India’s $700 Billion Healthcare Dream

It Has A Financing Problem And As Always Pharma Is Ignoring It

A recent report says that India’s healthcare sector is expected to reach $700 billion by 2030. It is a number that signals scale, opportunity, and inevitability. The projection that India’s healthcare sector could reach $700 billion by 2030 is a reframing. The number aggregates multiple segments such as hospitals, pharma, diagnostics, insurance, digital health and extrapolates recent high-growth trends into the future. In that sense, it is directionally credible. However, it can make the opportunity seem bigger than it is by confusing the total possible market with the part that can actually generate real revenue today.

The question that popped to my mind is how will the system finance that scale of consumption. Who will actually pay for this $700 billion? India’s public health expenditure is among the lowest globally, hovering around 1%–2% of its GDP, despite a steady increase in recent years. While total health expenditure (public and private) has increased to 3.8% of GDP in FY22, the government’s share is only 1.84%, lagging far behind the 2.5% goal set by the National Health Policy 2017.

For all the optimism, India is still trying to build a world-class healthcare system on a deeply fragmented and underdeveloped financing foundation. Nearly half of healthcare spending in India continues to come directly out of patients’ pockets. Hundreds of millions of Indians sit in the “missing middle”, a category that is too affluent to qualify for government schemes, yet too financially constrained to afford meaningful private insurance. So, without a parallel expansion in financing mechanisms, the $700 billion figure remains an aspiration and one that highlights the size of the opportunity, but also the fragility of the assumptions underpinning it.

This is not only a policy gap but also the central constraint that shapes how healthcare is consumed in India and it is a constraint that pharma has largely chosen to ignore. India does not suffer from a lack of healthcare demand. If anything, it carries a disproportionate share of the global disease burden.

In a system dominated by out-of-pocket spending, healthcare consumption is episodic. It is delayed, truncated, and often abandoned midway. Treatment decisions are shaped less by clinical need and more by immediate affordability. Large providers like Apollo Hospitals encounter this reality every day. Patients enter the system, but pathways diverge quickly depending on their ability to pay. The clinical journey and the financial journey are inseparable.

For pharma companies, this creates a structural blind spot. The industry has spent precious time optimizing for prescription generation by expanding field forces, increasing doctor engagement, and proliferating brands. But unlike what sales forces presume, prescriptions do not guarantee consumption, and consumption does not guarantee continuity. The constraint lies elsewhere.

At the centre of this disconnect is the “missing middle” an estimated 350-400 million Indians who represent the most under-penetrated healthcare opportunity in the world. This segment is digitally connected, increasingly health-aware, and aspirational. But it is also financially exposed. A single hospitalization or long-term therapy can destabilize household finances. Interestingly and predictably, it is not traditional pharma players who are moving closest to this segment because it isn’t in their interest to think much about patients.

Digital health platforms like HealthifyMe have begun to build sustained engagement models around lifestyle diseases. What started as a fitness and nutrition platform is steadily evolving into a metabolic health ecosystem by tracking behaviour, nudging habits, and building longitudinal relationships with users.

As I said, this becomes particularly relevant in the context of emerging therapies like Ozempic and Wegovy. These drugs are clinically transformative, especially in diabetes and obesity management. But they also require long-term adherence and come with significant cost implications. The answer to this question seems obvious but it is definitely worth discussing repeatedly - will the company that manufactures the drug capture the value, or will it be the platform that manages the patient journey? My point on compounds, competitors and customers changing is well known to the regular reader.

In the present context, I think a part of the problem lies in how healthcare financing has evolved in India. Insurance providers such as Star Health, Allied Insurance and Niva Bupa have built their models primarily around hospitalization. This is understandable as hospital events are discrete, high-value, and easier to underwrite.

But I have long believed that the future of healthcare in India is not acute but chronic disease. Diabetes, cardiovascular diseases, obesity, and cancer require long-term therapy adherence, not episodic interventions. Yet, these are precisely the areas where financial support is weakest. The result is a system that functions well when patients are critically ill, but poorly when they need sustained care.

For pharma, this has implications. The industry’s most valuable therapy areas are structurally misaligned with how financing flows through the system. Patients start treatment but often fail to continue. Adherence becomes a financial decision rather than a medical one. And in that gap, enormous value is lost if our best hope and response is to create EMI programs with banks.

Some early signals suggest that the system is beginning to reorganize itself. Integrated healthcare platforms like Apollo HealthCo are attempting to combine pharmacy, diagnostics, and telehealth into a unified consumer experience. This creates the possibility of bundling care, smoothing payments, and eventually embedding financing into the care journey.

At the same time, digital platforms are building behavioural and engagement layers, while insurers continue to manage risk pools. What is missing is a unifying layer that connects these pieces into a coherent, patient-centric financial model. This is where pharma has an opportunity, if it can look beyond ‘Rx for my brand’ and choose to act.

The next evolution of the industry should be better business models around those brands and molecules. GLP-1 therapies offer a glimpse into this future. Their success will depend not just on efficacy, but on how effectively companies can structure long-term affordability, ensure adherence and integrate with broader care ecosystems.

The Indian healthcare ecosystem is entering a phase where control is shifting. Providers like Apollo Hospitals are expanding beyond hospitals into integrated care delivery. Platforms like HealthifyMe are building continuous engagement with patients. Insurers like Star Health and Allied Insurance and Niva Bupa are shaping how risk is pooled and priced. Together, they are beginning to define how healthcare is financed and consumed.

Pharma, in contrast, remains largely positioned as a supplier - a manufacturer and distributor of medicines - dependent on prescriptions, vulnerable to drop-offs, and increasingly exposed to pricing pressure. We still haven’t realised that the entity that finances healthcare often determines how care is delivered.

India’s ambition to build a $700 billion healthcare system is both necessary and achievable. But it will not be realized through infrastructure expansion or clinical innovation alone. It will require a fundamental rethinking of how healthcare is financed. For pharma leaders, this is the central lever that will determine market expansion, therapy adoption and therefore, long-term growth.

The choice ahead is that pharma can continue to operate as a participant in the system staying focused on molecules, prescriptions, and incremental share gains, or it can step into a more ambitious role as an architect of demand, actively shaping how therapies are accessed, financed, and sustained. Ultimately, India needs a Funded Bharat and not just need a Swasth Bharat.