Health Care Services : International footfalls under the lens by Kotak Institutional Equities
International footfalls under the lens
We expect a limited impact on our hospital coverage on account of travel disruptions due to the ongoing Middle East war. Apart from the Middle East, we would also monitor the impact on medical value travel (MVT) from Africa, given most flight connectivity is via the Middle East. Within the listed space, the exposure is high for Artemis, Max, Fortis, Medanta and Yatharth (in that order). Importantly, excluding Artemis, MVT from the Middle East and Africa constitutes just 1-4% of overall sales. Specifically, the contribution from Iran and Israel is negligible. If the situation eases soon, companies might largely be able to recoup at least the elective procedures. Currently, we have not factored in any hit in our estimates.
After Bangladesh, Middle East and Africa are the most critical MVT markets
According to the Bureau of Immigration, there were 644,387 foreign tourist arrivals (FTAs) for medical purposes in India in CY2024. Out of these, ~75% were from Bangladesh. Due to geopolitical reasons, the contribution from Bangladesh would have reduced significantly in CY2025. As shown in Exhibit 2, besides Bangladesh, the other critical countries contributing to medical tourism in India are Iraq (5%), Somalia (2%), Oman (2%) and Uzbekistan (1%). It is estimated that the Middle East and West Asia account for ~18% of international medical patients seeking treatment in India. Similarly, we estimate Africa accounts for 15-20% of MVT in India. Currently, the government of India extends the e-medical visa facility to 171 countries.
Middle East accounts for 5-40% of MVT sales for listed hospitals
After Bangladesh, the Middle East is a critical market for MVT in India, contributing 5-40% of international sales for listed Indian hospitals. The contribution from the Middle East is relatively higher for Delhi-focused hospital chains. For instance, Max has 15 company- and partner-owned patient assistance centers across 14 countries, including Dubai, Iraq and Oman. In general, within MVT, the key focus markets for Max are the Middle East, Eastern Europe and Africa. To cover up for the Bangladesh shortfall seen over the past few quarters, APHS has been exploring newer markets such as Uzbekistan, Africa, Indonesia and Iraq. For Fortis, the key focus MVT markets are West/East Africa, the Middle East and Central Asia.
There has been disruption in patient inflow from Africa too
Along with the Middle East, we highlight Africa as another key market for MVT in India. With most flights from Africa being routed through the Middle East, there has been a disruption in patient inflow from Africa too over the past one week. Except for Aster DM, which has recently started focusing on Africa, most other hospital companies derive 25-50% of their international sales from Africa. Among companies that have disclosed their on-ground presence in Africa, Max has patient assistance centers in Kenya, Zimbabwe, Nigeria, Ethiopia and Tanzania. Our preferred picks in hospitals are Apollo Hospitals, Rainbow and Medanta.
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