Medical Tourism In India Or Healthcare Tourism Economics Essay

Liberalization, Privatization and Globalization has made universe a smaller topographic point. Because of LPG, a figure of Multi-National Corporations came into being. It expanded the skylines for companies of one state to run into more so one state. But still there are many limitations, regulations and ordinances which a company has to follow to come in into a new market. Therefore, before get downing up a new venture or come ining into a new state the hazards involved and the chance should be exhaustively studied.

This peculiar research study is done on the footing of placing the feasibleness of come ining into a new state i.e. India, into medical and hospital attention. The research study gives insight to Mars-M ( M-M ) , an Australian-owned medical corporation, whether it should spread out internationally by set uping a private infirmary to supply medical and hospital attention for domestic and international patients in India or non.

The research study is divided into 4 parts. 1st portion contains the nature of the private infirmary marketA in India – including demand, rivals and cost factors. The 2nd portion focuses on the Foreign Direct Investments policies and revenue enhancement inducements offered by the Indian Govt. the 3rd portion concentrates on the suited and appropriate manner to come in into the Indian market i.e. joint venture with one of the most reputed companies into private infirmary attention. Followed by the last and the concluding portion recommendations why Mars-M ( M-M ) should give green signal for investing in India.

Table of Content

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Nature of private infirmary market



Demand for private infirmary market in India



Cost factors



Location Analysis



SWOT Analysis



Government policies



FDI in infirmary attention



Joint Venture with the Wockhardt












The research study has been prepared to analyse the feasibleness of investing into private infirmary sector in India. It covers all the facet required to get at the investing determination for Mars-M ( M-M ) , an Australian-owned medical corporation, who is in hunt of a suited state for investing with a position to ease local every bit good as international people with the medical and wellness attention.

This study analyses the infirmary attention industry in India, strength and potency to function the tremendous population of the state. It besides includes analysis of rivals in private infirmary attention, demand potency, rightness of choosing the location, initial cost factor for get downing a new venture in India by MNC, all political and fiscal construction of India followed by the policies and inducements given by Indian Govt. and World Bank.

Private Medical and Hospital attention Industry in India

Indian Healthcare Industry to Double in Value by 2012

Rising income degrees

Changing demographics

Shift in disease profile from chronic to lifestyle diseases to impel the growing

The wellness substructure across Indian provinces is projected to turn by an norm of 5.8 per centum per annum between 2009-2013, taking the entire outgo in 2013 to USD 14.2 billion

Of the 32 Indian provinces that the study considered, the six provinces of Maharashtra, Rajasthan, West Bengal, Uttar Pradesh, Tamil Nadu and Andhra Pradesh are forecasted to stand for about 50 per centum of the outgo for 2009-2013 period.

While the Indian health care system has grown manifold over the past few old ages, it has yet non been able to maintain gait with the rapid rise in the population. One illustration of that is the handiness of hospital beds in our state -against a universe norm of four beds per 1,000 population, India lags behind at merely over 0.7 soon. ” There is a turning demand to cover with the issues of urban healthcare substructure as rural to urban migration has significantly increased the demand for these services.

The Indian health care industry is estimated to duplicate in value by 2012 and more than quartet by 2017. The chief factors impeling this growing are lifting income degrees, altering demographics and unwellness profiles, with a displacement from chronic to lifestyle diseases. This is likely to ensue in considerable substructure. The health care sector in India is undergoing a stage of reform propelled by rapid economic growing. Apart from the health care suppliers, emerging markets such as diagnostic ironss and medical device makers are pulling increasing sums of investing.

In comparing to all 32 provinces, Maharashtra forecasted to keep its laterality as the province with highest cumulative health care substructure outgo, with spend of $ 7.3 billion between 2009 – 2010


Indian infirmaries are fast going the first pick for foreign patients owing to easy entree to visa installations, coupled with the best rising medical substructure, which will assist India gain to an extent of US $ 1.86 billion in foreign exchange by 2012. Currently, India ‘s net incomes through medical touristry yearly is an estimated US $ 821.40 million.

Medical touristry can be loosely defined as the proviso of ‘cost effectual ‘ private medical attention in coaction with the touristry industry for patients necessitating surgical and other signifiers of specialised intervention.

Jointly facilitated by the corporate sector involved in medical and health care every bit good as the touristry industry – both private and public.

India has originated as one of the most of import hubs for medical touristry.

