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Emerging Healthcare Landscape of
IndiaExecutive Summary
April 2018
Amsterdam Copenhagen Hamburg Mumbai New York Oslo Singapore Stockholm
2018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright
12018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright
Contents
 Country Context
 Regulatory Changes
 Pharmaceuticals
 Medical Technology
 Diagnostics
 Institutions
 Digital Health
 Conclusion
22018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright
Governance and Healthcare Index
Source: Healthcare Access and Quality Index 2015: Global Burden of Disease Study, 2015, Lancet Report; : Worldwide Governance Indicators, 2014: World bank,
http://databank.worldbank.org/;
India
32018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright
Access Challenge
Source: Urban Population Contribution To National GDP To Touch 70% By 2011, The Associated Chambers of Commerce and Industry of India, March 2008, Census 2011 (accessed 3
February, 2015), UN – World Urbanization Prospects (The 2014 Revision)
77.0%
539mn.
74.0%
621mn.
72.0%
734mn.
68.0%
896mn.
50.0%
805mn.
23.0%
161mn.
26.0%
219mn.
28.0%
286mn.
32.0%
429mn.
50.0%
814mn.
0%
20%
40%
60%
80%
100%
1981-1990 1991-2000 2001-2010 2011-2020 E2050
Population
%
Rural
Urban
42018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright
Affordability Challenge
Source: National Council for Economic Research (India), Ministry of Health and Family Welfare, CDSCO website
0
50
100
150
Urban Rural
0.6
10.2
1.0
7.3
Number of Households in Mn.
(2014)
18.1
107
57
.5
60.7
87 Mn
176 Mn
Lowest income (< USD 1,800 p.a.)
Lower income (USD 1,800 – 4,000 p.a.)
Middle Income (USD 4,000 – 20,000 p.a.)
Upper Income (>USD 20,000 p.a.)
52018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright
National Health Protection Scheme (2018)
Source :http://www.ijmr.org.in/article.asp?issn=0971-5916;year=2015;volume=142;issue=4;spage=383;epage=390;aulast=Nandi
Notes : ** The evidence for the impact of RSBY are unclear due lack of administrative data on various aspects of the scheme
The NHP was last reformed in 2017, however it needed to be amalgamated with an insurance scheme
• INR 500,000 cover per family
• Existing disease covered
• Pre and post hospitalization expenses covered
• Coverage of 10mn families based on SECC data
• No cap for family size and age
• Defining package rates for surgeries
• Management of funds
• Preventing system leakages
• National roll out
• Providers adherence to the scheme
• Y-O-Y expenditure expected to increase up to 15%
for 5 years
National
Health Policy
2002 2005
National Rural
Health Mission
2008
Rashtriya Swasthya
Bima Yojana (RSBY)
2018
National Health
Protection scheme
-486 districts (28 States and Union
Territories) covered until 2012
-Settlement of 175Mn cases by 2013
-Increase in individuals covered
from 4Mn in 2009 to 34Mn in 2013
- Service offerings from 15
insurance companies, 25 TPAs
-12,000 hospitals empaneled
Even with irregularities, RSBY led to
Focused needs of
under-served rural
areas
Unifying frame-
work
Coverage of below the
poverty line, larger scheme
, larger fund allocation
Higher fund allocated for
insurance, Higher
population coverage
- Integration of existing policies absent
- Decentralized service delivery
- Focus on states that lag health
indicators
- Unclear evidence to
examine the impact of
RSBY**
- Scheme considered to
be underfunded
- Systemic leakage
- Insurance frauds
- Inadequate
reimbursements
Evolution of the existing health policy scheme in India
Key Questions:
- Contours of the scheme
- Implementation
- Actual allocation of funds
- Infrastructural
development
- Dedicated medical
fraternity
- Adequate drugs and
supplies
ChallengesBenefits
2009 - 2017
Benefits Challenges
62018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright
73%
27%
0%
20%
40%
60%
80%
100%
Public Vs Pvt
Health Insurance Challenge
Health Insurance Density (2015)
%
Note: *NHPS means National Health Protection Scheme;
Source: IRDA Annual Report, 2014 - 15, Hindustan times – 17 Oct. 2017, India spend – 07 June 2017, The astonishing cost of healthcare in India, Quartz India, 18th April, 2016, Economic
Times – 10th Oct 2017, UC Analysis
994mn
314mn
0%
20%
40%
60%
80%
100%
Insurance Density
Private
Insurance
Public
Insurance
Insured
Not
Insured
Health Insurer (2015)
*NHPS aims to
address this issue
72018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright
1.1% 1.4%
4.2%
3.1% 3.7% 3.8%
7.6% 8.3%
1.8%
3.3%
1.2% 2.5%
3.4%
4.5%
1.5%
8.9%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Indonesia India Turkey China Russia Brazil United
Kingdom
United
States
Low Public Spending
Source: World Bank, WHO (accessed 19th October 2017)
(in USD Bn.)
