India's Healthcare Attracts $11.9Bn FDIs But Sees Shortage of Over 1 Mn Doctors

Hospitals remain the primary focus of healthcare investments due to their robust operational metrics and scalability, revealed a recent report by Grant Thornton Bharat in collaboration with the Association of Healthcare Providers India (AHPI).

'The Vitals for Growth: Decoding Healthcare Financing and Funding in India' report also stated that the healthcare and diagnostics have seen a total of $11.9bn foreign direct investment (FDI) inflows between April 2000 and September 2024. Most of them are directed towards hospital chains, diagnostics and specialised care facilities. It also received $3.2bn between 2022 and 2024.

“India’s healthcare landscape is being reshaped by shifting demographics, increasing cases of chronic lifestyle diseases, and a rising emphasis on preventive care and quality healthcare services. These structural shifts, coupled with growing insurance penetration and post-pandemic resilience, are redefining patient expectations and healthcare delivery models," said Bhanu Prakash Kalmath S J, partner and healthcare industry leader at Grant Thornton Bharat.

Surge in M&A and PE Transactions

The report also stated that India's healthcare and pharma sector recorded 594 merger and acquisition (M&A) and private equity (PE) transactions from 2022 to 2024, valued at $30bn. Hospitals accounted for around 40% of this. In 2024, the hospital segment dominated deal values with a 44% share, totaling approximately $6.1bn, year-on-year growth of nearly 24%, the report noted.

It said that multispecialty hospitals continue to lead in healthcare delivery, with recent consolidations aimed at achieving operational efficiencies and regional expansion. On the other hand, single-specialty hospitals have attracted $1.4bn in PE investments over two years.

In high-demand specialties like oncology, cardiology and mother-and-child care, Valuation multiples range between 20x and 30x EBITDA (earnings before interest, taxes, depreciation and amortization), the report said. It highlighted that the listed companies in the healthcare sector are currently valued in the range of 3.5x to 5.0x revenue multiples.

Challenges Remain

“To strengthen India’s healthcare infrastructure, it is crucial to address the shortage of healthcare professionals, with a deficit of 1.54mn doctors and 2.4mn nurses. The urban-rural disparity remains a challenge, as 60% of hospital beds are concentrated in metro cities while 70% of the population resides in non-metro regions," said Girdhar Gyani, director general, AHPI.

Gyani also believes that the increasing cost of medical treatments and high out-of-pocket expenditures further necessitate innovative financing models.