Indian Healthcare To Double Size To Us$100 Bln By 2015: Fitch

The Indian healthcare sector will double its size to US$100 billion by 2015 from the present US$50 billion, according to ratings agency Fitch.

Giving a stable outlook for the sector, it said: "Fitch expects a continuous double digit growth in the sector leading to a doubling in size of the current US$50 billion industry by 2015."

Fitch cited a growing economy, lifestyle related health issues, improving healthcare insurance penetration, government initiatives and increasing disposable income as the main reasons for a robust future of the sector.

It, however, cautioned that profitability margins will remain stressed for many players, given the time taken to stabilise operations and to attain economies of scale.

"The agency notes that revenue growth in 2011 will be aided by capacity expansion undertaken recently. However, the credit profiles of many players focusing on debt-led bed increases or acquisitions will remain stressed during 2011," it said.

With Indian healthcare infrastructure still at its nascent stage, the sector will continue to seek investment both from the debt market as well as from equity (particularly private equity), it said.

"Private equity funding is expected to play a crucial role in the expansion of the healthcare industry in 2011," it said, adding the hospital sector, especially the super- specialty services, will continue to be the main area of interest to private equity investors.

It further said Tier II and III cities will continue to attract investors on account of the under-penetration of healthcare services in these areas.

However, lower income levels and limited insurance penetration leading to lower margins in these cities will steer investors towards innovative business models of operation such as the hub-and-spoke model, it said.