Indian Healthcare Market to Reach $638 Bn by 2025: Report

The sector, valued at $110 billion in 2016, has grown significantly, reaching $372 billion in 2023, with a compound annual growth rate (CAGR) of 22.5% during this period.

The Indian healthcare market is projected to grow to $638 billion by 2025, according to a recent study by Bajaj Finserv AMC.

The sector, valued at $110 billion in 2016, has grown significantly, reaching $372 billion in 2023, with a compound annual growth rate (CAGR) of 22.5% during this period.

The report highlights a 17.5% CAGR over the past decade, driven by advancements in hospitals, pharmaceuticals, diagnostics, and wellness services.

“The sector has experienced a massive surge in private healthcare spending during and post-COVID-19, with the hospital market size growing from $62 billion in 2020 to $132 billion in 202322. In pharmaceuticals, India emerged as a global vaccine hub, led by organizations like the Serum Institute and Bharat Biotech. In diagnostics, a core shift occurred towards digital diagnostics, while demand for home testing kits accelerated post pandemic. Additionally, the functional foods and personalized nutrition market is growing at a 16% CAGR and is expected to reach $12 billion by 2027. Meanwhile, the fitness and wellness industry are projected to grow at a 27% CAGR, reaching $12 billion by 2025,” Sorbh Gupta, Senior Fund Manager – Equities, Bajaj Finserv AMC said.

Growth Drivers in Indian Healthcare

As per the report, India’s evolving demographics are a key driver of healthcare sector growth. Life expectancy is expected to rise to 84 years by 2045, from 67 years in 2021, and the median age is projected to increase from 28.8 years in 2025 to 38.3 years by 2050.

Moreover, this aging population is anticipated to boost demand for healthcare services.

The report further revealed that the healthcare infrastructure has also expanded significantly, with the number of medical colleges rising to 758 in FY24. Hospital beds are expected to grow 12 times by 2045.

However, the report also highlights that the healthcare sector still faces challenges, with a shortfall of 3 million beds, 1.54 million doctors, and 2.4 million nurses needed by 2025 to meet demand.

Underpenetration of Health Insurance

Health insurance remains underpenetrated in India, with out-of-pocket expenditure accounting for 54.8% of healthcare costs. This contrasts with countries like the UK (17.1%) and the US (11.3%).

The market is, however, expanding, with health insurance premiums rising from $3.82 billion in FY16 to $13.07 billion in FY24.

Additionally, premium collections are projected to grow further, reaching INR 1.5 trillion by 2029.

Rising Awareness of Wellness

The study further highlights growing health consciousness among Indians due to rising non-communicable diseases (NCDs), which account for 63% of all deaths in the country.

Lifestyle diseases, including diabetes and obesity, are on the rise, with India expected to have 134 million diabetics by 2045.

This shift has fueled demand for preventive health products and wellness services. The fitness and wellness market is growing at a 27% CAGR and is projected to reach $12 billion by 2025.

Indian consumers are increasingly investing in fitness, urbanization, and preventive healthcare solutions.

Medical Tourism: A Key Contributor

Medical tourism in India is recovering strongly, expected to grow from 4.8 lakh visitors in 2022 to 7.3 lakh in 2024.

Major surgeries in India cost about 20% of what they do in developed countries, making it an attractive destination.

The medical tourism sector contributes 10-12% to overall healthcare revenues, with its value expected to grow from $7.69 billion in 2024 to $14.31 billion by 2029.

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