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1、Investing in Indias Healthcare Sector:Opportunities and Enabling PoliciesOverview of Indias Healthcare EcosystemHow Hi-Tech Innovation is Advancing the Scope of Indian Healthcare Tax Incentives and Policy Support for the Healthcare Sector Pg 04Pg 11Pg 17Issue 51 September 2022|www.india-From Dezan S
2、hira&Associates IndIa BrIefIng Issue 51 September 20222IntroductionCreditsPublisher-Asia Briefing Media Ltd.Lead Editor-Melissa CyrillEditor-Naina BhardwajDesigner-Aparajita Zwww.india-www.vietnam-www.china-www.russia-Indias highly diversified healthcare sector is an attractive investment avenue,wit
3、h high growth rate recorded in new segments like telemedicine and medical tourism,besides hospitals,medical devices and equipment,health insurance,diagnostics,clinical trials,and the pharmaceuticals industries.India is now within the top five economies in the world and is witnessing rising incomes a
4、nd rapid urbanization.These factors have given way to sedentary lifestyles,which are increasingly inducing diseases caused by high blood sugar,high cholesterol,obesity,alcohol consumption,etc.This has in turn popularized the concept of preventive healthcare,necessitating the provision of specialized
5、 healthcare services and establishment of super specialty hospital networks.Moreover,the outbreak of COVID-19 exposed major gaps in Indias healthcare capabilities,and highlighted massive investment opportunities for hospital infrastructure,insurance,pharmaceutical manufacturing and R&D,technology-en
6、abled service industries,and human capital growth.In this issue of India Briefing magazine,we provide readers with an overview of Indias healthcare ecosystem,major trends in the domestic healthcare market,and scope for medical tourism.This is followed by a spotlight on the role played by technologic
7、al innovation in overcoming long-term challenges plaguing the countrys healthcare infrastructure.Finally,we identify the tax incentives available to the sector and major enabling policies.With kind regards,Rohit KapurROHIT KAPURManaging DirectorDezan Shira&AssociatesNew Delhi O IndIa BrIefIng Issue
8、51 September 20223Asia Briefing Ltd.Unit 507,5/F,Chinachem Golden Plaza,77 Mody Road,Tsim Sha Tsui East Kowloon,Hong Kong.Annual SubscriptionIndia Briefing Magazine is published four times a year.To subscribe,please visit please explore the clickable resources below.Investing in Indias Healthcare Se
9、ctor:Opportunities and Enabling PoliciesContentsOverview of Indias Healthcare EcosystemPg 04How Hi-Tech Innovation is Advancing the Scope of Indian Healthcare Pg 11Tax Incentives and Policy Support for the Healthcare Sector Pg 17ReferenceIndia Briefing and related titles are produced by Asia Briefin
10、g Ltd.,a wholly owned subsidiary of Dezan Shira Group.Content is provided by Dezan Shira&Associates.No liability may be accepted for any of the contents of this publication.Readers are strongly advised to seek professional advice when actively looking to implement suggestions made within this public
11、ation.For queries regarding the content of this magazine,please contact:All materials and contents 2022 Asia Briefing Ltd.Like India Briefing on FacebookFollow India Briefing on TwitterConnect with Dezan Shira&Associates on LinkedinView Dezan Shira&Associates on Youtube Follow UsScan the QR code to
12、follow us on WeChat and gain access to the latest investor news and resourcesConnect with us for the latest news,events and insights across Asia.Legal,Tax,Accounting Newswww.india- and W S Advisory and C IndIa BrIefIng Issue 51 September 20224Overview of Indias Healthcare EcosystemDriven by factors
13、like population demographics,a growing middle class,rising incomes,better health awareness,and increasing lifestyle diseases,Indias healthcare market has been expanding at a compound annual growth rate(CAGR)of 22 percent.The Indian healthcare market,which was valued at US$86 billion in 2016 is now p
14、rojected to reach US$367 billion by 2023 and US$638 billion Naina BhardwajAuthorHealthcare is among the fastest growing sectors in India,with the federal government pursuing an aggressive policy to make the country a global hub for health and wellness.There is huge scope for foreign investments in t
15、his area due to a liberalized FDI regime in various sub-sectors like hospitals,medical devices,health insurance,etc.Chapter 1by 2025 as per INC42.Data by Statista pegs this estimate at US$372 billion by 2022,up from US$160 billion in 2016.The fast-moving growth in the sector is supported by improvem
16、ents in healthcare coverage,services,and increasing expenditure by public as well as private players.In fact,post the Covid-19 pandemic,Size of Indias Healthcare Market(2008-2020)with Projections for 2022-2025(US$Billion)4552596466778286822428536747963820082009200017
17、20182019 2020*2021*2022*2023*2024*2025*All figures with*represent forecasted data.IndIa BrIefIng Issue 51 September 20225there is an increased call for self-reliance in the Indian healthcare system with focus shifting to innovation and research,drug and equipment manufacturing,digital transformation
18、 in health services,fair access to healthcare solutions,mental health,and wellness.Overview of Indias healthcare marketThe healthcare sector in India is among major contributors to the Indian economy,in terms of both revenue and employment.The sector has grown rapidly in the last five years on accou
19、nt of digitization,innovation,and newer hybrid business models with the integration of traditionalists and technology enterprises.Further,the Covid-19 pandemic catalyzed long-term behavioral transformation towards personal health and hygiene,health insurance,fitness and nutrition,as well as health m
20、onitoring and medical check-ups.The pandemic also augmented the adoption of digital technologies,including telemedicine.Moreover,the rising proportion of lifestyle diseases caused by high cholesterol,high blood pressure,obesity,poor diet,and growing alcohol consumption in urban areas is boosting dem
21、and for specialized care services.Key segments of the Indian healthcare sectorIndias healthcare sector comprises hospital infrastructure,medical devices and equipment,health insurance,clinical trials,telemedicine,and medical tourism.These market segments are expected to diversify as an ageing popula
