Healthcare investment in India to rise in 2010: Fitch

Fitch Ratings today said that the outlook for India's healthcare sector in 2010 is stable and it expects the industry to expand by 10 per cent to 15 per cent, with improved profitability.

However, in its new report, India Health Care Outlook 2010, Fitch notes that the dependence on debt-funded capex and acquisition plans will continue to affect the credit profiles of healthcare providers.

"Newly commissioned hospitals and improved occupancy rates at existing ones will drive revenue growth," the report said.

"Better capacity utilisation and increased focus on higher-margin tertiary and quaternary healthcare services are expected to boost profitability, and improve cash flow from operations (CFO)," it added.

Demand for healthcare facilities is expected to go up due to a number of factors, including increasing instances of lifestyle related diseases, rising income levels and an improvement in the health insurance business.

The agency expects that the favourable demand-supply gap coupled with the promising potential of the Indian healthcare industry will attract substantial investments. Fitch estimates the private sector to contribute a significant 80 per cent to 85 per cent of the total annual spend in 2010.