The healthcare space has grown by leaps and bounds in recent times, as expectations of strong demand in the coming decade have attracted investors as well as investments into the sector.
All participants of the humongous healthcare ecosystem, which comprises hospitals, diagnostics as well as pharmaceutical companies, are expected to witness a strong demand upheaval in the years to come.
A teaser of the growing interest in the sector also translated into strong gains across different players within the entire healthcare universe. Pharmaceutical companies focused on the domestic market - Torrent Pharma, Alkem Laboratories, Zydus Life, GSK Pharma, Abbott India, Glenmark Pharma and Laurus Labs - have surged 4-38 percent in the past three months. Hospital companies like Apollo Hospitals, Fortis Healthcare, Global Health, Narayana Hrudayalaya, Krishna Institute of Medical Sciences and Max Healthcare also rose 22-43 percent in the same period.
Diagnostic players such as Dr Lal PathLabs, Vijaya Diagnostics, Metropolis Health and Krsnaa Diagnostics also gained 12-25 percent in the past three months.
While talk of growing demand prospects for the sector has time and again surfaced on the news headlines, it must be understood what factors are triggering those strong projections. To search for an answer, let us dive a little deeper to understand the changing dynamics within the healthcare space.
Strong tailwinds are triggering hopes of a strong demand trajectory for the sector at large. Firstly, analysts have often pointed towards a change in consumer sentiment, especially post COVID, which is defined by an increased focus on health. "The demand for acute therapies for spring flu, air pollution and post COVID side-effects has significantly risen, a trend which was not expected to continue post the pandemic, but now reflects a rise in health awareness," an analyst covering the pharmaceutical sector says.
Coupled with that is an increase in disposable income expected in coming years on the back of India's economic growth. The two factors, when mixed together make the perfect recipe that ensures that resilient demand not only sustains but also grows in coming years.
Another tailwind that sits at the heart of the growing demand is the fact that in the coming decade, India's young population would move to their late 30s and early 40s.
"In the coming decade, much of the younger population will turn to their 40s which will increase volumes, especially for therapies that cater to the wellness category," says Aditya Khemka, Fund Manager at Incred Equities.
Sailesh Raj Bhan, Fund Manager at Nippon India Mutual Fund highlights that there will also be a rise in the population of those above 50 years of age in the coming decade. "We need to look at the India story. India has 30 crore people above 50 years of age currently. In 10 years’ time, this will go up to 45 crore. This population suffers from chronic diseases like diabetes, for which you need medication for 15-20 years. This will eventually lead to greater demand," Bhan adds.
Khemka also sheds light on the initiatives taken by the government and industry participants to fuel the changing consumer sentiment. "Now people are more willing to go for routine check-ups, the government is also giving incentives while industry participants are also running camps and advertising heavily to create awareness around healthcare," he adds.
In addition, the capital expenditure being made across the healthcare sector as companies expand to tier II and tier III cities is also reaching healthcare services to more people.
The changing consumer sentiment, easier access to healthcare, increasing disposable income and an ageing population are the four pillars that are likely to keep demand for healthcare and related services buoyant in the coming decade.
Moreover, the upward demand curve will also benefit all the players in the healthcare system including drugmakers, hospitals, insurance, and diagnostics companies, if one were to look at it from a long-term perspective.
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