The report titled ‘Healthcare Innovation in India’ says the growth will be driven by rising consumerization of health, reconfigurations to the global healthcare value chain, a deepening of Indian scientific and technological expertise, and regulatory tailwinds, the report title.
The report outlines the opportunity in healthcare innovation where companies increasingly leverage emerging technologies to add innovation vectors—including new business models, software-led solutions, and products—that extend beyond more longstanding value engineering considerations.
The overall Indian healthcare market, valued at about $180 billion in FY 2023, is projected to grow at approximately 10–12% compounded annual growth rate (CAGR) to reach $320 billion by FY 2028. Healthcare innovation is a rapidly growing segment currently valued at $30 billion and accounts for 15% of the overall market. It has almost doubled over the last three years, with 55% of the market size led by exports.
This segment is dominated by pharma services such as contract development and manufacturing organisation (CDMO), clinical research organisation (CRO), pharma IT; and healthtech with vaccines and biotech, and medtech emerging as green shoots.
“From cutting-edge pharma services to disruptive healthtech and medtech advancements, India’s healthcare innovation landscape is experiencing a remarkable transformation. With its focus on innovation, quality, and cost-effectiveness, India’s healthcare innovation market is addressing domestic needs and making its mark on the global stage,” said said Aarthi Rao, Partner at Bain & Company.”This $30 billion sector is fuelled by rising investments, supportive government policies, a deepening scientific talent pool and is brimming with potential in nascent fields such as Biotech and MedTech,” Rao added.As per the report, the Indian pharma services account for approximately 50% of the healthcare innovation market, valued at $16 billion in FY 2023, with 85%–90% of revenue driven by exports.
The CDMO segment saw the highest growth, driven by global supply chains shifting away from China and improvement in capacity, capability, and quality by Indian players. Pharma IT also showed robust growth, led by growing global price pressures and demand for omnichannel transformation.
The report highlights international pharma companies are setting up technology ‘innovation hubs’ and global capability centers (GCCs) driven by India’s growing technological expertise. Pharma services is expected to reach $30 billion by FY2028.
“The shift of focus away from China, coupled with the growing expertise of Indian players, will make India an attractive destination for outsourcing over the next few years,” it says.
India’s healthtech market, the next prominent segment within healthcare innovations, witnessed strong growth, as it more than doubled from $3 billion in 2020 to $7 billion in FY2023.
The report says the growth is also fueled by both the Covid-19 pandemic and efficiency needs in healthcare, has seen healthtech claim roughly 25% of the overall healthcare innovation space. “Consumers are increasingly seeking “phygital” experiences with seamless integration across channels. Healthtech players have also started expanding into global markets to increase their addressable patient pool, especially for services with a limited willingness to pay in India. The segment also witnessed consolidation over the last few years as large incumbents and digital natives acquired players in a bid to hasten their foray into digital health,” the report adds.
“Indian healthcare innovation has created a market valued at $30 billion and growing at 15% per annum. Indian healthtech entrepreneurs have served more than 400 million patients by providing access to high quality affordable care thereby creating a $7 billion market in India,” said Charles-Antoine Jannsen, managing partner, HealthQuad.
“This healthcare revolution is at its beginnings. As India’s health tech companies focus increasingly on profitability and grow revenues at 25% CAGR in the next 3 years, investors in the space will keep on generating outstanding returns”, he added.
India’s vaccines and biotech sector, valued at $4 billion in FY23 contributes 15% to the healthcare innovation market having proliferated in the past three years. India remains a global powerhouse, supplying 60% of global vaccine demand. Supply of Covid-19 vaccines bolstered its position.
Additionally, innovative funding models and the entry of new investor classes in biotech are promising advancements for future biotech and vaccine development.MedTech is evolving from an import-reliant industry to one capable of producing innovative,new-to-the-world products.
This $11 billion market, currently dominated by imports (75-80%), witnessed Indian players contribute roughly $2.5 billion in FY23, showcasing significant growth. Once focused primarily on value engineering and replicating existing technologies, domestic players are now driving innovation, developing groundbreaking “new-to-the-world” products such as portable diagnostic tools and biodegradable stents.
Tightening regulations and price caps also push players to innovate and produce high-quality products at competitive prices.
The report says investments in healthcare innovation typically ranges from $1.5 billion to $2 billion annually.
“Healthtech consistently attracted interest, netting more than 55% of overall deal volume across the last four to five years,” the report says.