Public
Private
Healthcare Spend as % of GDP (2014)
2.8%
4.7%
5.4% 5.5%
6.3%
7.1%
8.3%
9.1%
17.1%
*NHPS aims to
address this issue
82018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright
High OOPE
OOPE % of Total Health Expenditure (2014)
9.7% 11.0%
17.8%
25.5%
32.0%
44.0% 45.8% 46.9%
62.4%
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
United
Kingdom
United
States
Turkey Brazil China Mexico Russia Indonesia India
Source: WHO, World Bank Data
*NHPS aims to
address this issue
92018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright
Contents
 Country Context
 Regulatory Changes
 Pharmaceuticals
 Medical Technology
 Diagnostics
 Institutions
 Digital Health
 Conclusion
102018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright
38%
39%
5%
18%
0%
20%
40%
60%
80%
100%
2015
131
226
-
50
100
150
200
250
2016 2020
Indian Healthcare Sector
Source: WHO, World Bank Data
Note :1. Indicated split is representative contribution of key healthcare segments to overall healthcare market. Healthcare services does not include primary
healthcare services. There is certain proportion of primary healthcare provided by the state which has not been included/ estimated
2. The pharma segment accounts for the formulations and API, domestic as well as global market
Pharma
Healthcare services
By Segments %
Medtech
Others
USD Bn
CAGR
(2016 – 20)
- 14%
112018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright
Source: Previous UC Engagements, Hindu BusinessLine – “Stent prices slashed by 85%; health group gives thumbs up”, Indian Express – “US firms approach USTR against India’s medical
price control measures”, Economic times – “Now, government plans to cap margins of medical devices to bring down prices”, Times of India – “To market new drugs in India, global trials must
include Indians”
Regulatory Landscape Flux
Impact of Impending Regulations
Multiple sub-committees under Ministry of Health working independently to establish
policies/regulations
Regulation Remarks
Essentiality
• National list of Essential Medicines
• National list of Essential Medical Devices
Price Capping/
Control
• ~85% and ~69% price caps for stents and knee implants respectively
• USTR against India`s medical pricing steps
Local Manufacturing
• NMDP - ‘Make in India’
• 100% FDI permitted, fallen to 50% as of 2017
• Import duties hike for raw materials vs semi-finished goods
Trade Margin Capping
• DoP categorizing 23+ devices for limiting trade margins
• Method favored by Medical Technology Association of India
Clinical Trials; Indian
samples
• New drugs developed outside the country, should include Indian patients in the global
clinical trials
Genericization
• Mandatory Generics Prescriptions
• Propagation of Jan Aushadhi Scheme
National Health
Protection Scheme
• Special focus on TB
• Limitations for MNC products in public hospitals
• Increase influence of private insurance industry in the public healthcare space
122018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright
Contents
 Country Context
 Regulatory Changes
 Pharmaceuticals
 Medical Technology
 Diagnostics
 Institutions
 Digital Health
 Conclusion
132018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright
Pharma Market
15.4
23.3
0
5
10
15
20
25
2016 2020
CAGR - 11.0%
Indian Pharma Market
In USD Billion
13.9
1.6
1.5
-
2
4
6
8
10
12
14
16
18
2017
Market segmentation
In USD Billion
17
Note: 1 – Fixed dose combinations (FDC), 2 - Unbranded generics market share has been derived by deducting the share of branded generics from total
market, 3- The market size indicates India market (consumption) and excludes exports
6.8
10.2
-
2
4
6
8
10
12
14
16
18
2017
FDC penetration
In USD Billion
17
Source: Primary Research, Indian pharmaceutical industry, India Brand Equity Foundation, 2017, Generics to double in 5 years, The Hindu, 12th Sept, 2015
Unbranded
generics
Branded
generics
Patented
Non - FDC
FDC
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Genericization (Gx)
Source: Indian pharmaceutical industry, Times of India – 18 Apr 2017, The wire – 1 May 2017, Jan Aushadhi, Drugs and Control act, Drugs and Cosmetics act
• Medical Council of India 2016 circular mandates physicians to Rx drugs with
generic names
• Govt. propagating affordable generics via Jan Aushadhi scheme
• Pharma companies to conduct BE tests for certain generics and print labels with
generic names 2X brand names
• Stakeholders have concerns about implementing the policy while maintaining
drug quality
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Gx: Supplementary Policies Required
India US UK Germany Finland Sweden France
Main
Policies
Generic
Prescription
Generic
Substitution
Supplementarypolicies
Regulated
Pricing
Physician
Incentives
Pharmacist
incentives
Formulary
Mandated Not Mandated
or Supported
Source: Primary Research, The experiences of implementing generic medicine policy in eight countries, Saudi Pharmaceutical Journal, 2014, European market entry strategy for generic
companies, European Commission,2016, Pharmering markets – Picking a pathway to success, IMS Health, 2013
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1.5
3.6
13.9
17.5
1.6
2.1
0
5
10
15
20
25
2017 2020
11.0%
8.0%
33.1%
If Public Sector Shifts To Gx (15%)
(Bn USD)
9.0%
15.5
%
81.8
%
75.3
%
9.2% 9.2%
0%
25%
50%
75%
100%
2017 2020
%
17
23.2
11.1
6.0
-
5
10
15
2017
17
(Bn USD)
Note: Overall contribution of public sector by value is expected to go down
Source: Primary Research, UC Analysis
CAGR
‘17 – ‘20
Public
sector
Private
sector
Unbranded
generics
Branded
generics
Patented
Unbranded
generics
Branded
generics
Patented
Indian Pharma Market
172018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright
1.5
4.9
13.9
16.2
1.6
2.1
0
5
10
15
20
25
2017 2020
14.
1
2.9
-
4
8
12
16
20
2017
11.0%
5.2%
47.6%
If NLEM Shifts To Gx (21%)
9.0%
21.2%
81.8%
69.7%
9.2% 9.2%
0%
25%
50%
75%
100%
2017 2020
%
17
23.2
17
Source: Primary Research, UC Analysis
CAGR
‘17 – ‘20
Unbranded
generics
Branded
generics
Patented
Unbranded
generics
Branded
generics
Patented
NLEM
Non - NLEM
Indian Pharma Market
(Bn USD) (Bn USD)
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Gx Impact
Facilitators Probability
Global
MNC
Large
Domestic
*
Small
Domestic
#
Rationale
Stringent
Quality
Regulations
High • High Cost of BA/BE studies
Acceptance By
Healthcare
Professionals
Medium • Physicians propagate MNC generics
Adoption Of
Generics
Across Govt.
And Private
Institutes
Medium
• Adoption likely in govt. institutes only
Increase In
Generic
Acceptance
Among
Patients
Medium
• Physicians influence Patients'
acceptance
Note: * Large Domestic Players – Players contributing >0.5% to Indian Pharma Market, # Small Domestic Players – Players contributing to <0.5% to Indian Pharma Market
Favorable Not Favorable
Source: Primary Research, UC Analysis
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Industry Dynamics
Note; * Width of the bar indicates the number of players in this space
Current Scenario* Post Genericization**
Small Domestic
Players
Large Domestic
Players
Global MNC’s
Source: Primary Research, UC Analysis
Global MNC’s
Large Domestic
Players
Small Domestic
Players
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Reassess
Manufacturing
Strategy
Reorganize
Sales Strategy
Prioritize
Institutional
Segment
Four Genericization Strategies
Expand
Product
Portfolio
Source: UC Analysis
• OTC
• Ayurvedic products
• Differentiated
formulations
• Direct selling to
institutions
• Digital marketing
• Updated training
programs
• Revised
performance
metrics
• Cost effective
manufacturing
option w/o
compromising
quality
1 2 3 4
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OTC
2.4
5.0
0
1
2
3
4
5
6
2016 2020
CAGR (‘16-’20)
- 20%
OTC Industry (USD Bn.)
