17 October 2010
The recent study published in August 2010 by the Lancet[1], one of the UK’s most prestigious medical journals, concluded that Indian hospitals could be the source of a drug-resistant superbug. This has incensed India’s healthcare industry. Indian medical officials are particularly annoyed by the nomenclature of the new gene, New Delhi metallo-β-lactamase (NDM-1), which is thought to make bacteria resistant to antibiotics.
These allegations could permanently damage India’s attempt to become the hot destination for medical tourists from abroad. The Confederation of Indian Industry has forecast that India’s medical tourism business could be worth $2.4 billion in revenues by 2012. Another report by IBEF [2] supports this trend predicting that the number of tourists being treated in India will continue to grow at 20-30% per annum and generate earnings of $19.5 billion in foreign exchange within two years.
Upmarket private hospital groups in India have been the main beneficiaries of business from the US and Europe for patients who seek both lower cost and more prompt treatment. The table below [3] shows that costs in India are a fraction of those in the USA and significantly lower than costs for treatment in Singapore or Thailand:
| Cost in US $ | USA | Singapore | Thailand | India |
| Coronary Angioplasty | $46,000 | $11,250 | $4,150 | $3,500 |
| Coronary Bypass | $56,000 | $12,900 | $13,250 | $7,000 |
| Total Hip Replacement | $24,000 | $15,000 | $10,000 | $6,300 |
| Hip Resurfacing | $48,000 | $14,000 | $10,000 | $7,000 |
| Face Lift | $20,000 | $6,250 | $4,800 | $3,100 |
However, it is not simply cost that is driving international healthcare business to India. There are a growing number of world-class medical and diagnostic facilities which are internationally accredited, and over 600,000 English-speaking physicians and 100,000 specialists who have been trained in the best global institutes. All medical records are also maintained in English.
Furthermore, private groups dominate the healthcare sector providing 80% of outpatient and 55% of inpatient care including the full range of services for the treatment and monitoring of life-style related diseases which are becoming more prevalent amongst Indians. Many of the larger healthcare groups have set up health cities so that patients and their relatives/friends benefit from a range of facilities such as health spas, hotels and restaurants on the same campus. Indeed Ernst & Young estimates that 15-20 health cities will be opened over the next 5 years.
Testament to the attractiveness and importance of the market is that most of the domestic players have ties abroad (Apollo with BUPA and Mondiale; Fortis/Wockhardt with Harvard Medical, Blue Cross, Blue Shield and BUPA) whilst major multinationals such as GE Healthcare are collaborating to develop institutes of world-class standing in India. The Government of India has recognised the significance of international medical tourists and recently enhanced medical visas (Mvisa and MXvisa) by extending them from 6 months to 3 years for visits to India.
The recent bidding war for Singapore’s Parkway Holdings demonstrates how lucrative the healthcare market in Asia can be. Khazanah Nasional (Malaysia’s sovereign wealth fund) made a higher cash offer than India’s Fortis Healthcare for Parkway, which operates 16 hospitals across Asia. The winning bid which valued Parkway at $4 billion in July 2010 represented a 40% premium on the price paid by Fortis Healthcare for the 23.9% stake they acquired from TPG (the private equity group) for $684 million, valuing the company at $2.8 billion, only four months earlier in March 2010 [4].
It is no wonder, therefore, that the threat of the superbug is getting Indian healthcare officials hot and bothered!
© Mary Anne Cordeiro
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