Healthcare IndustryHealthcare Industry

By Group 2; Section B

» Neha Sikarwar; Roll No. – 12» Souvik Roy; Roll No. - 14» Boby Sebastian; Roll No. - 16» Rahul Bedi; Roll No. - 18» Vipul Bajaj; Roll No. - 20

By Group 2; Section B

» Neha Sikarwar; Roll No. – 12» Souvik Roy; Roll No. - 14» Boby Sebastian; Roll No. - 16» Rahul Bedi; Roll No. - 18» Vipul Bajaj; Roll No. - 20

Objective

To study the various aspects of the Health care industry in India with respect to the Marketing segmentation, issues at hand

and opportunities of growth.

Flow of Presentation

Brief Overview of Indian HealthCare Sector

Emerging and Re-emerging diseases

Indian healthcare infrastructure

TelemedicineHealth Insurance

Market (India)Nutraceuticals Market

Medical TourismAyurvedaSurgical EquipmentsPharmaceuticals in IndiaResearch and

DevelopmentLabour ForceSurvey AnalysisRecommendations

07/04/2023copyright (your organization) 2003

Brief Overview

The Healthcare Sector comprises of Hospitals Diagnostics Pathology Equipment and Supplies Medical Tourism Telemedicine, etc

It is one the prominent contributors to India’s GDP.It attracts large number of domestic as well as international

playersIndia has become an attractive destination for

Medical Tourism Clinical Studies Research and Development Programs

There is massive growth potential and scope for expansion

HealthCare : Market Size

The HealthCare Industry is presently worth $50bn.

Second largest service sector employer in the country.

Provides jobs for 4.5mn people directly or indirectly.

Ratings agency Sitch estimates doubling of size of the sector to $100bn by 2015.

Indian HealthCare : The Growth Story

A sudden in paradigm shift in the last five years.

This shift has become visible only in the last two years.

A shift from an unorganized to an organized structure.

It was earlier seen only as a social sector but now there is a move towards corporatization.

Apollo pioneered the trend of corporate hospitals in India.

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Factors for the HealthCare boom in India

Strong Indian EconomyIncreasing options for Healthcare FinancingIncreasing Opportunities in Healthcare

delivery Better Profitability (15-20% EBIDTA) Earlier Break Even (2-3 years) Medical Tourism Increasing demand from within the county

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Increasing Demand from Within the Country

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Top Health Care Companies and Hospital Chains

APOLLO LIFESUN HEALTHCARENICHOLAS PIRAMAL INDIA PVT. LTDWIPRO GE HEALTHCARESERUM INSTITUTE OF INDIA LTDCIPLACADILLA HEALTHCARERANBAXYFORTIS HEALTHCARE

Emerging & Re-Emerging Diseases

Pneumonia - The deadliest Acute respiratory infections (ARIs) are responsible for most deaths in the developing nations.

HIV/AIDS - Over 33 million people are living with HIV/AIDS worldwide. There is still no cure on the horizon. Worst affected is sub-Saharan Africa

Emerging & Re-Emerging Diseases(contd)

Diarrhea - It imposes a heavy burden on developing countries - accounting for 1.5 billion bouts of illness a year in children under five. The burden is highest in deprived areas where there is poor sanitation, inadequate hygiene and unsafe drinking water.

Tuberculosis (TB) - a disease once thought to be under control, has bounced back with a vengeance to kill 1.5 million people a year - even more when in combination with HIV/AIDS. Nearly two billion people - one-third of the world's population - have latent TB infection

Emerging & Re-Emerging Diseases(contd)

Influenza - It is a greatly misunderstood disease. Each year we confront seasonal, or interpandemic influenza. Seasonal influenza kills about 250,000 to 300,000 people each year throughout the world

Measles - It is the most contagious disease known to man. It is a major childhood killer in developing countries - accounting for about 900 000 deaths a year

“In an era of increasing globalization, emerging infectious diseases are everybody's problem”

SARS - Nearly three years ago, the world experienced another newly emerging microbe—a previously unknown corona virus—that caused severe acute respiratory syndrome (SARS). Fortunately, the morbidity and mortality associated with the SARS outbreak were not as great as what we observe every year with influenza. The SARS outbreak turned out to be a classic study in epidemiology with regard to tracking the point source, the spread, and the containment. SARS first appeared in Guangdong Province in China. It was not reported to authorities until it emerged in Hong Kong, when an index case, which traveled from Guangdong to Hong Kong, stayed at the Metropole hotel and infected at least 14 people. Those individuals did some traveling throughout the world. Within months we had an epidemic that temporarily transfixed the world and did extraordinary economic damage in Canada, China, and Hong Kong, and other countries. There were 8,098 reported cases and 774 deaths.

