Budget 2020: Healthcare sector allocation rises to Rs 69,000 crore

Ayushman Bharat gets a boost as hospitals to be developed under PPP mode; Jan Aushadhi scheme to be expanded to every district

Hospital and healthcare sector stocks were in focus after Finance Minister Nirmala Sitharaman announced the Centre's plans to expand the government's flagship health insurance scheme Ayushman Bharat-Pradhan Mantri Jan Aarogya Yojana (PMJAY). The FM announced an allocation of Rs 69,000 crore for the healthcare sector in the 2020-21 Union Budget, slightly up from last year. Of this, around Rs 6,400 crore would be for AB-PMJAY scheme, flat from last year.

In 2019-20 the FM had announced a Rs 62,659.12 crore outlay for the healthcare sector.

Besides allocating Rs 6,400 crore for the scheme, the FM also said that the AB-PMJAY scheme would be expanded by setting up more hospitals in the tier-II and III cities under the public-private-partnership (PPP) route. Proceeds from taxes on medical devices would be used for development of hospitals.The government will provide viability gap funding for the process. Shares of Apollo Hospital Enterprises, Aster DM Healthcare were marginally down around afternoon after gaining initially in the morning.

"Viability gap funding window to be set up to cover hospitals, with priority given to aspirational districts that don't have hospitals empanelled under Ayushman Bharat. The government will open hospitals in tier II and tier III cities covered under aspirational districts scheme, which still do not have a Ayushman-empanelled hospital," Sitharaman said.

On-boarding of hospitals for the scheme has been a perennial challenge for the scheme. At present, about 16,000 hospitals are empanelled under the scheme of which around 50 per cent are private sector hospitals.

Under Ayushman Bharat, the government had also initiated a programme to set up 1,50,000 health and wellness centres (HWCs) by 2022. Stocks of diagnostic companies like Dr. Lal Pathlabs and Metropolis Healthcare were up in the range of 1.5-3.5 per cent in early trade.

This apart, the FM also said that the generic medicine retail outlets Jan Aushadhi stores would be expanded to every district. Apart from medicines, these stores would now also stock more surgicals. Currently the Jan Aushadhi stores sell 154 surgicals, which will now be expanded to about 300 surgicals. This would be a positive for both SME pharma manufacturing units as well as small domestic medical devices makers who supply to the scheme.

The expansion of the Jan Aushadhi scheme may further dent the branded generic medicines market in India as these medicines are cheaper than branded ones by at least 50 per cent.

The FM also re-iterated the government's commitment to eliminating tuberculosis from India. Setting a target of 2025, Sitharaman said 'TB Harega- Desh Bachega'. This is five years ahead of the Global Sustainable Development targets. TB kills an estimated 480,000 Indians every year and more than 1,400 every day. India also has more than a million ‘missing’ cases every year that are not notified and most remain either undiagnosed or unaccountably and inadequately diagnosed and treated in the private sector.

Lupin is the market leader in the trade market for anti-TB medicines in India with a 63 per cent share.