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Indian Healthcare Innovation Market Poised to Reach $60 Bn by 2028: Bain & Co

Written by : Jayati Dubey

March 7, 2024

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Healthtech, comprising approx 25% of the healthcare innovation market in FY2023, experienced significant growth, reaching $7 billion from $3 billion in FY2020.

The Indian healthcare innovation market is anticipated to achieve an estimated value of $60 billion by fiscal year 2028.

This growth is fueled by the strategic adoption of emerging technologies and innovative business models, as highlighted in a comprehensive report by consulting firm Bain & Co and HealthQuad.

Currently valued at $30 billion, the sector is predominantly led by pharmaceutical services and healthtech entities, with biotech and medtech sectors showing promising signs of growth in their early stages.

Historically recognized for pioneering cost-effective services and products, the Indian healthcare industry is now venturing into new realms of innovation by harnessing the power of emerging technologies, as highlighted in the report titled "Healthcare Innovation in India."

According to Bain's research, this transformation aligns with the global trend of pharmaceutical companies increasingly outsourcing discovery, development, and manufacturing processes, with a projected increase in outsourcing expenditure from 58% to 61% by 2027.

India as an Attractive Outsourcing Destination

With a diminishing focus on China and its expertise, India is poised to become an attractive outsourcing destination for pharmaceutical activities.

The report emphasizes that Indian players have developed expertise in chemical synthesis, injectables, and fermentation, making the country an appealing destination.

Additionally, India's growing technological proficiency in areas such as advanced analytics, AI/ML, and AR/VR is prompting pharma services players to offer innovative solutions and establish technology "innovation hubs" in international pharma companies' India-based global capability centers (GCCs).

Reportedly, healthtech, constituting approximately 25% of the healthcare innovation market in fiscal year 2023, has experienced significant growth, reaching $7 billion from $3 billion in fiscal year 2020.

The sector, comprising over 10,000 startups, witnessed heightened activity during the COVID-19 pandemic, expanding in both consumer-facing and enterprise-facing segments. A notable trend is the global expansion of healthtech players seeking to broaden their patient base.

India as an Innovation Hub for Big Pharma & Biotech Startups

Bain’s report highlights that India's growing scientific and technological expertise positions it as a crucial innovation hub for Big Pharma.

Twelve of the top twenty global pharmaceutical companies have established GCCs in India, initially focused on support functions but evolving into innovation hubs with a deep emphasis on R&D and technological innovation.

This trend is expected to strengthen in the coming years, with Indian GCCs playing a pivotal role in driving the innovation agenda.

Moreover, biotech start-ups in India are incorporating cutting-edge technologies such as cell and gene therapy, oligonucleotide therapy, protein biologics, gene editing, and next-gen sequencing to develop innovative products.

Noteworthy examples include Zumutor Biologics' work on natural-killer cell receptor monoclonal antibodies for cancer treatment and Bugworks' development of novel anti-microbial therapies.

While commercialization of these technologies is in the early stages, promising results, such as ImmunoACT receiving marketing authorization for its CAR-T cell therapy in late 2023, are emerging.

Transforming Investor Attitudes

The lengthy R&D cycles and monetization processes associated with pharmaceutical research have historically led to cautious investor attitudes.

However, the report also notes a transformation in investor sentiment, driven by the emergence of sector-focused funds, technologically savvy family offices, and new investment/exit constructs.

Notable deals exemplify this shift, including Sun Pharma's investment in Agatsa, Cipla's in Achira Labs, and Biological E's in Eyestem.

The report concludes by outlining the future trajectory of innovation in the healthcare sector. It is expected to be shaped by the consumerization of health, realignments in the global healthcare value chain, deepening Indian scientific and technological expertise, and favorable regulatory developments.

As India positions itself as a key player in the global healthcare innovation landscape, the sector's evolution is set to bring transformative changes in healthcare delivery and outcomes.


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