Indian Healthcare Infrastructure

As on December 2010, there were 335 medical colleges which were recognized by the Indian Medical Council.

As on 2001, a total of 5, 39, 00 MBBS doctors were registered with the Medical council number of Physicians and specialists available is less than the estimated requirements.

The current doctor population ratio is 1:1800. Though at present approximately 50000

doctors are being produced annually in the nation, but the number needs to go up.

Indian Healthcare Infrastructure(contd)

By 2020, the Indian healthcare industry is estimated to be worth US$ 275.6 billion. Currently, 8 per cent of India’s GDP is spent on healthcare. India needs to spend at least US$ 80 billion more in the next five years to meet targets, according to Mr Pradipta K Mohapatra, Chairman, Executive & Business Coaching Foundation India Ltd and Past Chairman, Confederation of Indian Industry (CII), Southern Region.

Survey Analysis on Infrastructure

51% of the surveyed population believes that there is considerable difference between performances of hospitals in their region.

39% of the population believes that quality of govt. hospitals is bad and 35% of population believes that the quality is just an average. 18% believes that the quality of the govt. hospitals is very bad. Only 8% believes that quality of govt. hospitals are good.

Survey Analysis on Infrastructure(contd)

57% of the population believes that quality of private hospitals is good and 22% of population believes that the quality is just an average. 21% believes that the quality of the private hospitals is very good.

83% of the population is of the opinion that cost of private hospital is quite expensive.

Measures Taken to Improve

Medical practitioners to undergo knowledge and skill up gradation and recertification every five years are proposed in the Tenth Plan.

Promoting Open Universities for providing continuous up gradation of medical knowledge

Setting up of Medical Grants Commission for funding new Government Medical and Dental colleges

Developing decentralized district based health manpower planning that would meet the demands of health services, and encouraging all States to establish University of Health Sciences (UHS)

Telemedicine

Telemedicine is the ability to provide interactive healthcare utilizing modern technology and telecommunications.

Various telemedicine usage models

Real-Time

Store and Forward (asynchronous):

Home Health Telemedicine

Recommendations

More medical collegesAttract more FDI investment Student exchange programmes More special medical schemes Branding Healthcare IndustryPreserve and promote Ayurvedic Medical SystemTelemarketing and social marketingSeminars and workshop (build awareness; stop

corruption)

The Health Insurance Market of

India

Need of Health Insurance

Government Hospitals: Inadequate facilities

Expensive Medicines: Diagnostic charges are beyond common man’s reach.

High cost of Specialists.

Tax benefit under section 80 D of the Income Tax Act

Standard Health Insurance: Features

Room and boarding expenses provided by the hospitalNursing expensesDiagnostic and medicine expensesOther Services: Surgeon, Anesthetist, Medical

Practitioner, Consultants, Specialist fees, Anesthesia, blood, oxygen, operation theatre expenses, cost of surgical appliances, medicines and drugs and similar expenses.

Pre-hospitalization and post hospitalization expenses subject to conditions and limits.

Companies Category

Non-Life Insurance:

Public: Companies like Oriental, National Insurance, United India, etc. Private: Companies like ICICI Lombard, Reliance, Bajaj Allianz, etc.

Specialized Health Insurance Companies:Offers Core Health Insurance services & Products only.Examples: Star Health & Allied Insurance, Apollo DKV Insurance

Life Insurance Companies: Addresses following needs: Saving Pension Retirement InvestmentPlayers are LIC and other private players

Market Segmentation

Working Class IndividualsWorking Professionals with Family.StudentsSenior CitizensSmall and Medium Enterprises/ Corporate Houses:

Product Ranges

Individual Health Insurance Products (Single Person).Family Health InsuranceSenior citizen Health InsuranceIndividual Personal AccidentOverseas Travel Health InsuranceGroup Health Insurance Policy for corporate /

Organization

Industry Statistics

Inferences

Dominance: The four state-owned general insurers, account for almost 60 per cent of the premiums written in the first nine months of this fiscal.

National Insurance Company: sharp rise in premium of 54% during the period.

Private players: ICICI Lombard: at top position third spot in the industry with a growth of over 70 per cent and a

market share of 13.2 per cent, Star Health & Allied Insurance (Star Health) with a share of 11.5

percent.