22、tion with a growing middle class increasingly favors preventative healthcare.Trends in the Indian Healthcare SectorShift from communicable to lifestyle diseases caused by high cholesterol,high blood pressure,obesity,alcohol consumption,etc.Expansion to Tier II and Tier III cities like Nashik,Mohali,
23、Dehradun,etc.Emergence of telemedicine Rising adoption of artificial intelligence(AI)Increasing penetration of health insurance Focus on universal immunization programs(UIP)Factors Driving Growth in Indias Healthcare SectorDemographic,epidemiological,and health transitions Rising income Increase in
24、life expectancy Dual disease burden-communicable and non communicable Lifestyle disordersMedical value travel India is fast emerging as an attractive destination for medical value travellers from across the globe,with many consumers including wellness packages in their travel plansEnabling policy en
25、vironment Implementation of several large-scale and ambitious initiatives like Ayushman Bharat PLI schemes and the scheme for promotion of medical device parksVast demand supply gap Need for increased investment in the sector Emergence of public private partnership(PPP)models in the sector IndIa BrI
26、efIng Issue 51 September 20226Hospitals and infrastructureIn FY 2021,the hospital industry in India accounted for 70 percent of the total healthcare market,followed by pharmaceuticals(20 percent)and medical technology(10 percent).The long-term market outlook for hospitals in India is stable,with ann
27、ual revenues likely to grow robustly over the next few years on account of rising domestic demand for healthcare as well as medical tourism.While metropolitan cities like Delhi,Mumbai,Chennai,and Kolkata host super specialty hospital groups(Apollo,Fortis,Max,etc.)with world class infrastructure,heal
28、thcare players are now looking to expand in Tier-2 and Tier-3 cities,such as Nashik(Maharashtra),Indore(Madhya Major Segments in Indias Healthcare SectorHospitalsPharmaceutical DiagnosticsMedical equipementand suppliesMedical insuranceTelemedicineGovernment(healthcare centers,district hospitals,gene
29、ral hospitals)Private(nursing homes,mid-tier&top-tier private hospitalsIncludes manufacturing,extraction,processing,purification&packaging of chemical matrierials for use as medications for humans or animalsComprises businesses&laboratories that offer analytical or diagnostic services,including body
30、 fluid analysisIncludes establishments primarily manufacturing medical eqiupment&supplies,e.g.surgical,dental,orthopedic,opthalmologic,laboratory intruments,etc.Includes health insurance&medical reimbursement facility,covering an individuals hospitalization expenses incurred due to sickness Has enor
31、mous potential in meeting the challenges of healthcare delivery to rural&remote areas besides several other applications in education,training&management in the health sectorHealthcare Market Distribution India 2019-2030*,by Provider Type(in%)Share of Market Segments of the Healthcare Sector in Indi
32、a in FY 2021OthersDiagnosticsHealthtech start-upsOutpatient department clinicsPharmaceuticalsInpatient department hospitals52020442030*Hospitals70%20%10%PharmaceuticalsMedical technology/others2019Data accessed from Statista,as on July 28,2022Data accessed from Statista,as on July 28,2022
33、 IndIa BrIefIng Issue 51 September 20227Pradesh),Visakhapatnam(Andhra Pradesh),Jaipur(Rajasthan),Mohali(Chandigarh),Surat(Gujarat),and Dehradun(Uttarakhand).The hospital industry in India offers huge investment opportunities for both global and domestic investors.At present,there are 582 investment
34、opportunities worth US$32.16 billion in the medical infrastructure sector.Investors must note that 100 percent foreign direct investment(FDI)is allowed for construction of hospitals under the automatic route for greenfield projects and for brownfield projects,up to 100 percent FDI is permitted under
35、 the government approval route.Pharmaceuticals The current market size for pharmaceuticals in India is US$41 billion,and is expected to reach US$130 billion by 2030.The Indian pharmaceutical sector is the third largest in the world,with cost of production approximately 33 percent lower than in the U
36、S.According to data from the World Trade Organization(WTO),India ranked third globally in terms of volume of exports and 11th globally with respect to the value of exports in 2019.Forecasts suggest that Indian pharmaceutical exports will continue to rise and the country is ready to become a pharmace
37、utical export hub.Between 2016 and 2020,Indias pharma exports grew at a CAGR of 5.98 percent,amounting to US$16.29 billion in FY 2020.Major categories within Indias pharmaceutical sector are generic drugs,active pharmaceutical ingredients(API)/bulk drugs,over-the-counter drugs,vaccines,contract rese
38、arch and manufacturing,as well as biosimilars and biologics.The market size for biosimilars in India is approximately US$3 billion and is expected to touch US$12 billion by 2025.At present,there are approximately 104 investment opportunities in pharmaceuticals,biotech,and life sciences sub-segments,
39、worth US$199.5 million.BiotechnologyThe biotechnology sub-segment comprises biopharmaceuticals,bio-services,bio-agriculture,bio-industry,and bioinformatics.Indias biotechnology market is expected to grow at a CAGR of 30 percent to reach US$100 billion by 2025.In India,there are more than 2,500 biote
40、chnology companies operating,employing approximately one million people,with around 15,500 biotechnology graduates joining the workforce every year.Medical devices and equipmentOffering comparatively fewer barriers to entry,the Indian medical device industry is a sunrise sector,projected to reach US
41、$50 billion by 2025.As per the Global Harmonization Task Force Rules,four classes(A,B,C,and D)of medical devices are manufactured in India.The manufacturing of high-end medical devices(C and D)is led by multinational companies that have extensive service networks in India.This high-end segment has o
42、ver 90 percent dependency Consolidated Revenue of Leading Players in the Indian Hospital Industry in India in FY 2020(INR Billion)Apollo HospitalsFortisMax HealthcareNarayan HrudulayaAster DM IndiaHCG HospitalsShalby Hospitals112.4746.3243.7131.2816.3110.964.87 IndIa BrIefIng Issue 51 September 2022
43、8on imports and offers considerable opportunities for investment.On the other hand,classes A and B,which are relatively less technologically advanced,are produced largely by domestic manufacturers.Most of these Indian manufacturers are micro,small,and medium enterprises(MSMEs)with an average turnove