0.55
1.83
0
1
2
3
4
5
6
2016 2020
Dietary Supplement Industry (USD Bn.)
Limited price controlHigher growth
Source: A brief report on nutraceutical products in India, ASA and Associates, 2015
CAGR (‘16- ‘20)
- 35%
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Pharmaceutical companies
Ayurveda
23.5
23.6
26.1
27.1
30.3
31.1
32.8
37.1
37.6
38.4
41.3
43.3
50.5
52.6
74.4
0 20 40 60 80
Digene
Band-Aid
Benadryl
Pudin Hara
Halls
Unwanted 72
Iodex
i-pill
Himani
Vicks
Moov
Volini
Zandu
Hajmola
Eno
OTC brands ranked by sales – FY’16
(USD Mn.)
FMCG companies
Source: Euromonitor data - 2016
Ayurveda
Company
Branch of
medicine
GSK Ayurveda
Dabur Ayurveda
Zandu Ayurveda
Sun Pharma Allopathy
Paras Pharma
Ayurveda
P&G
Ayurveda
Zandu
Ayurveda
Piramal Allopathy
GSK
Ayurveda
Mankind Allopathy
Mondelez
Dabur Ayurveda
J&J Allopathy
J&J NA
Abbott Allopathy
Ayurveda
Allopathy
Gastrointestinal
Lifestyle
Cough, cold and allergy
Emergency contraceptives
Analgesics
Therapy Area
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OTC: Three Levers to Win
Explore New
Channels
Ranbaxy and Pfizer’s tie-
up with ITC to improve
OTC rural reach
Evaluate Marketing
Spend
About 16-19% of
revenues spent on
marketing Eno, Himani
and Vicks
Establish Rx to OTC
Engine
Boehringer Ingelheim`s
Dulcoflex and Buscogast
success in OTC market,
addressing unmet needs
Source: Glaxo SmithKline Annual Report, 2016, Emami Annual Report, 2016, Procter and Gamble Annual Report, 2016
242018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright
Contents
 Country Context
 Regulatory Changes
 Pharmaceuticals
 Medical Technology
 Diagnostics
 Institutions
 Digital Health
 Conclusion
252018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright
MedTech Sector - Implants
70
60
80
30
40
20
0%
20%
40%
60%
80%
100%
Cardio Ophthal Ortho
Local
MNC
MNC Vs Local (2015)
%
770
1260
410
490
260
500
0
500
1000
1500
2000
2500
2015 2020
Implants Market – Key Therapy
Segments* (USD Mn)
Cardiology
Ophthalmology
Orthopedic
CAGR
14%
10%
4%1440
2250
Note: *Not exhaustive
Source: Previous UC Engagements, AIMED, UC Analysis
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MedTech Evolution - ImplantsPhas
e
Status Quo – MNCs build
the market
Rise of indigenous players
SalientTrends
Emergence of Market
Leaders
Source: Medical Devices Growth in Emerging Markets, Lessons from other industries (IN VIVO: The Business & Medicine Report)
Dominance by MNC’s
Technological
advancement
Enhanced research and
development
Favorable govt.
regulations
Conducive local
manufacturing
ecosystem
Market gap filled by
economy players
Underserved market
Market Leaders:
Indigenous Players
• Develop high quality products
• Work in partnership with MNCs for
technical superiority
Market Leaders: MNC
• Launch innovative products
• Work with the distribution network
of the local players
• Tie-up with local manufacturers
• Unequalled quality MNC
products
• Limited indigenous players
Indigenous players start
manufacturing high quality
products
Increased share of value
players
Phase 1 Phase 2 Phase 3
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Rising demand from price
sensitive tier 2,3 markets
Value Segment
Percutaneous
Coronary
Intervention Market
Total Knee
Replacement
Market
69% 52%
Intra-Ocular Lens
Market
48%
Overall market CAGR :
10%
Value segment CAGR :
12%
Overall market CAGR : 3.7%
Value segment CAGR : 6.8%
Overall CAGR :
18%
Note: Figures mentioned inside the circle represent value segment market share
IOL- Intra-Ocular Lenses; PCI - Percutaneous Coronary Intervention (commonly known as Angioplasty) ; TKR – Total Knee Replacement
Assumption - Tier 1 cities mainly consists of premium products and Tier 2 cities mainly consists of value products
Source: Previous UC Engagements
- Premium - Value - Economy
- Economy + Value - High Value + Premium
2016 Market Shares
Legend
Improved clinical data availability Feature focused market
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MedTech: MNC Value Trap
BlindsidedUnaware Underestimate
Source: UC Analysis, Previous UC Engagements
Fear Disregard Inflexible
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MedTech: Six Levers To Win
Evaluate
Value
Segment
Develop 3-
Tiered Pricing
Approach
Manage Key
Accounts
Local
Manufacturin
g
Penetrate
Lower Tier
Geographies
Assess
Inorganic
Opportunities
302018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright
Contents
 Country Context
 Regulatory Changes
 Pharmaceuticals
 Medical Technology
 Diagnostics
 Institutions
 Digital Health
 Conclusion
312018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright
84
65
118
82
0
20
40
60
80
100
120
Diabetes
Prevalence
CHD
Prevalence
3 2
14
44
4
2
18
54
0
10
20
30
40
50
60
TB HIV HCV HBV
Hyper
tension
Heart
Disease
Diabetes
Hepatitis B
Others
Disease burden (2014)
%
Chronic & Infectious Disease Burden
Source: WHO, AVERT.org, tbfacts.org, Viral hepatitis eradication in India by 2080 - gaps, challenges & targets, IJMR, UC Analysis
35
%
30
%
18
%
12
%
5%
0%
20%
40%
60%
80%
100%
Disease
Burden
Growth in chronic
disease
In Millions
