Invest in health and build your wealth this World Health Day

Today, the globe will be celebrating the World Health Day. Every year, on April 7th, The World Health Organization (WHO) organizes annual World Health Day, which is dedicated towards achieving universal healthcare for all. While this day has been celebrated for almost 3/4th of the century, nearly half the world population still lacks access to appropriate medical services. About 100 million people have been forced into poverty due to the high medical bills or unaffordable services. 
 
India faces a challenge of changing disease profile 
As the world gears up to observe World Health Day on Saturday, India's health report card is mixed. The life expectancy in India is at 70.3/66.9 years in 2016 vs 59.7/58.3 years in 1990 for females/males respectively. The biggest challenge that India is facing is change in the disease profile of the country. The disease burden in India due to acute diseases (communicable/maternal/neonatal/nutritional) has come down from 61% in 1990 to 33% in 2016. The bad news is that the contribution of non-communicable diseases (heart disease/cancers/respiratory diseases/neurological disorders) has risen to 55% in 2016 from 30% in 1990.                 
 
Some health stats in India
  • There are ~2.5mn people were living with cancer in India in 2017 and ~7lakh new cases are discovered each year.
  • Cardiovascular diseases (CVDs) have become a leading cause of mortality in India. CVD burden in India is 272 per 1,00,000 population vs. global average of 235 per 1,00,000 population.
  • Each year ~44,000 women die due to preventable pregnancy-related causes in India, which accounts for 20% of deaths due to preventable causes related to pregnancy and childbirth globally.
  • In India, ~220,000 deaths are reported each year due to Tuberculosis (TB). India is the country with the highest burden of TB globally. This disease between 2006-14 cost ~$340bn to the Indian economy.
Due to the increasing disease burden, growing and ageing population and health awareness, India’s healthcare industry has a huge potential of growth. The healthcare sector is largely unorganized and most people are not insured. Further, ~60% of the healthcare expense is borne by the patients.
 
Health insurance plays a pivotal role in healthcare 
 
Advanced countries have health expenses covered by insurance schemes, which improves the quality of the life of its citizen. Health insurance helps to shield individuals and their families from the financial risk arising due to unanticipated health expenses of serious illness or injury, and facilitates access to the health care system, thereby improving health outcomes. Health insurance, thus plays a pivotal role in the healthcare sector.
 
Health insurance in India typically pays for only in-patient hospitalization and for treatment at hospitals in India. The payment options under health insurance include direct payment or cashless facility and reimbursement at the end of the hospital stay.
 
Positive outlook on India’s healthcare sector
 
In order to boost the healthcare sector, the government in 2018 Union Budget, announced The National Health Protection Scheme. This scheme is aimed at providing health insurance cover of up to Rs5lakh per family per year to 10 crore poor families. This accounts for ~40% of the total population. 
 
The growing expenditure on healthcare will be positive for the companies operating in this sector. Here is the profile of some healthcare companies which will be the beneficiary of this scheme.
 
Apollo Hospitals - Apollo is one of the leading private sector super speciality hospital chains in India. It was established in 1983 by Dr. Prathap C Reddy. It was India’s first corporate hospital. Apollo has two businesses i.e. hospitals and pharmacies. Currently, Apollo has 71 hospitals and 2,849 pharmacies. The 71 hospitals have total bed capacity of 9,948. Read IIFL view.
 
Dr Lal Pathlabs - Dr Lal Pathlabs is a Delhi based leading blood test laboratory. It was started in 1949 by Dr Major S. K. Lal. As of February 2018, Dr Lal Pathlabs had 189 clinical labs, 1,759 Patient Service Centres and 5,021 Pick-up Points. This company mostly has presence in north India. The company came with an IPO in December 2015. Read IIFL view.
 
Narayana Hrudayalaya – Narayana Hrudayalaya is a Bengaluru based leading healthcare service providers. It operates network of 23 hospitals and 7 heart centers across India. This includes a chain of multispecialty, tertiary and primary healthcare facilities. Besides, company also operates one hospital at Cayman Islands and 19 primary healthcare facilities. Read IIFL view.
 
Thyrocare Technologies - Thyrocare Technologies is a leading biochemistry laboratory focused on lifestyle disorders and offering preventive and health wellness tests. Thyrocare was started by an ex-BARC scientist, A. Velumani, in 1996. Thyrocare operates a central processing laboratory (CPL) in Navi Mumbai and has six regional processing laboratories (RPL), which operate 24/7. Read IIFL view.
 
New India Assurance Company – New India Assurance is the largest Indian general insurer in terms of domestic gross written premium. It has a market share of 15% in all lines of business as on December 31, 2017. Health insurance contributed ~35% of the total net premium for 9MFY18. It has around 20 health insurance products in its portfolio with differentiated features depending upon the type of illness, age of the insured and floater coverages. New India has tie ups with 17 third party administrators. Read IIFL view.



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