44、r of US$450-500 million.As a net importer of medical devices,India is particularly dependent on imports for high-tech medical products like as cancer diagnostics,medical imaging tools,ultrasonic scans,and PCR technologies.The primary challenge for the Indian medical devices industry remains the high
45、 cost of local manufacturing vis-vis competing economies,owing to lack of adequate infrastructure,insufficient domestic supply chain and logistics,high cost of finance,shortage of quality human capital,limited design capabilities,as well as gaps in research and development(R&D).With vast demand and
46、considerably strained supply,the medical devices market offers immense investment opportunities for investors.India allows 100 percent FDI for the medical devices segment through the automatic route.DiagnosticsIndias diagnostics market is projected to grow at a CAGR of 20.4 percent to reach US$32 bi
47、llion in 2022,registering a considerable increase from a valuation of US$4 billion in 2019.The share of the organized sector in the diagnostic segment is approximately 25 percent(15 percent in labs and 10 percent in radiology).Although this segment is largely fragmented at present,large investors ar
48、e building hub-and-spoke structures,thereby consolidating the industry.Additionally,the new Clinical Establishment(Central Government)Rules,2019,will also lead to standardization and better quality.Over the next few years,this segment is expected to register growth,offering significant opportunities
49、 for investors.Additionally,the novel concept of miniaturized diagnostics has been gaining traction.With technological advancements,it is now possible to diagnose many conditions at a much cheaper price with the aid of a small hand-held device or an add-on to a smartphone.The capability of such devi
50、ces is increasing exponentially,as is their potential to diagnose a large number of ailments instantly at a low cost.Medical tourismMedical tourism is fast evolving as an attractive segment of the Indian healthcare sector.In 2020,before the pandemic struck,Indias medical tourism industry was valued
51、at approximately US$9 billion and expected to grow to US$13 billion by 2022.In fact,in 2017,India ranked seventh in the top 20 wellness tourism markets globally and third in the top 10 wellness tourism markets in Asia-Pacific.The number of foreign tourist arrivals(FTAs)in India on medical visa grew
52、to an estimated 697,000 in 2019 from 184,298 in 2014.Major contributing factors include the presence of world-class hospitals and skilled medical professionals,superior quality healthcare,low treatment costs in comparison with other countries,credibility of alternative systems of medicine,as well as
53、 increased global demand for wellness services like Yoga and meditation.India has around 37 Joint Commission International(JCI)accredited hospitals as well as 513 National Accreditation Board for Hospitals&Healthcare Providers(NABH)accredited hospitals.IndIa BrIefIng Issue 51 September 20229Home hea
54、lthcareA Niti Ayog 2021 industry report identifies the Indian home healthcare market as a sunrise sector,valued at US$6.2 billion in 2020 and estimated to touch US$21.3 billion by 2027.This segment is slated to grow at 19.2 percent CAGR,driven by factors like a rising elderly population,increase in
55、the incidence of chronic diseases necessitating long-term care,enhanced demand for constant personalized care,as well as the increasing number of nuclear families in rapidly urbanizing areas.The home healthcare segment employs a unique home care model where it is possible to reduce infrastructure an
56、d operational costs by 15-30 percent vis-vis hospital expenses for similar treatment.Components of home healthcarePostoperative care is an important component of the home healthcare segment.Additionally,technology-enabled healthcare companies also offer sophisticated critical care at home,including
57、advanced facilities like respiratory services(home ventilation),palliative care,cancer support services,post trauma/accident care,etc.This segment can be categorized into the following broad subdivisions:Home healthcare services:At-home nursing services,medical consultations Home healthcare devices:
58、Health screening,monitoring,and self-diagnostic devices like pulse oximeters Home healthcare solutions:Telehealth and telemedicineTelemedicineThe market size for telemedicine in India was valued at approximately US$830 million in 2019 and is projected to increase to US$5.5 billion by 2025 at 31 perc
59、ent CAGR during the period 2020-25.Virtual careconstituting teleconsulting,telepathology,teleradiology,and e-pharmacyis experiencing a stimulus in India.Major hospital groups like Apollo,AIIMS,Narayana Hrudayalaya,etc.have adopted telemedicine services and entered a number of public private partners
60、hips(PPPs).By September 21,2021,the Health Ministrys eSanjeevani telemedicine service had crossed 12 million teleconsultations since its launch,enabling Cost of Common Medical Procedures Across Major Destinations for Medical Value Travel,2021(US$)Medical procedureIndiaThailandMexicoSingapore*Colombi
61、aSouth Korea*USAHeart bypass7,00017,188121,0017,20011,20026,000123,000Heart valve replacement11,500-8,50021,80035,00016,90020,00039,990170,000IVF treatment6,5003,750-15,6256,50014,90013,0007,90015,400Hip replacement7,,81313,50013,9008,00025,00040,364Source:Medical Tourism AssociationNote:D
62、ata for countries marked with*is for 2019.IndIa BrIefIng Issue 51 September 202210patient-to-doctor consultations and doctor-to-doctor consultations.Health insuranceHealth insurance contributes 20 percent to the non-life insurance business,making it the second largest portfolio.The primary factors d
63、riving growth in this segment include rising income levels,increasing awareness in urban areas,and growing lifestyle-related health demands.However,the penetration of health insurance in India continues to remain abysmally low,presenting huge opportunities for investors to tap into the market.India
64、now allows up to 74 percent FDI in the insurance sector,with relaxed ownership norms.In the insurance sector too,the players have been leveraging technology and strategic partnerships to deliver innovative products.For example,social messaging platform WhatsApp announced plans in December 2020 to de
