Even before the historic Portugal-to-India voyage of Vasco da Gama in the 15th century, India fired the minds of traders and merchants.
Today, 600 years later, the healthcare industry is feeling the allure of the subcontinent.
The attraction is justified. India has become the largest vaccine supplier in the world, producing 62 percent of global supply. It also provides more generics than any other country. It ranks as the third biggest pharma manufacturer, with 3,000 companies operating 10,500 manufacturing units. Pharma exports topped $19 billion in 2021, with growth projected at 15 percent compound annual growth rate (CAGR) through 2035.
The world’s largest democracy has also adrenalized the development of the healthcare sector with production-linked incentives. In 2021 alone, India’s commitment of $2 billion U.S. led to 49 pharmaceutical and 21 medical-device companies rushing to the country.
Some of India’s development as a global healthcare giant is coming at the expense of its chief economic rival in Asia.
Cracks have appeared in the great economic wall of China.
A trade war shortly before the pandemic disrupted global supply chains depending on China. But this was only a preview of greater havoc to come as the coronavirus jolted China’s manufacturing and logistics. Symptoms of the world’s over-reliance on China showed up first in shortages of personal protective equipment … then in issues with port shutdowns, labor shortages, quarantines, and much else. The pandemic laid bare the world economy’s shocking overdependence on the Asian giant.
The result is near-shoring, and it’s playing to India’s advantage.
Some healthcare players, second-guessing the exposure and cost of Chinese production and supply chains, see India as an opportunity to de-risk operations. India is closer to growing Western markets, so speed-to-market improves … and so does the management of complexity, compliance, and consumption of fuels at a time when companies put growing emphasis on ESG goals. Chinese labor expenses are creeping up, and the nation’s warlike stance toward Taiwan worries investors and businesses. Some companies, unhappy with the standards of protection for intellectual property in China, see India as safer for R&D and development.
And significantly, after six decades of growth, China’s population fell in 2021. For companies with long-term plans there, it’s a red flag for potential labor force and domestic consumption issues.
Meanwhile, India’s population grows. A CNN article recently reported that India’s population is projected to surpass China’s as early as April 2023. By 2064, the article says, India will have 50 percent more consumers than China.
A class act
Growing population in hard-working and (largely) English-speaking India means a flourishing middle class.
India, in fact, has about the same number of people in its middle class as the entire population of the United States. This continued growth in prosperity, along with an enterprising healthcare vision for the country, makes India as alluring today as it was for voyagers questing for its spices and trade centuries ago.
Consider these statistical attractions for healthcare firms eyeing India operations:
- India’s GDP growth was 8.9 percent in 2021. That’s strong any year, but for a coronavirus year … dynamic and powerful.
- Direct foreign investment in India has topped $19 billion U.S.
- India has 69,000 hospitals and more than a half million pharmacy stores.
- A growing number of global healthcare giants and multinational corporations have set up R&D and manufacturing facilities for the long-term.
- The pharma market is projected to grow at 17 percent CAGR until 2030. The medical device market is even more robust, with 37 percent projected growth in this time.
- A crucial facet of pharma manufacturing is the API (active pharmaceutical ingredient) sector. The Indian government is currently investing $1.3 billion to improve API production in India and foster more independence from imports.
Finally, and perhaps the most powerful indicator of the rise of India as a healthcare superpower, is the projection that India will emerge in the next 10 to 15 years as a top three economic power.
The future depends on the present
What does all this mean for healthcare companies?
We’ll see more and more of them join Amazon, Coca-Cola, Microsoft, Johnson & Johnson and 1,000 other U.S. companies and a host of other international ones already doing business in India.
Healthcare is turning eyes to India once again in a search for prosperity and discovery. Leaders sense new opportunity in one of the richest human civilizations.
Mahatma Gandhi once said, “The future depends on what you do in the present.”
As revelations from the pandemic disrupt thinking about markets and accessibility … and as new technology recasts the entire healthcare environment … it’s more and more clear that, for healthcare companies and those that serve them, the future means being present in India.