A nice blend of top-class medical expertness at attractive monetary values is assisting more and more Indian corporate infirmaries to entice foreign patients, including patients from developed states such as the UK and the US, for high terminal surgeries like Cardiac By-Pass Surgery or a Knee/Hip Replacement.

Exorbitant cost of health care and medical installations in advanced states,

easiness and affordability of international travel,

favourable currency exchange rates in the planetary economic system, quickly bettering engineering and high criterions of medical attention in the development states

Salient Features

Low cost medical intervention

High quality medical attention

Low delay clip for critical interventions

Fluent English speech production staff

Cost Factor

The cost factors for puting up the private infirmary would chiefly include land, staff, and capital. The ground of traveling into joint venture with the Wockhardt is that it will cut down the cost factors for Mars-M in puting up a infirmary in other state ( India ) , and Wockhardt is one of the taking transnational company in India and which is recognized globally for its accomplishments, it besides has a strong place support from its place state ( India ) . Land if taken on a rental with the Wockhardt would be advisable as it would necessitate less capital to put in land. The staff will be classified harmonizing to their capablenesss and grades of cognition. It besides intends to use local staff. Financing such a immense undertaking would necessitate a batch of capital ; this can be achieved by raising some sum of money from the Mars-M and Wockhardt. Equities can be achieved from the stockholders of both the company since it is a joint venture. Government will besides give some benefits and price reduction on this undertaking. The universe bank has given the authorities of Maharashtra province an International Development Association loan of $ 134m ( ?89m ) , of whichA 5 % will be used to construct the private multispecialty hospital.A The infirmary will be run by Wockhardt, India ‘s 5th largest pharmaceuticalA company, which will have 51 % of theA equity. Thus it will be easier for Mars-M to gain a good repute as Wockhardt is already good established name in private infirmary attention.

Location Analysis: Pune, Maharashtra ( India )

The Indian wellness attention market has emerged as a new and moneymaking growing avenue for both the bing participants every bit good as the new entrants. The health care industry in the state, which comprises infirmary and allied sectors, is projected to turn 23 per cent per annum to touch US $ 77 billion by 2012 from the current estimated size of US $ 35 billion. India ‘s population, geographic location and authorities support are promoting.


Positive Factors

81 % Literate population

Dumbly Populated 7,214/ KmA?

Majority of High and Middle income group

Good sewage system

Huge range for farther development

Population of Pune metropolis ( 2009 ) excepting suburbs is about 33 Lacs ( approx ) . Entire bed strengths ( which includes Private and Government Hospitals ) is 6000 approx. So figure of beds per 1000 population is 1.8, but harmonizing to WHO criterions it should be 3. So we are short of 4000 beds in Pune. And this deficit will increase in future.

IT Services sector remains a major driver of the economic system and occupations created here, Pune ‘s NRI Diaspora and first-generation of successful engineering enterprisers are promoting a Renaissance of entrepreneurial activity.

Pune is emerging as a outstanding location for IT and fabricating companies to spread out.

25 % of income of Pune comes from IT sector.

Pune has the 6th largest metropolitan economic system and the highest per capita income in the state.

Extra 2,500 extra beds in 2016.

Negative Factors

Reputed infirmaries like Ruby Hall, Apollo Jehangir, Aditya Birla

Market incursion hard for fledgling

High Real estate rates

Scarcity of Trained Doctors, Specialist, Nursing staff ( common job f whole India )

Congested infinite around infirmary premises


Strengths: Pune called Oxford of East, has immense pupil base. Besides it is hub of IT industry, therefore we expect high employer base use of insurance an infirmary services.

Failing: Acute deficit of skilled physicians and trained Para-medical staff and investings required to elate the current position of the health care.

Opportunities: Changes in human ecology and socio-economic mix are changing the population ‘s disease profile and increasing the incidence of lifestyle diseases therefore increasing the demand for beds

Menaces: Steep population growing with deficiency of proper health care policies, Infrastructure and handiness to the health care for all is challenge in the approaching yearss.

Indian Government Policies & A ; inducements

The State offers subsidies, loans, revenue enhancement releases and other benefits for the puting up of private pattern, infirmaries, diagnostic Centres and pharmaceuticals.

The authorities subsidises the unethical and exploitatory private wellness sector via medical instruction at the disbursal of the public treasury.

The Government liberalized entry norms in the health care industry for private participants in the 1980s. It offers several inducements to private participants ; such as, land allotment at subsidised rates for new hospital undertakings.

During the 2009 Interim budget, the authorities hiked the allotment for NRHM by US $ 423.7 million over and above US $ 2.5 billion.