65、but opportunities for health insurance and micro-pension products in India.Many foreign players like Allianz SE(Germany),Tokio Marine(Japan),Munich Health(Germany),Insurance Australia Group AIG(Australia),BUPA Finance PLC(UK),etc.have partnered with their Indian counterparts to enter the Indian insu
66、rance market.In the wake of the pandemic,many new health insurance start-ups have witnessed considerable growth.Launched in May 2021,the Mumbai-based HealthySure is an insurtech startup that targets SMEs and makes insurance and healthcare for employees affordable and accessible.The platform offers d
67、igitized policy and claim experience with curated health and wellness offerings.Bengaluru-based Kenko Health is a health insurance startup that intends to make health finance accessible.It provides OPD benefits,such as doctor consulting fees and diagnostic costs,within a predefined closed network.It
68、 also provides a subscription-based service that covers health expenses,focused on middle-income households in Tier II cities that are not covered by standard health insurance schemes.Investment trends in the Indian healthcare sectorThe healthcare sector in India recorded cumulative FDI to the value
69、 of almost US$29.28 billion between April 2000 and December 2021.Of this,the drug and pharmaceutical segment witnessed the highest investment value of more than US$19 billion.Inflows in industries,such as hospitals and diagnostic centers and medical and surgical appliances,stood at US$7.73 billion a
70、nd US$2.35 billion,respectively.Cumulative Incoming FDI in the Indian Healthcare Market from April 2000 to December 2021,by Sector(US$Billion)Total healthcare marketDrug and pharmaceuticalsHospital and diagnostic centersMedical and surgical appliances2.357.7319.1929.28WE HELP COMPANIES NAVIGATE THE
71、HEALTHCARE INDUSTRY IN ASIADezan Shira&Associates has helped healthcare investors across China,ASEAN,and India.From pre-investment studies and strategy development to incorporation and post-establishment compliances,the firm has tailored its services to help foreign companies enter this emerging ind
72、ustry in Asia.EXPLORE MORE IndIa BrIefIng Issue 51 September 202211How Hi-Tech Innovation is Advancing the Scope of Indian Healthcare Inadequate infrastructure and limited access to quality care has plagued the traditional Indian healthcare system for a long time.Yet,the outbreak of the Covid-19 pan
73、demic unleashed digital disruptions that jumpstarted the availability of a wide range of patient-centric and efficient solutions.Underlying these consumer trends is the success of various healthtech start-ups like Cult.fit,HealthifyMe,Pharmeasy,Innovaccer,Pristyn Care,etc.Chapter 2The Covid-19 outbr
74、eak in 2020 triggered a prolonged period of economic disruption and necessitated several sectors to shift towards digitization to stay operational and competitive.Among those impacted,the healthcare sector faced huge challenges managing caseloads and providing normal healthcare services.As pandemic-
75、induced lockdowns across India caused mobility restrictions,the public and service providers turned to online platforms for patient-doctor consultations,diagnostics,and fitness and wellness solutions.The aftermath reminded India of the need to be self-reliant in the healthcare sector.The pandemic ex
76、posed shortcomings in the countrys healthcare infrastructure and the danger of import dependencies for critical items like bulk drugs(active pharmaceutical ingredients)and medical equipment,especially as major export markets like China closed off their supply chains due to a zero-Covid policy.Since
77、then,the government and industry players have responded through policy implementation and investments to improve and expand existing business models,respectively.The federal government launched a slew of measures,including the Telemedicine Guidelines 2020,Production-Linked Incentive(PLI)schemes for
78、medical devices,and various sub-schemes for the promotion of pharmaceutical segments.Meanwhile,Naina BhardwajAuthorKey Growth Drivers in the Indian Healthcare SectorIncreased life expectancyRising number of diabeticsHigh cost of non-communicable diseasesRising incomeSenior citizen(%age share in Indi
79、as population)2025202520252032|Addition to the middle class 204170 years90 million$4.6 trillion70+million16%IndIa BrIefIng Issue 51 September 202212private players have begun offering innovative patient-centric products.In India,the traditional healthcare journey across pharmacies,doctors(for consul
80、tation),and diagnostics centers has witnessed a paradigm change.Factors like automation,digitization,and tech-enablement have revolutionized the way one perceives healthcare and expects services.New healthcare technology(healthtech)businesses like Practo,Healthkart,1mg,DoctorInsta,Lybrate,etc.are fo
81、cusing on closing key supply-demand gaps in the healthcare sector,such as by promoting services for early detection of disease,minimizing mental stress,detecting and preventing hereditary abnormalities,and enhancing consumer lifestyle.While the traditional healthcare system has been fraught with con
82、straints,such as lack of equitable accessibility and affordability of quality care,the emerging digitized healthcare system has begun offering convenient,accessible,and low-cost services.These healthtech businesses employ cutting-edge technologies to ensure quick access to up-to-date medical informa
83、tion,genetic condition histories,and lifestyle choices to facilitate effective and fast treatment.Overview of Indias healthtech landscapeThe Indian healthtech industry,led by players like Pharmeasy,Reliance-backed Netmeds,Tata group-backed 1mg,Medlife,mfine,and MeddiBuddy,etc.,is propelled by variou
84、s trends.These include:Significant expansion of the digital infrastructure Emergence of paratelemedicine solutions Use of AI-integrated softwareDisruptive Technologies in HealthcareLess invasive diagnostics and smaller implantsRemote monitoring solutions and ancillary servicesPatient facing mobile a
85、ppsSurgical robotic toolsConnected devices for home use3D printing and AI integrationDigital platform integrationIndian Healthtech EcosystemHealthtechDigital healthHealthcare ITNGS|Robotics|Nanotech|Wearables/Biosensors|3D printing|IOTAI|Big data|Smart devices Machine learning|Blockchain|AppsSoftwar
86、e|Electronic records|Data security IndIa BrIefIng Issue 51 September 202213 Wider insurance coverage for remote health services Access to one-stop healthcare solutions Rise in consumer awareness regarding health The healthtech market will be further boosted in upcoming years with the continuing rise