Growth in infectious diseases
In Millions
2016-20
CAGR-
9%
CAGR-
6%
CAGR- 8%
CAGR- 2%
CAGR- 8%
CAGR- 5%
2016-20 2016-20 2016-202016-20 2016-20
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Diagnostic Market
Source : UC Analysis, Previous UC Engagements, http://www.business-standard.com_July 2014, Forbes Magazine_March 2015, Economic Times_2015, LiveMint, http://trak.in/
india-startup-funding-investment-2015, http://health.economictimes.indiatimes.com/health-files/2015-in-review-the-diagnostic-industry/1150
Diagnostics Market Size
0.3
0.8
1.9
3.0
0
1
2
3
4
2016 2020
2.2
3.8
Organized
25-30%
Unorganized
12%
Total
15%
USD Bn
CAGR
(2016-20)
0%
20%
40%
60%
80%
100%
2016
Molecular
Dx
Other
Pathology
~2-4%
~95%
National and Regional Lab
Chains – Volume Split by Type of
Tests%
CAGR
(2016-20)
MDx
12%
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Monitoring Challenge
Source: Live mint – “Lack of regulations still a concern for diagnostic laboratories industry”
NABL
Accreditation Not
Mandatory
Regulatory Grey
Zone
Highly
Fragmented
Market
• 5 national lab chains
(500+ collection
centres) to become 7
by 2020
• 15 regional lab chains
(100+ collection
centres) to become 20
by 2020
• ~70,000 stand alone
diagnostic laboratories
• Clinical
Establishment Act,
2010 by Centre
prescribes minimum
standards
• However, only
adopted by 10 states
• Health, a state matter
• NABL: nodal agency
for accreditation,
• Accreditation in India
not mandatory
• <2%(783) labs,
accredited till January
2017
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Molecular Diagnostics
Source : UC Analysis, Previous UC Engagements
Demand for highly specialized tests (PGD, PGS and NIPT) has led to diagnostic labs
investing in high end technologies - Next Generation Sequencing and Microarrays
Example: New testing areas - Reproductive Health
• 15% out of 26 Mn+
annual pregnancies in India are
high risk
• 27MnInfertile
couples in India
• IVF specialists
promoting Pre-
natal
genetic
screening
successful implantation
• Pre-natal
genetic
screening
for community
specific
chromosomal
abnormalities
• 1.4/1000 incidence of
Downs Syndrome
• 0.28/1000
incidence of Edward’s
Syndrome
• 2-3%
congenital
malformations
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Diagnostics: Five Levers to Win
Source: UC Analysis
Focus On
Regional Labs
Reach Out To
Doctors
Marketing To
Specialists
Customization of
Solutions e.g.
Panels
Shape and
Evangelize
Diagnostic
Pathways
362018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright
Contents
 Country Context
 Regulatory Changes
 Pharmaceuticals
 Medical Technology
 Diagnostics
 Institutions
 Digital Health
 Conclusion
372018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright
29.9
41.9
10.4
15.9
5.2
16.5
2.2
3.8
0
20
40
60
80
100
2016 2020
Healthcare Institution Segment
USD Bn
Upsurge of medical tourism
• CAGR of Medical tourism: 26%
• 150 countries eligible for medical visas
• ~2 mn medical tourists in 2016
Rise of single specialty healthcare
• Low setup cost; Rise in SSH
• Women and Child, Cardiology and Oncology form
45% of SSH
MSH
SS
H
Wellness
Diagnostics
48
78
Note: SSH – Single Specialty Hospital, MSH – Multi Specialty Hospital
Source: WHO, Annual Reports, KPMG, UC Analysis, Previous UC Engagements
Healthcare Services – Key Segments
CAGR (2016-20)
- 13%
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E-pharmacy/ Retail Pharmacy
Source: Economic Times (Sep 15 2017) – “How online pharmacies are now rushing to pace up growth”, YourStory (21 Jun 2016) – “A nascent Indian e-pharma sector already plagued by bias and
harassment”, FICCI Report – “E-Pharmacy in India: Last mile access to medicines”
• Online pharmacy market ~ USD 110mn.
to USD 120 Mn
• Estimated 45-50 e-pharma start-ups in
India
Key challenges affecting regulatory
decisionsMarket dynamics
• Drug abuse
• Tracking consignments
• Inter-state selling
• 25 Chains aggregating to ~2000 outlets
• Less than 20% penetration across the
pharmacy retails
• Availability of qualified pharmacists
across outlets
Key challenges affecting regulatory
decisionsMarket dynamics
E-pharmacy
Retail Pharmacy
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3.5 3.4
3.1
2.3
2
1.3
0
1
2
3
4
WHO* UK US Brazil China India
Infrastructure Rollout
Source: IBEF Sector Report, WHO
Healthcare infrastructure
In-patient beds/ 1000
Global average - 2.9
0.
3
3.
4
Rural
India
Urban
India
Note : * WHO Recommendation
Over USD 200 bn to be spent on medical
infrastructure by 2024
1.54 million doctors and 2.4 million
nurses required to match infrastructure
growth
Additional ~3 million beds to match
global average
Improved access to services in lower
tiered geographies e.g. Apollo, Fortis
Hospital
402018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright
14.2
20.3
2.7
5.2
0
5
10
15
20
25
30
2016 2020
Hospital Retail
Institutional Segment
CAGR
(2016-20)
17%
9%
16.9
25.5
Pharmaceutical Sales by Channel
(USD Bn)
Increased adoption of unbranded
generics
Savings from hospital specific
unbranded generics
Infrastructure roll out in SSH, tier 2 etc.