Furthermore, the authorities announced a US $ 64 million enterprise in October 2009 to advance domestic industry of medical devices such as stents, catheters, bosom valves and orthopedic implants that will take to lower monetary values of these critical equipment.

Harmonizing to Union Budget 2010-11, the Finance Minister, Mr Pranab Mukherjee increased the program allotment for Ministry of Health and Family Welfare from US $ 4.2 billion in 2009-10 to US $ 4.8 billion in 2010-11.

Furthermore, in order to run into revised cost of building, in March 2010 the authorities allocated an extra US $ 1.23 billion for six approaching AIIMS-like institutes and upgradation of 13 bing Government Medical Colleges.

Foreign Direct Investment in Hospitals

Since January 2000, FDI is permitted up to 100 per centum under the automatic path in infirmaries in India. Thus no authorities blessing is required every bit long as the Indian company files with the regional office of the RBI within 30 yearss of reception of inward remittals and register the needed paperss along with form FC-GPR with that Office within 30 yearss of issue of portions to the non-resident investors.6 Controlling interest is besides permitted in infirmaries for foreign investors. FIPB blessing is presently merely required for foreign investors with anterior proficient coaction, but is allowed up to 100 per centum. Prior to January 2000, FDI in infirmaries was permitted under the FIPB path, which meant that the FIPB would see the investing proposals and take a determination and the Indian company with the RBI would do thereafter filings. Current ordinances besides permit other signifiers of capital mobilisation, which are treated as FDI. For case, Indian companies can raise foreign currency resources abroad through ADRs and GDRs under the automatic path, upto 49 per centum topic to specified conditions and such investings are besides treated as FDI.

The slack investing environment for infirmaries is besides apparent from the treatments. No major regulative hurdlings were cited by any of the respondents with respect to the puting up of infirmaries.

The undermentioned treatment high spots the available grounds on infirmaries that have received FDI in recent old ages and positions on the extent to which FDI is likely to come into the infirmary concern in India. It needs to be pointed out that a differentiation is made between FDI in the traditional sense of ownership of physical assets on one manus and private equity and FII support of infirmaries through retentions of portions by persons or a group of foreign investors on the other. If one goes by the current definition of FDI in India, private equity interest of over 10 % by any single investor besides counts for FDI and Foreign Institutional Investors ( FIIs ) are permitted to put under the FDI path in add-on to the FII path.

Joint ventures with Wockhardt

The Company has a built up strong presence in the Indian subcontinent through its strategically focused attempts on high growing, chronic curative sections.

Wockhardt Hospital ‘s being is the consequence of a 40-year tradition of caring and invention nurtured by Wockhardt Ltd, India ‘s 5th largest Pharmaceutical and Healthcare company with a presence in 20 states across the Earth. By systematically puting in engineering and substructure which match international benchmarks, Wockhardt Hospitals are today, one amongst the best health care institutes in the country.A

Wockhardt Hospitals presently runs 7 infirmaries located at Nagpur, Nashik, Surat, Rajkot, Bhavnagar and Vashi. Wockhardt would originate its presence in Goa with a new infirmary in 2010 and by 2011, four new infirmaries will be commissioned at South Mumbai, Bhopal, Patna and Jabalpur.

Wockhardt Hospitals follow procedure driven quality systems that adhere to international criterions of clinical attention, safe environment, medicine safety, regard for patient rights and privateness and infection control criterions. With the latest engineering, multi-disciplinary capableness, province of the art installations, first substructure and first-class patient attention atmosphere and procedures, Wockhardt is poised to go the most advanced and progressive health care establishment in India

As a consequence, it will be more executable to work in joint venture with such a good reputed trade name


The research study concludes that India is decidedly a good state to investing for Mars-M. Because of the ground that this industry has all the factors like the Govt. policies, FDI initiatives govt. enterprises, etc… Favorable to do state a better investing Centre. 100 per centum FDI is besides permitted in private infirmary attention sector which is a good symbol for the company if they want to put straight into the state, along with that the apparatus and operating cost is besides less every bit compared to other states, hence it will pull more of foreign median tourer.


As a concern analyst I will urge Mars-M to give the green signal to the investing proposal to India because of the ground that India has all the favourable status to put up a private infirmary and medical attention, in which the company has expertness in Australia.

Along with that I will besides urge the company to make a joint venture with Wockhardt in India as it is the fifth largest pharmaceutical company in India and has the immense potency to enlargement backed by the World Bank.