Fortis Healthcare?s purchase of 24% stake in Singapore?s hospital chain Parkway Holdings signals the confidence of India?s healthcare providers as well as the sector?s still to be realised promise. Fortis admitted it seeks to get access to sophisticated and highly rewarding stem cell therapy and organ transplant technologies from the deal. Sector watchers say corporate hospitals? income is increasing at 13%-20%, compared to about 15% growth seen among pharmaceutical companies. Unlike the pharma sector, there is no price control in healthcare. Partly because of the healthcare sector?s potential and partly due to the need for integrating the business, many pharmaceutical companies have ventured into or have stepped up their investments in the healthcare sector.

It is interesting to note that the overseas purchase of Fortis Healthcare follows the divestment of the 34.8% stake that Malvinder and Shivinder Singh brothers had in Ranbaxy. The growth opportunity in healthcare is tremendous considering the fact that only a small fraction of the population has access to quality healthcare. The country has only 1.5 beds for 1,000 people, much lower than the average of three to four beds per 1,000 people in other developing countries like Brazil, China, and Thailand. Rich nations have four to eight beds per 1,000 people. The increased allocation for healthcare in the next fiscal accounts for 0.32% of the total economic output of the country, way below the double-digit public health spending in developed economies. In such a scenario, if private healthcare industry has to measure up to the needs of the public, it should be able to pump in huge investments. The government is reluctant to give it the infrastructure status because its borrowing needs may crowd out those of other eligible sectors. To increase the consumer base, healthcare needs to be affordable. Health insurance is the way out, but the political consensus to raise foreign ownership ceiling in insurance companies from 26% to 49% is still elusive. To realise the promise of the health sector, a comprehensive approach covering all the allied sectors is needed.

gireesh.chandra@expressindia.com