Source: Primary Research, IMS health market reflection report, IMS Health, 2016, Healthcare industry in India, India Brand Equity Foundation, 2017, UC Analysis
Increased relevance of purchase
committee
412018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright
Institutions: Four Levers to Win
Partner with
Institutions
for Capability
Building
Develop a
Marquee
Account
Strategy
Expand into
Lower Tier
Geographies
Leverage E-
pharmacy and
Retail Chain
Growth
422018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright
Contents
 Country Context
 Regulatory Changes
 Pharmaceuticals
 Medical Technology
 Diagnostics
 Institutions
 Digital Health
 Conclusion
432018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright
Digital Healthcare
Note: a) Market size does not include e-pharmacy b) Health and Wellness Analytics include consumer related analytics and may have an overlap with data analytics performed for enterprises
such as with Big Data
Source: Deloitte Analysis, Gartner, NASSCOM: India Health-tech products report
50%
23%
17%
8%
2%
0%
20%
40%
60%
80%
100%
2015
Administrative
and Management
Software
Mobile Apps
Healthcare Platforms
Health and Wellness
Analytics
Wearables
India Healthcare Software Market by Segment Some Players
Wearables
Health and
Wellness
Analytics
Healthcare
Platforms
Mobile Apps
Administrative
and
Management
Software
442018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright
Digital Strategy: Three Levers to Win
Evaluate
E-Detailing
Customize
Digital
Strategies for
Specific
Therapy
Areas/Marquee
Accounts
Establish
Digital Reach
with
Caregivers,
Clinicians and
Patients
452018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright
Contents
 Country Context
 Regulatory Changes
 Pharmaceuticals
 Medical Technology
 Diagnostics
 Institutions
 Digital Health
 Conclusion
462018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright
Conclusion
Large GDP; Low
per Capita
Income
4.7% of GDP
Spend
154th
on
Healthcare
Index
900+Mn
Uninsured
Financial
InclusionFocus
Price Caps -
2017
Gx:
Genericization
Policy
Gx:Pharma
Consolidation
Gx:Strategy
Modification
OTC/Ayurveda
Growth
MedTech Value
Segment
Emergence
Advanced
Molecular
Diagnostics
Specialty/
Medical Tourism
Growth
Institutional
Segment
Growth
E-pharmacy/
Retail Growth
Healthcare
Digitisation
Tier 2
Healthcare
Penetration
Overview
Pharma
Healthcare
Services
MedTech
Diagnostics
Digitisation
National Health
Protection
Scheme - 2018
Healthcare Landscape – Key Elements Legend
AMSTERDAM
QVARTZ
Piet Hein Buildings – Wit, 8e etage
Piet Heinkade 95a, Amsterdam
Netherlands +31 6 11000204
HAMBURG
QVARTZ
Neuer Wall 40, DE-20354
Hamburg, Germany +49 40 298 13 470
NEW YORK CITY
QVARTZ
1185 Ave. of the Americas, 3rd floor, Suite 213
New York, NY 10036, USA +1 646 492 9913
SINGAPORE
QVARTZ
One George Street, Level 10-01
Singapore 049145 +65 91 59 94 17
COPENHAGEN
QVARTZ
Ryesgade 3A, DK-2200
Copenhagen N, Denmark +45 33 17 00 00
MUMBAI
UNIVERSAL CONSULTING INDIA PVT LTD
Shivsagar Estate D
Dr Annie Besant Road, Worli
Mumbai 400018, India +91 22 66222100
OSLO
QVARTZ
Wergelandsveien 21, NO-0167
Oslo, Norway +47 22 59 36 00
STOCKHOLM
QVARTZ
Birger Jarlsgatan 7, SE-111 45
Stockholm, Sweden +46 (0)8 614 19 00
If you would like to schedule a meeting to discuss this document, please email us at strategy@universalconsulting.com
UNIVERSAL CONSULTING INDIA PVT LTD
Shivsagar Estate D, Dr Annie Besant Road
Worli, Mumbai 400018, India
+91 22 66222100
strategy@universalconsulting.com
www.universalconsulting.com
241
994-2018
Amsterdam Copenhagen Hamburg Mumbai New York Oslo Singap
2018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright

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Emerging Healthcare Landscape of India:

  • 1. Emerging Healthcare Landscape of IndiaExecutive Summary April 2018 Amsterdam Copenhagen Hamburg Mumbai New York Oslo Singapore Stockholm 2018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright
  • 2. 12018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright Contents  Country Context  Regulatory Changes  Pharmaceuticals  Medical Technology  Diagnostics  Institutions  Digital Health  Conclusion
  • 3. 22018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright Governance and Healthcare Index Source: Healthcare Access and Quality Index 2015: Global Burden of Disease Study, 2015, Lancet Report; : Worldwide Governance Indicators, 2014: World bank, http://databank.worldbank.org/; India
  • 4. 32018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright Access Challenge Source: Urban Population Contribution To National GDP To Touch 70% By 2011, The Associated Chambers of Commerce and Industry of India, March 2008, Census 2011 (accessed 3 February, 2015), UN – World Urbanization Prospects (The 2014 Revision) 77.0% 539mn. 74.0% 621mn. 72.0% 734mn. 68.0% 896mn. 50.0% 805mn. 23.0% 161mn. 26.0% 219mn. 28.0% 286mn. 32.0% 429mn. 50.0% 814mn. 0% 20% 40% 60% 80% 100% 1981-1990 1991-2000 2001-2010 2011-2020 E2050 Population % Rural Urban
  • 5. 42018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright Affordability Challenge Source: National Council for Economic Research (India), Ministry of Health and Family Welfare, CDSCO website 0 50 100 150 Urban Rural 0.6 10.2 1.0 7.3 Number of Households in Mn. (2014) 18.1 107 57 .5 60.7 87 Mn 176 Mn Lowest income (< USD 1,800 p.a.) Lower income (USD 1,800 – 4,000 p.a.) Middle Income (USD 4,000 – 20,000 p.a.) Upper Income (>USD 20,000 p.a.)
