The global healthcare sector is growing rapidly even in the wake of worldwide economic downturn. Surprisingly, the sector is growing faster than the GDP. According to WHO, the worldwide healthcare expenditures rose from $2.6 to $5.1 billion between 1995 and 2005. Even during the 2009 economic slowdown, the total global healthcare expenditure moved upwards.
Healthcare Sector growth is driven by :
• economic growth
• consumer income and increasing disposable spending ability
• higher life expectancy
• population growth
• the emergence of advanced medical treatment and technologies
Healthcare Sector Trends
In the light of increasing global healthcare services demand, including diagnostic treatment and care, healthcare providers emerged as the largest investment opportunity within the industry. The opportunities for growth are prevalent throughout the spectrum of healthcare service providers, including large facilities that use cutting edge technology and foster medical tourism; medium sized, high efficiency hospitals that cater to a range of income groups. It can also be seen that government of various countries are outsourcing services to private healthcare service providers thus, widening their market share and their requirement for obtaining financial aid. All these indicate when compared to other participants in the healthcare sector , health service providers mainly those who offer local essential services such as SME and nurse paramedical practices tend to be less impacted by economic swings.
Although financial crisis might impact the pharmaceutical industry more directly than other sectors of healthcare , it appears now that it is tending to reverse and attain pre-crisis level quickly. The average worldwide annual growth in pharmaceutical sales is expected to reach 6% by 2014. The highest growth is expected in emerging economies such as India, Brazil, China, Mexico.
The healthcare system of a country consists of both public and private sectors. While the size and the activities of the private sector differs from country to country , it usually entails a wide range of profit and not for profit business. The private healthcare sector includes-
• Health service� providers – hospitals, clinics, psychiatric care, ambulance, telemedicine, traditional medicines, etc.
• Retailers and distributors – pharmacies, drug shops and pharmaceutical distributors
• Medical education and training institutes – nursing and pharmaceutical shops, etc.
• Financial entities – Health Management organizations, insurance companies, risk pooling entities
• Manufacturing – Medical Supplies, bio sciences, producers of pharmaceuticals
The health sector of the world is fragmented but is consolidating. In large number of countries, the private healthcare sector is highly fragmented, comprising of numerous small practices that are owned by medical professionals. But over the years and across all the regions and areas of healthcare services, the sector is becoming more consolidated, well organized and corporate. For example, Fortis Healthcare Limited was established in 1993 in India and now it has emerged as Asia’s largest healthcare providers comprising of a wide network of 68 hospitals.
One important point to note is that, of all the publicly listed healthcare providers in the world, it can be seen that a majority of these healthcare providers are based in emerging economies and many are exhibiting a tremendous growth.
However, there are a number of factors that limit the growth of the healthcare sector worldwide. Accurate market information about the healthcare sector in terms of its size, future growth trends, opportunities and threats is sometimes not available to the financial institutions who are first time investors in the sector. Because of high level of fragmentation in the healthcare sector with majority of the sector being taken by small business units doing healthcare operations, the investment opportunities for the investors seems to be slow paced and risk involving. Since a lot of investment is demanded in the healthcare business in terms of infrastructure, the investors are very cautious to invest due to project failures.
Last Updated on : 21th August 2013