Perspective on Health Care Sector, Bangalore University, Health Care,MBA

1. M-3
PERSPECTIVES ON HEALTH CARE SECTOR
DR. JERRY JOHN

2. Health Care
What is Hospital?
According to the World Health organization, Health is a
“State of complete physical, mental and social well being
and not merely the absence of disease or deformity
Hospital first came into existence prior to 1000 B.C
The modern concept of the hospital visualizes it, as one
of a comprehensive system of preventive and curative
medicine and as an institution devoted not only to
inpatient treatment, but also to ambulatory and
domiciliary use
The modern concept of the hospital visualizes it, as one
of a comprehensive system of preventive and curative
medicine and as an institution devoted not only to
inpatient treatment, but also to ambulatory and
domiciliary use
Dr.Jerry@KCM

3. Classification of hospital based up on
ownership and control is present as below
Public hospitals: The hospitals run by central or state government, local bodies and public sector
undertaking. The hospitals are purely service organizations and nonprofit making hospitals. Examples are
civil hospitals.
Voluntary Hospitals: These hospital are registered under the societies act or public trust act. They are run
by trusts and on non commercial basis examples, charitable hospitals.
Nursing Homes: Generally owned and, managed by individual doctors. These hospitals generally do not
admit cases of medico legal importance and the patient care services are usually provided in some of the
specialties of medicine. Some of the nursing homes provide only maternity care. Some hospitals even
provide tertiary care in some super specialties like cardiology, Nephrology. Example is Mayo medical
center. Awadh Hospital at Lucknow city, etc.
Corporate Hospitals: These hospitals are run on the basis of profit- earning and are registered under
companies act. Examples are Hinduja Hospital, Apollo Hospital, etc.
Dr.Jerry@KCM

4. Classification of hospital based up
on directory of hospital
• General Hospital: These hospitals usually
provide medical care in more than one
broad specialty and there is no strict
departmentation.
• Rural Hospitals :The hospitals located in
rural areas.
• Specialty Hospitals : Hospital providing
medical care usually in one or more
specialty like TB Hospital, Eye Hospital,
Cancer Hospital, heart centers etc .
• Teaching Hospital :Usually the hospitals
attached to medical college
• Isolation Hospital :Hospitals providing
patient care to communicable diseases.
Dr.Jerry@KCM

5. Classification of hospital based up on systems of medicine
Dr.Jerry@KCM

6. Departments
• Medicine Division
• Internal Medicine
• Cardiology
Gastroenterology
• Nephrology
• Pulmonary
• Psychiatry and
Neurology
• Infectious diseases
• Allergy
• Skin and Venereal
diseases
Endocrinology
• Geriatrics
• Immunology
• Pediatrics
• Surgery Division
• General surgery
• Obstetrics and
Gynecology
• Orthopedic
surgery
• Ophthalmology
• Otolaryngology
• Dental and Oral
Surgery
• Nephrology
• Neurologic
surgery
• Cardiothoracic
surgery
• Plastic surgery
• Anesthetics
Dr.Jerry@KCM

7. Doctor &
Hippocratic
Oath
• The word 'doctor' comes from the Latin word for
"teacher.”
• Hippocrates. A towering figure in the history
of medicine was the physician Hippocrates of Kos (c.
460 – c. 370 BCE), considered the "father of
modern medicine."
• The Hippocratic Corpus is a collection of around
seventy early medical works from ancient Greece
strongly associated with Hippocrates and his
students.
• Acharya Charak has been crowned as
the Father of Medicine in India
• One of the earliest document in medical ethics – 5th
century BC.
• Traditionally all doctors recite this oath at swearing
in. It is considered sacred for its religious foundation
and sanctity.
• Adopted at World Medical Association General
Assembly in 1948.
• Amended in 1968, 1984, 1994, 2005 and 2006.
• Declaration of physicians’ dedication to the
humanitarian goals of medicine.
Dr.Jerry@KCM

8. A Modern Version of the Hippocratic Oath
• I swear to fulfill, to the best of my ability and judgment, this covenant: I will respect the
hard-won scientific gains of those physicians in whose steps I walk, and gladly share such
knowledge as is mine with those who are to follow. I will apply, for the benefit of the sick,
all measures which are required, avoiding those twin traps of overtreatment and
therapeutic nihilism.
• I will remember that there is art to medicine as well as science, and that warmth,
sympathy, and understanding may outweigh the surgeon's knife or the chemist's drug. I will
not be ashamed to say "I know not," nor will I fail to call in my colleagues when the skills of
another are needed for a patient's recovery.
• I will respect the privacy of my patients, for their problems are not disclosed to me that the
world may know. Most especially must I tread with care in matters of life and death. If it is
given me to save a life, all thanks. But it may also be within my power to take a life; this
awesome responsibility must be faced with great humbleness and awareness of my own
frailty. Above all, I must not play at God. I will remember that I do not treat a fever chart, a
cancerous growth, but a sick human being, whose illness may affect the person's family
and economic stability. My responsibility includes these related problems, if I am to care
adequately for the sick.
• I will prevent disease whenever I can, for prevention is preferable to cure. I will remember
that I remain a member of society, with special obligations to all my fellow human beings,
those sound of mind and body as well as the infirm. If I do not violate this oath, may I enjoy
life and art, respected while I live and remembered with affection thereafter. May I always
act so as to preserve the finest traditions of my calling and may I long experience the joy of
healing those who seek my help.
Dr.Jerry@KCM

9. Brief
Overview
5/5/2012copyright (your organization) 2003
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 players
India has become an
attractive
destination for
Medical Tourism
Clinical Studies
Research and
Development Programs
There is massive growth potential and
scope for expansion
Dr.Jerry@KCM