NUTRACEUTICALS MARKET

Dietary supplements

To fill nutritional deficiencies in food

To prevent diseases

Segmentation

Functional foods

Functional beverages

Mineral supplements

Challenges

Lack of awareness

Lack of Trust among People

Lack of regulations

Expensive Products

Major Companies

Amway India-NUTRILITEHerb life

Distribution channel: Multi-level Marketing

MEDICAL TOURISM

MEDICAL TOURISM

INTRODUCTION20% growth rateHistoryInternational healthcare accreditation organizations

MEDICAL TOURISM IN INDIA30% growth rate9500 crores by 2015Health capital of India

ADVANTAGES OF INDIA

Quality and experience of doctors and surgeons

Most doctors and nurses are fluent in English

Latest medical equipments

Quality of nurses

Low cost

COMPETITION

Thailand, Singapore, Malaysia and Philippines are the major competitors

Thailand is more popular for cosmetic surgery.

In complex procedures Singapore has a technology advantage.

Cost in Thailand is also less than SingaporeThe Malaysian government is aggressively

promoting medical tourism.

SOURCE MARKET

SOURCE: http://www.tourism.gov.in

SOURCE OF FINANCIAL SUPPORT

SOURCE: http://www.tourism.gov.in

AYURVEDA

INTRODUCTIONIncreasing popularity in Western CountriesAvailability of good infrastructureHERBAL TOURISM IN KERALAKerala is becoming one of the major

destination of herbal tourismKerala has an excellent network of hospitalsInternational standard of facilities

SURGICAL EQUIPMENTS

World market growing at a rate of 6% from 2010

Market is highly price sensitive.Good network of distribution channelsPowered Instruments :- 47% of the total

marketNon-Powered Surgical Instruments:- blades,

scissors etcWound Closure Devices:- staplers, wound

closure strips etc

• The Indian pharmaceutical industry is the world's second-largest by volume.

• India's bio-tech industry clocked a 17 percent growth with revenues of Rs.137 billion ($3 billion) in the 2009-10 financial year .

• Bio-Pharmaceutical was the biggest contributor generating 60 percent of the industry's growth at Rs. 8,829/- crore, followed by bio-services at Rs.2,639/- crore and bio-agri at Rs.1,936 crore. 

Pharmaceuticals in India

07/04/2023copyright (your organization) 2003

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Pharmaceuticals in India (contd)

• The first pharmaceutical company was Bengal Chemicals and Pharmaceutical Works, which still exists today as one of 5 government-owned drug manufacturers, formed in Calcutta in 1903.

• For the next 60 years, most of the drugs in India were imported by multinationals either in fully formulated or bulk form.

Encouraged growth of drug manufacturing in the early 1960s, and with the Patents Act in 1970, enabled the industry to become what it is today.

The patent act removed composition patents from food & drugs, and though it kept process patents, these were shortened to 5 to 7 years.

Lack of patent protection made the Indian market undesirable for multinational companies & while they went out, Indian companies took their place.

They carved a niche in both the Indian & world markets with their expertise in reverse-engineering new processes for manufacturing at low costs.

Very few companies have taken steps towards drug innovation, the industry has been following the older model.

Government’s Role

Overview Purely Indian pharmaceutical companies is fairly low.

Mainly operated, controlled by dominant foreign companies having subsidiaries in India.

In 2002, over 20,000 registered drug manufacturers in India sold $9 billion worth of formulations & bulk drugs. 85% of these were sold in India, while over 60% were exported, mostly to the

U.S. & Russia.

Players in the market are mostly SME’s; 250 of the largest companies control 70% of the market.

Thanks to the 1970 Patent Act; multinationals represent only 35% of the market, down from 70% thirty

years ago.

Overview (contd..)

Pharmaceutical companies operating in India, even the multinationals, employ Indians at all levels.

Mirroring the social structure, firms are very hierarchical. Home grown pharmaceuticals, are often a mix of public & private enterprise. Leadership passes from father to son & the founding family holds a majority

share.

Globally, India currently holds a modest 1-2% share, growing at around 10% per year.

There are 74 U.S. FDA-approved manufacturing facilities in India. More than in any other country outside the U.S.A. In 2005, almost 20% of all Abbreviated New Drug Applications (ANDA) to the

FDA were filed by Indian companies.

Top 10 Pharmaceutical Companies in India, as of 2010.