87、 in consumer tech awareness,diversified eHealth models,advancements in technology,a growing number of eHealth start-ups,and support from the government.According to data by INC42,the Indian healthtech market,which stood at US$500 million in 2010,reached its tipping point during the Covid-19 outbreak
88、,with an estimated market size of US$10.6 billion in 2022.The segment is expected to grow exponentially to reach a market size of US$21.3 billion by 2025,acquiring a 3.2 percent share in the global healthtech market.A report by Red Seer estimates that the gross merchandise value(GMV)of the Indian e-
89、health industry will reach US$9-12 billion by 2025 and US$40 billion GMV by 2040.Indias Healthtech LandscapeSegmentsStart-upsE-pharmacy1mg,Netmeds,Pharmeasy,Medlife,Lifecare,Myra,Digi-prex,Care on go,GenericoTelemedicinePracto,Doc Prime,Mera Doctor,Lybrate,Qikwell,mFine,DocsApp,Call Health,CrediHeal
90、th,iCliniq,Yolo Health,Helathbuds,SMINQ,Heal Well 24Online fitness and wellnessCurefit,Healthkart,Healthifyme,Fitcircle,Mobiefit,Sarva,Cure Joy,Cult,Fitso,Be You,Grow Fit,Gym Pik,Healtheminds,FitternityE-Health Value Proposition ModelE-pharmacy Access to higher variety Attractive subscription based
91、models,discounts Door step delivery with option to reschedule Pre-booked appointments Access to larger pool of specialists Consumer reviews on the app Higher accessiblity No requirement of physical presence Professional fitness personnelTelemedicineOnline fitness and wellness IndIa BrIefIng Issue 51
92、 September 202214Sign upDoctorVideo/TextSeek consultationProvidesconsultationList specializationSet consultation feeAccept bookingMake paymentBook an appointmentPatientSign upManages platformTelehealth platformEarns commissionEarning(total payments-commission)Search a healthcare providerBusiness Mod
93、els Adopted by Different Healthtech Segments Telemedicine Business ModelE-Pharmacy:Omni Channel ModelClient places orderSelf-owned logistic team with changes ranging fromINR 0-50Inventory managedthrough procuring drugsfrom retail storesThe orders are directed by e-pharmacy on the basis of nearby loc
94、ation from the place the customer has placed the orderPlaces an order with average order size ranging from INR 700-1000Store receivesorderMargin earned:5%-10%CustomerMarketplaceShippingE-pharmacyoffline storeMakethe payment tomarket placeCompanies following this model Source:FatBit TechnologiesSourc
95、e:INC42 Plus Analysis IndIa BrIefIng Issue 51 September 202215E-Pharmacy:Marketplace ModelClient places orderRetailers are selected on the basis of geography,infrastructure,ability to fulfill large order and strict compliancesVendor receivesorderMake the payment tovendorCustomerMarketplaceShippingIn
96、dependentpharmacyretailerMakethe payment tomarket placeCompanies following this model Online Fitness and Wellness Business ModelAdminReject booking requestApprove booking requestOnline Fitness Membership BusinessAdmin earnings-membership-class paymentAttend classMake membership paymentList classes o
97、n-siteSearch classesRegister on-siteSelect classesSend booking requestFitness classesSource:INC42 Plus AnalysisSource:INC42 Plus Analysis IndIa BrIefIng Issue 51 September 202216Recommendations for the Indian Healthcare SectorFunding landscape in the Indian healthcare marketThe healthtech industry i
98、n India secured private equity and venture capital investments worth nearly US$1740 million in 2021,marking a significant leap from US$1.4 million in 2014.Pharmeasy,the online pharmacy and medical store,witnessed the highest influx of investment of about US$650 million in 2021.It must be noted that
99、most of these deals were concentrated in metropolitan cities.37.9 percent of the total deals took place in Bengaluru(Karnataka),followed by 23.6 percent in Delhi-NCR,and 21.3 percent in Mumbai(Maharashtra).Other cities which have emerged in the healthtech map of India are Pune(Maharashtra),Chennai(T
100、amil Nadu),and Hyderabad(Telangana).Another notable trend in the Indian healthtech funding landscape is the attractiveness of business-to-business business-to-consumer(B2B-B2C)models among investors.While B2B-B2C business healthtech start-ups raised US$756 million during 2014-2020,B2B remained the l
101、east funded segment in India.In 2020,B2C based healthtech start-ups received a funding of US$194.8 million while B2B start-ups received merely US$6.8 million.One of the leading investors in the Indian healthtech sector is Accel Partners,having participated in over 12 deals with investment in start-u
102、ps like Cure.fit(now Cult.fit),PlusPin,Dailyrounds,Cure Joy,etc.Other notable investors include Sequoia,Matrix,Nexus,Pi Ventures,IDG Ventures India,etc.Breakdown of Deals in the Indian Healthtech Sector,by Segment(2014-2021*,in%)Segment-Wise Funding of Healthtech Businesses in India(2014-2021*,in%)F
103、itness and wellnessFitness and wellnessHome healthcare*Data as of May,2021|Source:INC42*Data as of May,2021|Source:INC42Home healthcareE-pharmacyE-pharmacyTelemedicineTelemedicineOthersGenomicsOthersPersonal health managementPersonal health managementMedtechMedtechMarketplaceMarketplaceHealthcare IT
104、 and analyticsHealthcare IT and analyticsNationalhealth appBuilding healthcareworkforceEncourage Indian start-upsEase norms for public procurementDigital primarycareSandboxapproach13.5%3.9%17.2%22.0%13.1%14.9%4.1%8.3%2.0%7.9%13.3%26.0%0.6%0.7%4.6%15.6%4.0%20.2%7.1%IndIa BrIefIng Issue 51 September 2
105、02217Tax Incentives and Policy Support for the Healthcare Sector Since healthcare is a public good,the Indian government is keen to attract foreign investment and know-how to improve the scope of medical facilities across the country,remove inequalities in accessibility to quality care and emergency
106、 services,and reduce import dependencies in critical areas like active pharmaceutical ingredients(APIs)and medical devices.The governments digital health mission intends to deliver on targeted reforms,monitor for early disease detection,and reduce scope for unauthorized doctors treating patients,and
107、 is among flagship programs for the healthcare sector.Further,as the focus on health and wellness gains prominence worldwide,it has generated interest in alternative systems of medicine and thus potential for investment and research.The government is keen to capitalize on this trend and has put in p
