India has significant healthcare needs and a large shortage of clinical manpower and infrastructure. The COVID-19 pandemic accelerated the push for healthcare digitization in India. New digital health regulations were announced and the industry estimates digital healthcare could unlock $200-250 billion for the Indian economy over 10 years. However, realizing this potential would require $30 billion in tech investments, which is a major challenge given current investment levels and data/infrastructure constraints in India. Significant capacity building is still needed to develop a truly digital healthcare system at scale.

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3. purposes. On the clinical manpower supply, India has 13 of world's
lab techs, 93 of health workers, and 83 of nurses and doctors.
To match the global average, India needs a total investment of about
$460 billion now. To put things in perspective, 165 countries in the
world had gross domestic product of less than $460 billion in 2018.
To address the country's healthcare needs within the constraints of
capital, land and clinical manpower, homegrown solutions are
required. India's per capita healthcare spend is Rs 4,116 ($55), and
it is growing at 223 a year.
However, India's healthcare spend is just 43 of GDP (against the
globally recommended 153 of GDP) and it is among the lowest four
countries (ranked 129) in the world on healthcare spend, as per
Oxfam's Commitment to Reducing Inequality Index 2020.
Healthcare gold rush due to COVID-19
Let's set the context under which there has been an accelerated push
for healthcare digitization in India-the COVID-19 lockdown. Elective
healthcare spending fell 703 due to the lockdown and priority to
COVID-19 patients.
The healthcare industry started rumbling and is requesting the
government to come out with a bailout package of over Rs 50,000
crore. Doctors needed to restart their practice through work from
home or anywhere.
The decade-long deadlock between the Medical Council of India and
the health ministry on the telemedicine law suddenly cleared. There
was mutual agreement on developing and regulating the gold rush
towards telemedicine.
New digital health regulations
The telemedicine regulations were announced by the Niti Aayog and
the MCI. Prime Minister Narendra Modi, in his Independence Day
speech, also announced the National Digital Health Mission (NDHM).
The draft of the digital health regulation was available for the general
public to review and critique. This was the backdrop to the industry
chorus on digital health in India and the opportunity it offered.

4. Industry estimates
With the regulations out in the public, the industry voiced its opinion
on the real impact to the Indian economy. One industry report
estimated the pace of digital healthcare can unlock $200-250 billion
in next 10 years in terms of primary and secondary impact to the
nation's economic value. This value creation can be on three key
roads:
• Road 1: From episodic care to wellness·oriented care
• Road 2: From volume-based to value·based healthcare
• Road 3: From siloed systems to streamlined processes
While such stratospheric estimates for the digital health segment is
great for headlines, let's not fool ourselves with the history of what
the retail (brick and mortar) and e-commerce sectors underwent in
the past decade.
Ground reality
Over the last decade around $500 million was invested in different
digital health ventures which were cut-paste healthcare business
models of the West. The current technology spend on these is around
$500 million per annum.
For the $250 billion impact on the ground to be realized, health-tech
investments of around 5% ($12.5 billion) is needed right away with a
gestational lag of around two years on a conservative 2x on
valuations return and not on revenue growth.
In other words, all the sum total of early-stage VC money raised in
2019 globally will have to be directed to India and that too in health·
tech. This is a tough ask and a pipe dream.
Let's also focus on the available data sets, which is the oil to run the
digital health motorway, in India. Currently, India's data sets on
healthcare is of the 'telegraph' era. These include information on
radiology, labs, medicines, monitoring, doctor exam, nurse
observations, claims data, billing and transactions. This data set is
available for Bharat Stack 1 (the elite 12% of India's population).

5. The real driver for growth is Bharat Stack 2 (the next billion of India's
population) and 30-odd points of healthcare data (not under the
current NDHM regulations). This will make the digital health silk road
truly a reality.
To create a true high-speed digital health motorway of the future,
next-generation digital health ventures need incremental investments
of $18 billion.
Overall, we require a total of $30 billion of tech investments. Where is
that sort of money? We have been tracking around 150 health-tech
ventures in our annual healthcare and life sciences investment heat
map. We will need to create thousands of ventures that can create
the depth and width of healthcare apps for the next billion today!
Capacity creation
On a conservative basis, we estimate that the overall India digital
health opportunity is valued at $50 billion as it currently stands with
the different constraints in our physical and technology healthcare
delivery system. This is on the back of three key multiplier effects on
the Indian healthcare economy:
1. Increasing per capita spend on the health and well-being of
the next 1 billion people as disposable incomes go up and
the economy moves from the informal sector to the formal
sector in the next 10 years.
2. The incremental one-sixth of the disease burden that our
population carries as compared to the world due to the
genomic makeup and ageing population in next 10 years
through alternative healthcare delivery models.
3. Emerging alternative digital healthcare delivery models that
would play on the shortages in the physical delivery system
as penetration and acceptance of mobile.first delivery of
healthcare services becomes mainstream and productivity
of the clinical manpower is augmented by healthcare
technologies.
Kapil Khandelwal is managing partner at Toro Finserve LLP, which is the
sponsor to India Healthcare Opportunities Fund (REITSponsor), and
director at EquNev Capital Pvt. Ltd.