After food, healthcare expenses are becoming a bitter pill to swallow for Indian consumers

• Healthcare in India has turned more expensive as the government has levied a 5% goods and services tax (GST) on all non-ICU hospital rooms that cost more than ₹5,000.
• India also imports a lot of medicines, even though Indian pharma companies also export to the US and other nations.
• As per a recent survey by LocalCircles, a community social media platform, 52% of respondents feared that a weakening rupee would adversely impact them and their families as food, medicines and overall healthcare costs go up.

Indians would now have to deal with expensive medical care, which will make a dent in their home budgets — that are already weighed down by food.

The fall in rupee value is the last nail that’s hitting consumers across healthcare needs – be it medical devices, medication and even hospitalization.

As per a recent survey by LocalCircles, a community social media platform, 52% of respondents were worried that a weakening rupee would adversely impact them and their families as food, medicines and overall healthcare costs go up.

India relies heavily on imports for its medical equipment and the weakening of the Rupee makes imports more expensive.

“Their (consumers) fear seems to have basis as India continues to import a considerable amount of pharmaceutical products and medical devices despite having a thriving generic medicines industry and scaling up production of medical devices,” the report said.

Exports surge, but so have imports

While the Indian pharma industry’s exports grew 103% from $11.6 billion to $24.6 billion during 2014-22, it also imports a lot for its own medical needs.

As per the commerce ministry data by the Association of Indian Medical Device Industry (AiMeD), imports of medical devices increased by a record 41% to ₹63,200 crore (approx. $8.1 billion) in 2021-22 from ₹44,708 crore (approx. $6 billion) in 2020-21.

A majority of Active Pharmaceutical Ingredients (APIs), raw material and hospital equipment is also imported and paid for in dollars, said the LocalCircles report. Indian consumers, therefore, feel healthcare will burn a deep hole in their pockets in the future.

“Given an option, those who can afford the cost continue to buy imported devices for implants. Also, most of the medical equipment used in hospitals continues to be imported, which will necessarily get reflected in higher cost of treatment in private hospitals and laboratories,” said the report.

In addition to the rupee value, earlier this year, the government allowed pharma companies to hike prices of domestic formulations by up to 10%. It has affected 800 formulations covering major medicine groups like painkillers, antibiotics, cardiac medicines and more, further adding to healthcare costs.

Rising input costs also a cause of concern for pharma

There are other troubles on the horizon as well. Increased input cost and rising prices of APIs are already eating into the profitability of pharmaceutical companies. Some of this may be passed on to the customers.

As per a report by rating agency CareEdge, the operating profitability of Indian pharmaceutical companies is expected to decline by 200-250 basis points (or 2.5% points) in the financial year 2022-23.

“Due to supply chain disruptions and prevailing lockdown in China, the prices of some APIs have increased between 25-120% while prices of excipients have risen between 15-200% during the last 12-18 months,” said the report.

On top of that, the Indian government recently introduced a 5% GST on all non-ICU hospital rooms that cost more than ₹5,000, which would further make healthcare pricier.