108、lace a facilitative policy framework under the Ministry of AYUSH.Melissa CyrillAuthorIndias healthcare sector is maturing in its scope of services and affordability when compared to other high performing markets.This has contributed to the growth of the medical value travel market as well,which is p
109、oised to reach US$13 billion by 2026.Nevertheless,significant gaps persist in the demand and supply of quality care and accessibility to hospital and primary health facilities.Following the COVID-19 pandemic,the government has doubled down on policies to improve the state of healthcare infrastructur
110、e,overall investment viability of the health sector,R&D institutions,and domestic manufacturing ecosystem.Chapter 3We look at the policies promoting the growth and development of the healthcare sector in India in this chapter.Relevant tax policies Tax holiday The government has provided a tax holida
111、y for private healthcare providers operating 50-bedded(or more)hospitals in non-metropolitan areas,under section 80-IB of the Income-tax Act,1961.The deduction under this section is available to an assessee whose gross total income includes any profits and gains derived from the business of,among ot
112、her undertakings,operating and maintaining a hospital located anywhere in India other than the excluded area.Section 80-IB benefits have been extended to new hospitals with 100 beds or more,which are established in rural areas;these hospitals will benefit from 100 percent deduction on profits for fi
113、ve years.IndIa BrIefIng Issue 51 September 202218 A 250 percent deduction is available for approved expenditure on operating technology that facilitates telemedicine services and remote radiology.Domestically manufactured medical technology products have a 15-year income tax exemption.Goods and serv
114、ices tax(GST)regime Healthcare education(professional)and training services are exempt from GST in India.Other GST exemptions for the healthcare sector cover healthcare services by a clinical establishment,or an authorized medical practitioner,or paramedics;services provided by veterinary doctors;bl
115、ood banks;ambulance services;medical tests;and biomedical waste.However,as of July 18,2022,GST at the rate of five percent will be levied on non-ICU hospital rooms charging rent above INR 5,000 per day.Foreign direct investment(FDI)regimeIndia permits up to 100 percent FDI under the automatic route
116、in the hospitals segment and medical device manufacturing,which means foreign investors do not require approvals from the Government of India for investment in these areas.In the pharmaceuticals industry,FDI is allowed under the automatic route for up to 100 percent in greenfield projects and 74 per
117、cent in brownfield projects.In the AYUSH sector,100 percent FDI is permitted under the automatic route for the wellness and medical tourism segment.AYUSH refers to the Ayurveda,Yoga and Naturopathy,Unani,Siddha,and Homeopathy systems of alternative medicine.National policies impacting the healthcare
118、 sectorNational Health Policy,2017The National Health Policy emphasizes greater investment in preventative and primary healthcare,access to and financial protection at the secondary and tertiary care levels,as well as the provision of free drugs,diagnostics,and emergency care services at all public
119、hospitals.Further,the Policy envisages private sector collaboration,including the use of FDI Limits Permitted in Healthcare Segments in IndiaSectorAutomatic route(percent allowed)Government approval route(percent allowed)Construction of hospitals100%Healthcare(Greenfield)100%Healthcare(Brownfield)Up
120、 to 74%Above 74%Medical devices100%Biotechnology(Brownfield)Up to 74%Above 74%Biotechnology(Greenfield)100%Pharmaceuticals(Brownfield)Up to 74%Above 74%Pharmaceuticals(Greenfield)100%Insurance-Intermediaries100%IndIa BrIefIng Issue 51 September 202219financial and non-financial incentives to encoura
121、ge participation.Importantly,the Policy aims to increase government spending on healthcare to 2.5 percent of the GDP by 2025.In Union Budget 2022-23,the government has allocated INR 862.01 billion for the health ministry.Capital expenditure planned under the Department of Health and Family Welfare h
122、as increased multi-fold from INR 25.08 billion in FY 2020-21 to INR 56.32 billion for FY 2022-23.As per findings from the Economic Survey 2021-22,the pandemic pushed Indias health expenditure to 2.1 percent of the GDP for the first time.Ayushman BharatIt is imperative that adequate investments be ma
123、de to strengthen Indias primary healthcare delivery systems to boost the countrys preparedness,such as during public health emergencies.Under Ayushman Bharat,the government intends to set up a network of health and wellness centers(HWCs)at the primary care level to promote good health and detect dis
124、eases early.The Pradhan Mantri Jan Arogya Yojana(PM-JAY)is another pillar of Ayushman Bharat a non-contributory government sponsored health insurance scheme that enables access to inpatient healthcare for poor and vulnerable families in secondary and tertiary facilities.500 million beneficiaries com
125、e under this scheme with annual hospitalization coverage up to INR 500,000 per family.Drugs and diagnostics are also provided free of cost to eligible beneficiaries at HWCs under the PM-JAY scheme.Human resource developmentThe National Medical Commission Act 2019 has replaced the Medical Council of
126、India and includes a provision for a Medical Assessment and Rating Board(MARB)that will rate institutions on the quality of education and training imparted.The government seeks to implement similar reforms in nursing,dentistry,and allied health fields.Ayushman Bharat Digital Mission(ABDM)Launched in
127、 September 2021,it seeks to set up a national digital health ecosystem.The mission hopes to establish registries at appropriate levels to provide accurate and consolidated data on clinical establishments,healthcare professionals,health workers,drugs,and pharmacies.Moreover,digital prescriptions can
128、prevent unauthorized medical professionals from prescribing medication to patients.The ABDM also intends to create a unique health ID for every individual,which would enable the tracking of patient case history,including diagnostic tests and reports,etc.Cumulatively,the ABDM initiatives can ensure t
