

    Jul 31, 2017

    Should you subscribe to the IPO of Securities & Intelligence Services Ltd?

    Why Super Investors are Underperforming in This Market (The 5 Minute Wrapup)

    Jul 8, 2017

    If Super Investors can wait for the right pitch, so can you.

    More Views on News

    Most Popular

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms