Healthcare in India is both a complex challenge and an immense opportunity. Beyond the health benefits of medical innovations and interventions, addressing access to affordable basic health and wellness care is imperative to the financial security of low-income Indians. Indeed, health expenses remain the leading reason for default among MFI clients in India, annually pushing over 39 million annually below the poverty line.
On average, one episode of hospitalization accounts for 58% of per capita annual expenditure. Overall healthcare expenditures are growing at at a 15% CAGR. At the same time, increases in per capita spending, disposable income and health insurance penetration makes the health industry an attractive market opportunity to many investors.Historically, private spending within the sector has outmatched public spending by 80:20. While this allows for agile innovation and free-market competition that drives down prices, this often creates a skew towards urban care for the wealthy. Large low-income populations in rural and peri-urban areas are often neglected.
Recently, entrepreneurs and corporate hospitals are recognizing the huge market and impact opportunities in Tier 2 and 3 regions. With project and labor costs significantly lower in these areas, businesses can serve green-field markets and develop their own brand equity.
Certain sub-sectors within Indian healthcare are especially promising from both an impact and return perspective. As part of the upcoming blog series on impact investing in India’s health sector, Unitus Seed Fund will be highlighting these sub-sectors and profiling for-profit companies that have been successful in improving health outcomes at the base of the pyramid. Some of the forthcoming topics include:
- Non-communicable diseases (i.e. Diabetes, Heart Disease, and Cancer)
- Health Financing
- Maternal/Infant Medicine
Each of these fields affects millions of Indians and show promise for innovative, private-sector solutions. The prevalence of non-communicable diseases (NCDs) is an interesting example as it reflects a common misconception about the current epidemiology in India. Historically, it was communicable diseases, such as Tuberculosis and Polio, which received the attention of public health experts as these globally afflict the poor. NCDs, such as diabetes and hypertension, were not prioritized as these were considered ‘lifestyle diseases’ that only affect wealthy populations. In fact, there are 63 million diabetic patients in India, and rural and urban poor account for over 60% of cases. Lack of access to affordable care makes NCDs more prevalent among poor Indians. For-profit companies like Forus and Vaatsalya Healthcare are leveraging disruptive technologies and metropolitan health infrastructure to deliver cost-effective care to these populations.
Innovators within the BoP health sector have found that constrained margins can be offset by the large market size and strong willingness-to-pay. Unitus Seed Fund is actively investing in the healthcare sector and is seeking innovative BoP Startups that have what it takes to make money and make a difference in improving the health of millions of Indians.