Business Standard

Health care innovation market to touch $60 bn by FY28

- SOHINI DAS Mumbai, 6 March

Health care 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 ‘Health care Innovation in India’ said that health care innovation accounts for about 15 per cent ($30 billion) of the overall health care 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 health care 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.

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 lowcost 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 lowcost 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).

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