  • 6. 52018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright National Health Protection Scheme (2018) Source :http://www.ijmr.org.in/article.asp?issn=0971-5916;year=2015;volume=142;issue=4;spage=383;epage=390;aulast=Nandi Notes : ** The evidence for the impact of RSBY are unclear due lack of administrative data on various aspects of the scheme The NHP was last reformed in 2017, however it needed to be amalgamated with an insurance scheme • INR 500,000 cover per family • Existing disease covered • Pre and post hospitalization expenses covered • Coverage of 10mn families based on SECC data • No cap for family size and age • Defining package rates for surgeries • Management of funds • Preventing system leakages • National roll out • Providers adherence to the scheme • Y-O-Y expenditure expected to increase up to 15% for 5 years National Health Policy 2002 2005 National Rural Health Mission 2008 Rashtriya Swasthya Bima Yojana (RSBY) 2018 National Health Protection scheme -486 districts (28 States and Union Territories) covered until 2012 -Settlement of 175Mn cases by 2013 -Increase in individuals covered from 4Mn in 2009 to 34Mn in 2013 - Service offerings from 15 insurance companies, 25 TPAs -12,000 hospitals empaneled Even with irregularities, RSBY led to Focused needs of under-served rural areas Unifying frame- work Coverage of below the poverty line, larger scheme , larger fund allocation Higher fund allocated for insurance, Higher population coverage - Integration of existing policies absent - Decentralized service delivery - Focus on states that lag health indicators - Unclear evidence to examine the impact of RSBY** - Scheme considered to be underfunded - Systemic leakage - Insurance frauds - Inadequate reimbursements Evolution of the existing health policy scheme in India Key Questions: - Contours of the scheme - Implementation - Actual allocation of funds - Infrastructural development - Dedicated medical fraternity - Adequate drugs and supplies ChallengesBenefits 2009 - 2017 Benefits Challenges
  • 7. 62018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright 73% 27% 0% 20% 40% 60% 80% 100% Public Vs Pvt Health Insurance Challenge Health Insurance Density (2015) % Note: *NHPS means National Health Protection Scheme; Source: IRDA Annual Report, 2014 - 15, Hindustan times – 17 Oct. 2017, India spend – 07 June 2017, The astonishing cost of healthcare in India, Quartz India, 18th April, 2016, Economic Times – 10th Oct 2017, UC Analysis 994mn 314mn 0% 20% 40% 60% 80% 100% Insurance Density Private Insurance Public Insurance Insured Not Insured Health Insurer (2015) *NHPS aims to address this issue
  • 8. 72018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright 1.1% 1.4% 4.2% 3.1% 3.7% 3.8% 7.6% 8.3% 1.8% 3.3% 1.2% 2.5% 3.4% 4.5% 1.5% 8.9% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20% Indonesia India Turkey China Russia Brazil United Kingdom United States Low Public Spending Source: World Bank, WHO (accessed 19th October 2017) (in USD Bn.) Public Private Healthcare Spend as % of GDP (2014) 2.8% 4.7% 5.4% 5.5% 6.3% 7.1% 8.3% 9.1% 17.1% *NHPS aims to address this issue
  • 9. 82018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright High OOPE OOPE % of Total Health Expenditure (2014) 9.7% 11.0% 17.8% 25.5% 32.0% 44.0% 45.8% 46.9% 62.4% 0.0% 20.0% 40.0% 60.0% 80.0% 100.0% United Kingdom United States Turkey Brazil China Mexico Russia Indonesia India Source: WHO, World Bank Data *NHPS aims to address this issue
  • 10. 92018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright Contents  Country Context  Regulatory Changes  Pharmaceuticals  Medical Technology  Diagnostics  Institutions  Digital Health  Conclusion
  • 11. 102018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright 38% 39% 5% 18% 0% 20% 40% 60% 80% 100% 2015 131 226 - 50 100 150 200 250 2016 2020 Indian Healthcare Sector Source: WHO, World Bank Data Note :1. Indicated split is representative contribution of key healthcare segments to overall healthcare market. Healthcare services does not include primary healthcare services. There is certain proportion of primary healthcare provided by the state which has not been included/ estimated 2. The pharma segment accounts for the formulations and API, domestic as well as global market Pharma Healthcare services By Segments % Medtech Others USD Bn CAGR (2016 – 20) - 14%
  • 12. 112018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright Source: Previous UC Engagements, Hindu BusinessLine – “Stent prices slashed by 85%; health group gives thumbs up”, Indian Express – “US firms approach USTR against India’s medical price control measures”, Economic times – “Now, government plans to cap margins of medical devices to bring down prices”, Times of India – “To market new drugs in India, global trials must include Indians” Regulatory Landscape Flux Impact of Impending Regulations Multiple sub-committees under Ministry of Health working independently to establish policies/regulations Regulation Remarks Essentiality • National list of Essential Medicines • National list of Essential Medical Devices Price Capping/ Control • ~85% and ~69% price caps for stents and knee implants respectively • USTR against India`s medical pricing steps Local Manufacturing • NMDP - ‘Make in India’ • 100% FDI permitted, fallen to 50% as of 2017 • Import duties hike for raw materials vs semi-finished goods Trade Margin Capping • DoP categorizing 23+ devices for limiting trade margins • Method favored by Medical Technology Association of India Clinical Trials; Indian samples • New drugs developed outside the country, should include Indian patients in the global clinical trials Genericization • Mandatory Generics Prescriptions • Propagation of Jan Aushadhi Scheme National Health Protection Scheme • Special focus on TB • Limitations for MNC products in public hospitals • Increase influence of private insurance industry in the public healthcare space
  • 13. 122018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright Contents  Country Context  Regulatory Changes  Pharmaceuticals  Medical Technology  Diagnostics  Institutions  Digital Health  Conclusion
  • 14. 132018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright Pharma Market 15.4 23.3 0 5 10 15 20 25 2016 2020 CAGR - 11.0% Indian Pharma Market In USD Billion 13.9 1.6 1.5 - 2 4 6 8 10 12 14 16 18 2017 Market segmentation In USD Billion 17 Note: 1 – Fixed dose combinations (FDC), 2 - Unbranded generics market share has been derived by deducting the share of branded generics from total market, 3- The market size indicates India market (consumption) and excludes exports 6.8 10.2 - 2 4 6 8 10 12 14 16 18 2017 FDC penetration In USD Billion 17 Source: Primary Research, Indian pharmaceutical industry, India Brand Equity Foundation, 2017, Generics to double in 5 years, The Hindu, 12th Sept, 2015 Unbranded generics Branded generics Patented Non - FDC FDC