10. 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.
Dr.Jerry@KCM

11. 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.
Dr.Jerry@KCM

12. Factors for the HealthCare boom
in India
Strong Indian Economy Increasing options for
Healthcare Financing
Increasing Opportunities in
Healthcare delivery
Better Profitability (15-20% EBIDTA)
Earlier Break Even (2-3 years)
Medical Tourism
Increasing demand from within the
county
Dr.Jerry@KCM

13. Increasing Demand from Within the Country
8
Dr.Jerry@KCM

14. Top Health
Care
Companies
and
Hospital
Chains
APOLLO LIFE
SUN HEALTHCARE
NICHOLAS PIRAMAL INDIA PVT. LTD
WIPRO GE HEALTHCARE
SERUM INSTITUTE OF INDIA LTD
CIPLA
CADILLA HEALTHCARE
RANBAXY
FORTIS HEALTHCARE
Dr.Jerry@KCM

15. 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
Dr.Jerry@KCM

16. 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
Dr.Jerry@KCM

17. 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
Dr.Jerry@KCM

18. 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.
Dr.Jerry@KCM

19. 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.
Dr.Jerry@KCM

20. 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.
Dr.Jerry@KCM

21. 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.
Dr.Jerry@KCM

22. Measures
Takento
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)
Dr.Jerry@KCM

23. Telemedicine
• Telemedicine is the
ability to provide
interactive healthcare
utilizing modern
technology and
telecommunications.
• Various telemedicine
usagemodels
• Real-Time
• Store and Forward
(asynchronous):
• Home Health
Telemedicine
Dr.Jerry@KCM

24. Recommendations
More medical colleges
Attract more FDI investment
Student exchange programmes
More special medical schemes
Branding Healthcare Industry
Preserve and promote Ayurvedic Medical System
Telemarketing and social marketing
Seminars and workshop (build awareness; stop
corruption)
Dr.Jerry@KCM

25. Needof
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
Dr.Jerry@KCM

26. Standard
Health
Insurance:
Features
• Room and boarding expenses provided by the
hospital
• Nursingexpenses
• Diagnosticandmedicineexpenses
• OtherServices:
• Surgeon,
• Anesthetist,
• Medical Practitioner,
Consultants,
• Specialistfees,
• Anesthesia,
• blood,
• oxygen,
• operation theatre expenses,
• costof surgicalappliances,
• medicines and drugs and
similarexpenses.
• Pre-hospitalization and post hospitalization
expensessubjectto conditionsandlimits.
Dr.Jerry@KCM

27. 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
Investment
Players are LIC and other private players
Dr.Jerry@KCM

28. Market
Segmentation
Working Class Individuals
Working Professionals with Family.
Students
Senior Citizens
Small and Medium Enterprises/
Corporate Houses:
Dr.Jerry@KCM

29. Product
Ranges
Individual Health Insurance Products
(Single Person).
Family Health Insurance
Senior citizen Health Insurance
Individual Personal Accident
Overseas Travel Health Insurance
Group Health Insurance Policy for
corporate / Organization
Dr.Jerry@KCM

30. IndustryStatistics
Dr.Jerry@KCM

31. 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.
Dr.Jerry@KCM

32. MEDICAL
TOURISM
INTRODUCTION
20% growth rate
History
International healthcare accreditation organizations
MEDICAL TOURISM IN INDIA
30% growth rate
9500 crores by 2015
Health capital of India
Dr.Jerry@KCM

33. 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
Dr.Jerry@KCM

34. 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
Singapore
The Malaysian government is
aggressively promoting medical
tourism.
Dr.Jerry@KCM

35. SOURCE MARKET
SOURCE: http://www.tourism.gov.in
Dr.Jerry@KCM

36. SOURCE OF FINANCIAL SUPPORT
SOURCE: http://www.tourism.gov.in
Dr.Jerry@KCM

37. AYURVEDA
INTRODUCTION
Increasing popularity in Western Countries
Availability of good infrastructure
HERBAL TOURISM IN KERALA
Kerala is becoming one of the major
destination of herbal tourism
Kerala has an excellent network of hospitals
International standard of facilities
Dr.Jerry@KCM

38. SURGICAL
EQUIPMENTS
World market growing at a rate of 6%
from 2010
Market is highly price sensitive.
Good network of distribution channels
Powered Instruments :- 47% of the
total market
Non-Powered Surgical Instruments:-
blades, scissors etc
Wound Closure Devices:- staplers,
wound closure strips etc
Dr.Jerry@KCM

39. Pharmaceuticals
in India
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.
Dr.Jerry@KCM

40. Pharmaceuticals
in India (contd)
5/5/2012
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.
Dr.Jerry@KCM

41. Government’s
Role
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.
Dr.Jerry@KCM

42. 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.
Dr.Jerry@KCM

43. 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.
Dr.Jerry@KCM

44. 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 Sankyoin 2008)
4,162.25 41.622
3 Dr.Reddy's Laboratories 3,763.72 37.637
4 SunPharmaceutical 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 CadilaHealthcare 1,613 16.13
9 Aventis Pharmaceutical 983.80 9.838
10 Ipca Laboratories 980.44 9.8044
Dr.Jerry@KCM

45. 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.
Dr.Jerry@KCM

46. 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.
Dr.Jerry@KCM

47. 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.
Dr.Jerry@KCM

48. 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.
Dr.Jerry@KCM

49. 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.
Dr.Jerry@KCM

50. LabourForce
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.
Dr.Jerry@KCM