129、hat qualified professionals get uniform,transparent,and systematized access to information,which in turn will improve the delivery of patient care,both in physical healthcare establishments and remotely via telemedicine platforms.As of July 28,2022,50 digital health services and applications have in
130、tegrated with the ABDM.The ABDM has also expanded its partners ecosystem to 20 government and 32 private digital health applications.ABDM integration is achieved through the ABDM Sandbox(a digital space for experimentation created for testing integration processes before the digital health product i
131、s made live for the actual use).Any digital health service provider/developer can register on the ABDM Sandbox by following a pre-defined process of integrating and validating their software systems with ABDM APIs.Currently,919 public and private sector integrators have enrolled under the ABDM Sandb
132、ox to integrate and validate their software solutions under the scheme.IndIa BrIefIng Issue 51 September 202220Sector-wise enabling policies1.Hospitals and infrastructureScheme for Financial Support to PPPs in Infrastructure:Introduced in 2006,the scheme supports economically justified but commercia
133、lly unviable infrastructure projects,to supplement resources for bridging unmet infrastructure needs,and to encourage public-private-partnerships(PPP)in infrastructure projects.Under this scheme,64 projects have been approved with a total project cost of INR 342.28 billion and viability gap funding(
134、VGF)of INR 56.39 billion.A sum of INR 21 billion has been allocated for VGF in social infrastructure projects till 2024-25,split into two sub-schemes,as per the Niti Aayog.The first sub-scheme is for a broad range of social sectors,such as wastewater treatment,water supply,solid waste management,hea
135、lth,and education.Eligible projects are those with financing challenges and insufficient revenue streams to recover capital costs.The Central Government can provide a maximum of 30 percent of capital cost as VGF with the State Government/Sponsoring Central Ministry/Statutory Entity providing an equi
136、valent additional amount(up to 30 percent of the capital cost).The second sub-scheme is for pilot projects in the health and education sectors that suffer from insufficient revenue streams to recover operational costs fully,in addition to capital costs.The Central Government will provide a maximum o
137、f 40 percent of the capital cost of such projects.In addition,it could provide a maximum of 25 percent of the operational costs of the project during the first five years of commercial operations.The State Government can also provide an equivalent amount at a maximum of 40 percent of capital cost an
138、d 25 percent of operational costs for the first five years.2.Health insuranceFDI relaxation:The Insurance(Amendment)Act of 2021 increased the FDI cap for the insurance sector from 49 percent to 74 percent.For intermediary services like insurance brokers,re-insurance brokers,insurance consultants,cor
139、porate agents,third party administrators,surveyors,and loss assessors 100 percent FDI under the automatic route has been permitted since 2020.Relaxation of approval norms for some products:The Insurance Regulatory and Development Authority of India(IRDAI)has extended the Use and File procedure for a
140、ll health insurance products.This means that insurers can sell innovative and customized products after filing with the regulator and taking advantage of changes in market dynamics,instead of waiting for approvals.However,it will necessitate a robust product development,pricing,and policyholder prot
141、ections regime by the insurance company board.The Project Management Committee(PMC)of the insurance provider must ensure compliance to the policy of the board while giving approval to new products or signing off on the modification of existing products.Insurance companies must file the proposed name
142、 of the product,date of approval by PMC,and obtain the Unique Identification Number(UIN).Thereafter,they must file the product along with documents specified in the Consolidated Guidelines on Product Filing in Health Insurance Business,which were published July 22,2020 with the IRDAI within seven da
143、ys of launching that product.3.Pharmaceuticals and biotechnologyReforms:These include constituting a committee to facilitate inter-ministerial coordination,integration of portals of different departments into a single online IndIa BrIefIng Issue 51 September 202221platform for tracking the applicati
144、on status,and the delegation of reviewing powers to institutional committees.New Drugs and Clinical Trials Rules,2019:Approvals will be granted(or provisionally granted)within highly competitive timelines.New drugs approved for use in specified developed markets will be automatically permitted in In
145、dia if the global drug trials had included Indian patients.The Rules contain safeguard mechanisms to ensure adherence to due protocols and accountability by clinical trial sponsors and investigators.The government also seeks to promote India as a clinical trial hub and set up animal-testing and bioc
146、ompatibility testing laboratories.Production-linked incentive(PLI)schemes:Multiple schemes to boost manufacturing for domestic use and exports have been launched under the PLI umbrella.Initiatives for biotechnology segment:For strengthening Indias biotechnology capabilities,the government has set up
147、 the Biotechnology Industry Research Assistance Council(BIRAC),Bio-NEST,and BioTech Science Clusters.BIRAC is established as a not-for-profit section 8,Schedule B,public sector enterprise,by the Department of Biotechnology(DBT)as an interface agency to strengthen and empower emerging biotech enterpr
148、ises to undertake strategic research and innovation and address nationally relevant product development needs.The development of Indias first indigenously developed DNA vaccine candidate against COVID-19,ZyCoV-D,was supported by the National Biopharma Mission under the aegis of BIRAC and the DBT.Bio
149、-NEST provides incubation space to start-ups and entrepreneurs and connects industry with academia.Four bio-clusters have been set up at Faridabad,Bangalore,Kalyani,and Pune to catalyze R&D and entrepreneurship.Support for indigenous vaccine development and testing:Ind-CEPI mission aims to achieve e
150、pidemic preparedness through rapid vaccine development through a dedicated Program Management Unit(PMU)at the Biotechnology Industry Research Assistance Council(BIRAC).The Ind-CEPI Mission was approved on March 27,2019 with a total cost INR 3.129 billion under the supervision of the Department of Bi
