India’s hospital sector saw a remarkable influx of US$ 1.5 billion (Rs. 12,708 crore) in foreign direct investment (FDI) during FY23, representing half of the total healthcare FDI. This is a considerable jump from 24% in FY21 and 43% in FY20, illustrating the increasing role of hospitals in attracting foreign capital. Historically, the pharmaceuticals sector had been the primary focus for investors, but the focus is now shifting toward hospitals and diagnostic services, especially after the impact of COVID-19. Major hospital chains such as Manipal and Max have experienced significant buyouts, while Aster DM Healthcare recently merged with Quality Care India. According to Sujay Shetty, Global Health Industries Advisory Leader at PwC India, factors like the vast Indian market, underserved rural areas, the high disease burden, and the rise of both public and private insurance will continue to fuel sector growth.
The sector’s development is further exemplified by Temasek’s US$ 2 billion (Rs. 16,944 crore) investment in Manipal Hospitals, acquiring a 41% stake in the chain, which is valued at US$ 4.8 billion (Rs. 40,666 crore). In addition, there has been a rise in primary market activity, including six hospital IPOs, which have drawn private equity interest. Max Healthcare’s CMD, Abhay Soi, emphasized that investing in quality healthcare is essential for India’s ambitious target of achieving a US$ 5 trillion economy. As a capital-intensive sector that doesn’t typically provide large dividends, the hospital industry reinvests its profits into expanding infrastructure. For example, Max Healthcare intends to invest US$ 590.2 million (Rs. 5,000 crore) to expand its capacity by twofold over the next three years. Analysts forecast that ten publicly-listed Indian hospital companies will increase their bed capacity by 47% between FY24 and FY27. Meanwhile, seven emerging hospital chains raised US$ 424.9 million (Rs. 3,600 crore) via IPOs and placements, further supporting sector growth.