  • 15. 142018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright Genericization (Gx) Source: Indian pharmaceutical industry, Times of India – 18 Apr 2017, The wire – 1 May 2017, Jan Aushadhi, Drugs and Control act, Drugs and Cosmetics act • Medical Council of India 2016 circular mandates physicians to Rx drugs with generic names • Govt. propagating affordable generics via Jan Aushadhi scheme • Pharma companies to conduct BE tests for certain generics and print labels with generic names 2X brand names • Stakeholders have concerns about implementing the policy while maintaining drug quality
  • 16. 152018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright Gx: Supplementary Policies Required India US UK Germany Finland Sweden France Main Policies Generic Prescription Generic Substitution Supplementarypolicies Regulated Pricing Physician Incentives Pharmacist incentives Formulary Mandated Not Mandated or Supported Source: Primary Research, The experiences of implementing generic medicine policy in eight countries, Saudi Pharmaceutical Journal, 2014, European market entry strategy for generic companies, European Commission,2016, Pharmering markets – Picking a pathway to success, IMS Health, 2013
  • 17. 162018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright 1.5 3.6 13.9 17.5 1.6 2.1 0 5 10 15 20 25 2017 2020 11.0% 8.0% 33.1% If Public Sector Shifts To Gx (15%) (Bn USD) 9.0% 15.5 % 81.8 % 75.3 % 9.2% 9.2% 0% 25% 50% 75% 100% 2017 2020 % 17 23.2 11.1 6.0 - 5 10 15 2017 17 (Bn USD) Note: Overall contribution of public sector by value is expected to go down Source: Primary Research, UC Analysis CAGR ‘17 – ‘20 Public sector Private sector Unbranded generics Branded generics Patented Unbranded generics Branded generics Patented Indian Pharma Market
  • 18. 172018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright 1.5 4.9 13.9 16.2 1.6 2.1 0 5 10 15 20 25 2017 2020 14. 1 2.9 - 4 8 12 16 20 2017 11.0% 5.2% 47.6% If NLEM Shifts To Gx (21%) 9.0% 21.2% 81.8% 69.7% 9.2% 9.2% 0% 25% 50% 75% 100% 2017 2020 % 17 23.2 17 Source: Primary Research, UC Analysis CAGR ‘17 – ‘20 Unbranded generics Branded generics Patented Unbranded generics Branded generics Patented NLEM Non - NLEM Indian Pharma Market (Bn USD) (Bn USD)
  • 19. 182018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright Gx Impact Facilitators Probability Global MNC Large Domestic * Small Domestic # Rationale Stringent Quality Regulations High • High Cost of BA/BE studies Acceptance By Healthcare Professionals Medium • Physicians propagate MNC generics Adoption Of Generics Across Govt. And Private Institutes Medium • Adoption likely in govt. institutes only Increase In Generic Acceptance Among Patients Medium • Physicians influence Patients' acceptance Note: * Large Domestic Players – Players contributing >0.5% to Indian Pharma Market, # Small Domestic Players – Players contributing to <0.5% to Indian Pharma Market Favorable Not Favorable Source: Primary Research, UC Analysis
  • 20. 192018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright Industry Dynamics Note; * Width of the bar indicates the number of players in this space Current Scenario* Post Genericization** Small Domestic Players Large Domestic Players Global MNC’s Source: Primary Research, UC Analysis Global MNC’s Large Domestic Players Small Domestic Players
  • 21. 202018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright Reassess Manufacturing Strategy Reorganize Sales Strategy Prioritize Institutional Segment Four Genericization Strategies Expand Product Portfolio Source: UC Analysis • OTC • Ayurvedic products • Differentiated formulations • Direct selling to institutions • Digital marketing • Updated training programs • Revised performance metrics • Cost effective manufacturing option w/o compromising quality 1 2 3 4
  • 22. 212018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright OTC 2.4 5.0 0 1 2 3 4 5 6 2016 2020 CAGR (‘16-’20) - 20% OTC Industry (USD Bn.) 0.55 1.83 0 1 2 3 4 5 6 2016 2020 Dietary Supplement Industry (USD Bn.) Limited price controlHigher growth Source: A brief report on nutraceutical products in India, ASA and Associates, 2015 CAGR (‘16- ‘20) - 35%
  • 23. 222018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright Pharmaceutical companies Ayurveda 23.5 23.6 26.1 27.1 30.3 31.1 32.8 37.1 37.6 38.4 41.3 43.3 50.5 52.6 74.4 0 20 40 60 80 Digene Band-Aid Benadryl Pudin Hara Halls Unwanted 72 Iodex i-pill Himani Vicks Moov Volini Zandu Hajmola Eno OTC brands ranked by sales – FY’16 (USD Mn.) FMCG companies Source: Euromonitor data - 2016 Ayurveda Company Branch of medicine GSK Ayurveda Dabur Ayurveda Zandu Ayurveda Sun Pharma Allopathy Paras Pharma Ayurveda P&G Ayurveda Zandu Ayurveda Piramal Allopathy GSK Ayurveda Mankind Allopathy Mondelez Dabur Ayurveda J&J Allopathy J&J NA Abbott Allopathy Ayurveda Allopathy Gastrointestinal Lifestyle Cough, cold and allergy Emergency contraceptives Analgesics Therapy Area
  • 24. 232018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright OTC: Three Levers to Win Explore New Channels Ranbaxy and Pfizer’s tie- up with ITC to improve OTC rural reach Evaluate Marketing Spend About 16-19% of revenues spent on marketing Eno, Himani and Vicks Establish Rx to OTC Engine Boehringer Ingelheim`s Dulcoflex and Buscogast success in OTC market, addressing unmet needs Source: Glaxo SmithKline Annual Report, 2016, Emami Annual Report, 2016, Procter and Gamble Annual Report, 2016
  • 25. 242018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright Contents  Country Context  Regulatory Changes  Pharmaceuticals  Medical Technology  Diagnostics  Institutions  Digital Health  Conclusion
  • 26. 252018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright MedTech Sector - Implants 70 60 80 30 40 20 0% 20% 40% 60% 80% 100% Cardio Ophthal Ortho Local MNC MNC Vs Local (2015) % 770 1260 410 490 260 500 0 500 1000 1500 2000 2500 2015 2020 Implants Market – Key Therapy Segments* (USD Mn) Cardiology Ophthalmology Orthopedic CAGR 14% 10% 4%1440 2250 Note: *Not exhaustive Source: Previous UC Engagements, AIMED, UC Analysis
