India Tourism Report Q4 2011

Special Focus: Medical Tourism

Medical tourism is one of the fastest growing sub-sectors of the Indian tourism industry. Surgical procedures that can cost hundreds of thousands of dollars in the US are a fraction of the cost in India. As a comparison: a liver transplant costs around US$300,000 in the US; in India, a liver transplant can cost just US$69,000. Consequently, the number of people coming to India for treatment usually as part of a larger visit to the country is rising sharply. It is estimated that 500,000 patients travelled to India for medical care in 2005, up from just 150,000 in 2002.

There are many reasons for people choosing to undergo surgery in India. These range from the longer waiting times on the National Health Service (NHS) in the UK, high costs or a lack of medical insurance cover in the US, to the lack of medical expertise in many Asian, African and Middle East countries. A report by McKinsey Consultants and the Confederation of Indian Industry (CII) underlined the growth potential of medical tourism. The total healthcare market in India is expected to increase its contribution to GDP from 5.2% at present to 8.5% over the next 10 years. However, to exploit this opportunity fully, the report states that investments in the order of INR100,000-140,000 crore will be required to improve infrastructure. India has only 1.5 beds per 1,000 people, which compares poorly with other nations. As the bulk of this new money will be coming from the private sector, the report urges the government to launch initiatives to encourage investment in healthcare, and also to establish an industry association that can lobby the government for funding.

The government is keen to promote medical tourism, and has declared that the treating of foreign patients is legal. It is also encouraging medical tourism in the country by offering tax breaks and export incentives to participating hospitals. In addition, the government has cleared medical visas.

Industry experts estimate that medical tourism could bring India as much as US$2.2bn a year by 2012. India has a level of technological sophistication and infrastructure that should allow it to maintain a strong market position, even as other countries such as Argentina, South Africa or Malaysia look to enter this lucrative market. Moreover, most Indian pharmaceuticals meet the stringent requirements of the US Food and Drug Administration.

Some key demographic trends guarantee that the market for medical tourism will continue to expand in the years ahead. By 2015, the health of the vast baby boom generation will be declining. With more than 220mn baby boomers in the US, Canada, Europe, Australia and New Zealand, this represents a significant market for inexpensive, high quality medical care of the type offered by India. The leading players in this sub-sector are the private hospital groups, Fortis Healthcare, Wockhardt and Apollo Hospitals, which run a total of 26 hospitals across the subcontinent. These chains are actively seeking foreign partners to promote medical tourism. Already, tour operator Thomas Cook has teamed up with Bramwell Apollo

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Hospitals of India and appointed a leading surgeon as a medical tourism project adviser. Positive Health Clinic of Mumbai cooperates closely with Brightland Holidays and Sterling Resorts.

H1N1 And H5N1 Virus Updates

In 2010, the global incidence of the H5N1 virus (bird flu) declined sharply. The World Health Organization (WHO) reported four cases around the world, with no deaths, down from 72 cases and 32 deaths in 2009. All the cases were in Egypt. Since the WHO started reporting on the H5N1 virus in 2003, there have been 471 cases reported to the organisation and 282 deaths.

Despite the sharp decline in incidences of the virus, the likelihood of an outbreak remains a serious concern for government and healthcare planners. Vaccines remain in short supply, although governments have begun stockpiling the antiviral drug Tamiflu. In early 2008, the European Centre for Disease Prevention and Control (ECDC) said that the EU would be prepared by 2011-2012, following ongoing investment.

In 2009, the world also had to get to grips with an outbreak of the H1N1 virus (swine flu), which is a further threat to world tourism. Unlike the H5N1 virus, H1N1 swiftly mutated into a form permitting human-to-human transmission, which substantially increased chances of infection. The new strain of the swine flu virus emerged in Mexico in April 2009, although it appears that the virus had been present for some months.

In response, the Mexican government closed many public, private and education facilities in Mexico City and introduced quarantine in hospitals, but the virus quickly spread to other countries in the region and then globally. The southern hemisphere experienced particularly high rates of infection as the initial outbreak came during winter.

On August 10 2010, the WHO said that the H1N1 virus had moved into the post-pandemic period. Consequently, it will no longer provide specific updates on the virus. As of August 6 2010, more than 18,449 people worldwide had died from H1N1. By far the majority of the deaths were in the Americas, where there have been at least 8,533 fatalities, reflecting the regions status as the first site of the outbreak. This is followed by Europe (4,879), the Western Pacific (1,858), South East Asia (1,992), the Eastern Mediterranean (1,019) and Africa (168).

In June 2010, the WHO said: In Asia, overall pandemic influenza virus transmission remains low, except in parts of tropical South and South East Asia, particularly Singapore, Malaysia and Bangladesh. In Singapore, overall levels of acute respiratory infections remained slightly below the epidemic threshold and the proportion of respiratory samples testing positive for pandemic influenza virus increased slightly to 34%. In Malaysia, limited data suggests that pandemic influenza virus transmission has begun to decline since plateauing during May 2010.

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The main areas of bird flu infection in Asia continue to be Indonesia, Vietnam and China. As of August 31 2010, the main concentration of human deaths remains Indonesia, where there have been 139 deaths from 168 confirmed cases of bird flu in the country to date. China has registered 39 cases (26 deaths) and Vietnam has registered 119 cases (59 deaths).

Fears persist about the H5N1 virus, particularly in terms of the implications that widespread human-tohuman transmission would have for tourism industries across the region. Cross transmission between birds and humans involves considerable mutation of flu strains, with virulent strains such as H5N1 emerging every so often. The H3N2 pandemic, which originated in Hong Kong in 1968, killed between 750,000 and 1mn people. High demand for poultry, crowded market places and unhygienic rearing and feeding conditions make many countries in Asia fertile breeding grounds for cross-infection and the mutation of flu strains.

The H1N1 virus is actually a new strain of the virus not previously detected in pigs. The first cases of the virus were reported in Mexico and spread quickly to North America and around the world.

To understand the possible impact of avian flu and swine flu on tourism in Asia we can take a look at the severe acute respiratory syndrome (SARS) outbreak, which spread through much of Asia during the first half of 2003. The issue of travel advisories had a major impact on the region as visitor arrivals plunged during the second quarter of the year.

Given the highly uncertain picture it is difficult to incorporate the risks posed by either virus into our core forecast scenario. The flu variable is very much a wild card when it comes to forecasting methodology. Unless human-to-human transmission begins to escalate, the threat posed by bird flu and swine flu will remain an intangible factor. Our core forecasts should therefore be read while bearing in mind the downside risk posed by a potential human flu pandemic.

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