151、otechnology,Ministry of Science and Technology.COVID Suraksha Mission with a financial outlay of INR 9 billion.4.Medical devices,equipment,and diagnosticsMedical Devices Rules(MDR),2017:Coming into force January 2018,the MDR,2017 expanded Indias previous regulatory coverage of only 15 categories of
152、devices and aligned with international best practices.Under MDR 2017,devices are classified and regulated as per their risk profile.To ensure compliance with the highest quality standards and establish credentials of manufacturers,the Rules implement a registration regime that is to be followed up b
153、y an application for license with the Central Drugs Standard Control Organization(CDSCO.The process of applying for a manufacturing license is streamlined through an online electronic platform.Regulators intend for the medical device manufacturing ecosystem in India to be quality driven,performance-
154、oriented,safe,and transparent.The government amended the definition of medical devices in 2020 and inserted Chapter III A in the MDR,2017 through the Medical Devices(Amendment)Rules,2020 which came into effect in April that year.IndIa BrIefIng Issue 51 September 202222PLI Scheme for Promotion of Dom
155、estic Manufacturing of Pharmaceutical ProductsProductsCategory 1Category 2Category 3 Biopharmaceuticals Complex generic drugs Patented drugs or drugs nearing patent expiry Cell-based or gene therapy products Orphan drugs Special empty capsules Complex excipients APIs/KSMs and/DIs Repurposed drugs Au
156、to-immune drugs,anti-cancer drugs,antidiabetic drugs,anti-infective drugs,cardiovascular drugs,psychotropic drugs,and anti-retroviral drugs In-vitro Diagnostic Devices(IVDs)Phytopharmaceuticals Other drugs not manufactured in India Other drugs as approvedPLI Schemes for Different Segments in Indian
157、Healthcare Sector SegmentIncentiveTotal financial outlayTenureDomestic manufacturing of critical key starting materials(KSMs),drug intermediaries(DIs),and APIs Fermentation based drugs:20%of incremental sales value Chemical synthesis-based drugs:10%of incremental sales valueINR 69.40 billionFY 2021-
158、FY 2030Bulk drug parksINR 10 billion per bulk drug parkINR 30 billionFY 2021 FY 2025Domestic manufacturing of medical devices5%of incremental sales over base year FY 2020INR 34.20 billionFY 2021 FY 2028Medical services parksINR 1 billion per parkINR 4 billionFY 2021 FY 2025Finally,as per industry an
159、alysts,the Rules make ISO 13485(quality management system)a pre-condition for registration,thereby ensuring Indian medical device makers are globally competitive.National Essential Diagnostics List(NEDL):This has been implemented to improve the availability of quality diagnostics across health facil
160、ities in India.The NEDL also aims to bridge the existing regulatory systems gaps which may miss coverage of certain medical devices and in-vitro diagnostic devices(IVD).The essential diagnostics list(EDL)published by the World Health Organisation(WHO)is a reference point for the NEDL.Manufacturing e
161、cosystem cluster development:Medical device parks are being developed around five device manufacturing clusters in India.These parks will provide all the essential infrastructure,allowing companies to plug and play.In 2019,Andhra Pradesh,Telangana,Tamil Nadu,and Kerala were given the green light to
162、establish new medical devices parks.The Andhra Pradesh MedTech Zone(AMTZ)has nurtured institutions IndIa BrIefIng Issue 51 September 202223like the Kalam Institute of Health Technology,Indian Biomedical Skill Consortium,Medivalley,and Biovally Incubation Council,which provide support for policy init
163、iatives as well as consultancy on healthcare projects in the country,as per the Niti Aayog.PLI Scheme:A PLI scheme for manufacturing of medical devices in four identified categories has been announced as well as a scheme for the promotion of medical devices parks.5.Medical value travel(MVT)Accredita
164、tion regime:India has about 40 Joint Commission International(JCI)-accredited hospitals and 1400+National Accreditation Board for Hospitals&Healthcare Providers(NABH)-accredited hospitals.Clinical outcomes in Indias leading hospitals are at par with internationally recognized facilities.India also h
165、as a large pool of highly qualified doctors and paramedics who have fluency in English.e-Visa:The government has introduced a medical visa and medical attendant visa regime with e-visas offered to 150+countries within 24-48 hours.Ayurveda treatment has also been included in the medical visa category
166、.The medical visa and medical attendant visa allow multiple entries and long-term stay.FDI:100 percent FDI is permitted in the wellness and medical tourism segment under AYUSH.Regulating alternative medicine:The Ministry of AYUSH has directed state governments to implement the guidelines for accredi
167、tation of Ayurveda and Panchkarma Centers,so they can fulfil their potential for AYUSH-related therapies for chronic diseases.Policy Lessons for India from Asian Healthcare MajorsThere are many valuable lessons for India from other Asian countries that have successfully established themselves as an
168、investment hub in the healthcare sector:Unified regulatory framework to remove multiplicity and promote cluster-based developments:China restructured its food and drug regulatory body to form a single agency to streamline the governing regime and reduce the drug approval time.Support in healthcare i
169、nsurance and streamlining medical device regulations:Singapores facilitative policies and model of co-payment,in which people share the expense of their care along with government subsidies,have aided in reducing out-of-pocket expenditure.High tax incentives:Malaysia is providing high tax incentives
170、 to promote investments in the healthcare sector including customized incentives for large ticket investments,10-year tax holiday,access to ASEAN markets through free-trade agreements,duty exemptions,etc.MARKET SELECTION AND ENTRY STRATEGY ADVISORYForeign companies keen to invest in Indias healthcar
171、e ecosystem should note the facilitative regulatory environment,aided with aggressive policy push by the government.Dezan Shiras Business Intelligence solutions provide investors with the tools to clarify their options and the means to capitalize on opportunities across India.EXPLORE MOREScan this Q
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