Rank Company Revenue 2010 (Rs crore) Revenue 2010 (Rs billion)

1 Cipla 4,198.96 41.989

2 Ranbaxy (taken over by Daiichi Sankyo in 2008) 4,162.25 41.622

3 Dr. Reddy's Laboratories 3,763.72 37.637

4 Sun Pharmaceutical 2,463.59 24.635

5 Lupin Ltd 2,215.52 22.155

6 Aurobindo Pharmaceutical 2,081.19 20.801

7 GlaxoSmithKline 1,773.41 17.734

8 Cadila Healthcare 1,613 16.13

9 Aventis Pharmaceutical 983.80 9.838

10 Ipca Laboratories 980.44 9.8044

Patents The industry is being forced to adapt its business model to

recent changes in the operating environment. The 1st & most significant change was the January 1, 2005

enactment of an amendment to India’s patent law that reinstated product patents for the first time since 1972. The WTO’s Trade-Related Aspects of Intellectual Property Rights (TRIPS)

agreement, which mandated patent protection on both products & processes for a period of 20 years.

India was forced to recognize not only new patents but also patents filed after January 1, 1995.

The new patent legislation has resulted in fairly clear segmentation. The multinationals narrowed their focus onto high-end patients who make up

only 12% of the market, taking advantage of their newly bestowed patent protection.

Meanwhile, Indian firms have chosen to take their existing product portfolios & target semi-urban & rural populations.

Product development

Indian companies are adapting to the new environment.

Firms have made their ways into the global market, By researching generic competitors to patented drugs Following up with litigation to challenge the patent.

Those who can afford it, have set their sights on an even higher goal: new molecule discovery. Initial investment is huge, but companies are promised hefty profit margins &

recognition globally.

Local firms have been investing money into their R&D programs or have formed alliances.

Small & Medium enterprises

The outlook for small and medium enterprises (SME) is not as bright. The excise tax of 16% on the MRP of their products. Was a major issue.

Larger companies were cutting back on outsourcing & business is shifting to companies with facilities in tax-free states of - Himachal Pradesh, Jammu & Kashmir, Uttaranchal & Jharkhand.

But in a matter of a couple of years the excise duty was revised on two occasions, first it was reduced to 8% & then to 4%. As a result, the benefits of shifting to a tax free zone were negated. This resulted in, factories in the tax free zones, to start up third party manufacturing.

Under this these factories produced goods under the brand names of other parties on job work basis.

As SMEs wrestled with the tax structure, they were also scrambling to meet the deadline for compliance with the revised Schedule M Good Manufacturing Practices (GMP).

While this should be beneficial to consumers & the industry at large, SMEs have been finding it difficult to find the funds to upgrade their manufacturing plants, resulting in the closure of many facilities.

Challenges

All of these changes are ultimately good for the Indian pharmaceutical industry, which suffered in the past from inadequate regulation and large quantities of spurious drugs.

They force the industry to reach global competitiveness, however they have also expose some of the inadequacies in the industry.

Its main weakness is an underdeveloped new molecule discovery program. Market leaders such as Ranbaxy spend only 5-10% of their revenues on R&D. This disparity comes when advances in genomics have made research equipment

more expensive than ever.

The drug discovery process is further hindered by a dearth of qualified molecular biologists. Due to disconnect between curriculum & the industry, pharmaceutical companies

in India also lack the academic collaboration.

Research & Development

The Indian government has recognized R&D as an important driver in the growth of their pharmaceutical businesses & conferred tax deductions for expenses related to research & development.

They have granted other concessions as well, such as reduced interest rates for export financing and a cut in the number of drugs under price control.

Government support is not the only thing in Indian pharmaceutical’s favour. companies also have access to a highly developed IT industry that can partner

with them in new molecule discovery, related R&D.

Labour Force

India’s greatest strengths lie in its people.

India also boasts of well-educated, English-speaking labour force that is the base of its competitive advantage.

Although molecular biologists are in short supply, there are a number of talented chemists who are equally as important in the discovery process.

In addition, there has been a reverse brain drain effect in which scientists are returning from abroad to accept positions at lower salaries at Indian companies. Once there, these foreign-trained scientists can transfer the benefits of their knowledge and

experience to all of those who work with them.

India’s wealth of people extends benefits to another part of the drug commercialization process as well. With one of the largest and most genetically diverse populations in any single country, India can recruit for clinical trials more quickly and perform them more cheaply than countries in the

West. Indian firms have just recently started to leverage.

Survey Analysis & Recommendations

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