  • 27. 262018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright MedTech Evolution - ImplantsPhas e Status Quo – MNCs build the market Rise of indigenous players SalientTrends Emergence of Market Leaders Source: Medical Devices Growth in Emerging Markets, Lessons from other industries (IN VIVO: The Business & Medicine Report) Dominance by MNC’s Technological advancement Enhanced research and development Favorable govt. regulations Conducive local manufacturing ecosystem Market gap filled by economy players Underserved market Market Leaders: Indigenous Players • Develop high quality products • Work in partnership with MNCs for technical superiority Market Leaders: MNC • Launch innovative products • Work with the distribution network of the local players • Tie-up with local manufacturers • Unequalled quality MNC products • Limited indigenous players Indigenous players start manufacturing high quality products Increased share of value players Phase 1 Phase 2 Phase 3
  • 28. 272018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright Rising demand from price sensitive tier 2,3 markets Value Segment Percutaneous Coronary Intervention Market Total Knee Replacement Market 69% 52% Intra-Ocular Lens Market 48% Overall market CAGR : 10% Value segment CAGR : 12% Overall market CAGR : 3.7% Value segment CAGR : 6.8% Overall CAGR : 18% Note: Figures mentioned inside the circle represent value segment market share IOL- Intra-Ocular Lenses; PCI - Percutaneous Coronary Intervention (commonly known as Angioplasty) ; TKR – Total Knee Replacement Assumption - Tier 1 cities mainly consists of premium products and Tier 2 cities mainly consists of value products Source: Previous UC Engagements - Premium - Value - Economy - Economy + Value - High Value + Premium 2016 Market Shares Legend Improved clinical data availability Feature focused market
  • 29. 282018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright MedTech: MNC Value Trap BlindsidedUnaware Underestimate Source: UC Analysis, Previous UC Engagements Fear Disregard Inflexible
  • 30. 292018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright MedTech: Six Levers To Win Evaluate Value Segment Develop 3- Tiered Pricing Approach Manage Key Accounts Local Manufacturin g Penetrate Lower Tier Geographies Assess Inorganic Opportunities
  • 31. 302018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright Contents  Country Context  Regulatory Changes  Pharmaceuticals  Medical Technology  Diagnostics  Institutions  Digital Health  Conclusion
  • 32. 312018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright 84 65 118 82 0 20 40 60 80 100 120 Diabetes Prevalence CHD Prevalence 3 2 14 44 4 2 18 54 0 10 20 30 40 50 60 TB HIV HCV HBV Hyper tension Heart Disease Diabetes Hepatitis B Others Disease burden (2014) % Chronic & Infectious Disease Burden Source: WHO, AVERT.org, tbfacts.org, Viral hepatitis eradication in India by 2080 - gaps, challenges & targets, IJMR, UC Analysis 35 % 30 % 18 % 12 % 5% 0% 20% 40% 60% 80% 100% Disease Burden Growth in chronic disease In Millions Growth in infectious diseases In Millions 2016-20 CAGR- 9% CAGR- 6% CAGR- 8% CAGR- 2% CAGR- 8% CAGR- 5% 2016-20 2016-20 2016-202016-20 2016-20
  • 33. 322018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright Diagnostic Market Source : UC Analysis, Previous UC Engagements, http://www.business-standard.com_July 2014, Forbes Magazine_March 2015, Economic Times_2015, LiveMint, http://trak.in/ india-startup-funding-investment-2015, http://health.economictimes.indiatimes.com/health-files/2015-in-review-the-diagnostic-industry/1150 Diagnostics Market Size 0.3 0.8 1.9 3.0 0 1 2 3 4 2016 2020 2.2 3.8 Organized 25-30% Unorganized 12% Total 15% USD Bn CAGR (2016-20) 0% 20% 40% 60% 80% 100% 2016 Molecular Dx Other Pathology ~2-4% ~95% National and Regional Lab Chains – Volume Split by Type of Tests% CAGR (2016-20) MDx 12%
  • 34. 332018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright Monitoring Challenge Source: Live mint – “Lack of regulations still a concern for diagnostic laboratories industry” NABL Accreditation Not Mandatory Regulatory Grey Zone Highly Fragmented Market • 5 national lab chains (500+ collection centres) to become 7 by 2020 • 15 regional lab chains (100+ collection centres) to become 20 by 2020 • ~70,000 stand alone diagnostic laboratories • Clinical Establishment Act, 2010 by Centre prescribes minimum standards • However, only adopted by 10 states • Health, a state matter • NABL: nodal agency for accreditation, • Accreditation in India not mandatory • <2%(783) labs, accredited till January 2017
  • 35. 342018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright Molecular Diagnostics Source : UC Analysis, Previous UC Engagements Demand for highly specialized tests (PGD, PGS and NIPT) has led to diagnostic labs investing in high end technologies - Next Generation Sequencing and Microarrays Example: New testing areas - Reproductive Health • 15% out of 26 Mn+ annual pregnancies in India are high risk • 27MnInfertile couples in India • IVF specialists promoting Pre- natal genetic screening successful implantation • Pre-natal genetic screening for community specific chromosomal abnormalities • 1.4/1000 incidence of Downs Syndrome • 0.28/1000 incidence of Edward’s Syndrome • 2-3% congenital malformations
  • 36. 352018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright Diagnostics: Five Levers to Win Source: UC Analysis Focus On Regional Labs Reach Out To Doctors Marketing To Specialists Customization of Solutions e.g. Panels Shape and Evangelize Diagnostic Pathways
  • 37. 362018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright Contents  Country Context  Regulatory Changes  Pharmaceuticals  Medical Technology  Diagnostics  Institutions  Digital Health  Conclusion
  • 38. 372018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright 29.9 41.9 10.4 15.9 5.2 16.5 2.2 3.8 0 20 40 60 80 100 2016 2020 Healthcare Institution Segment USD Bn Upsurge of medical tourism • CAGR of Medical tourism: 26% • 150 countries eligible for medical visas • ~2 mn medical tourists in 2016 Rise of single specialty healthcare • Low setup cost; Rise in SSH • Women and Child, Cardiology and Oncology form 45% of SSH MSH SS H Wellness Diagnostics 48 78 Note: SSH – Single Specialty Hospital, MSH – Multi Specialty Hospital Source: WHO, Annual Reports, KPMG, UC Analysis, Previous UC Engagements Healthcare Services – Key Segments CAGR (2016-20) - 13%
  • 39. 382018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright E-pharmacy/ Retail Pharmacy Source: Economic Times (Sep 15 2017) – “How online pharmacies are now rushing to pace up growth”, YourStory (21 Jun 2016) – “A nascent Indian e-pharma sector already plagued by bias and harassment”, FICCI Report – “E-Pharmacy in India: Last mile access to medicines” • Online pharmacy market ~ USD 110mn. to USD 120 Mn • Estimated 45-50 e-pharma start-ups in India Key challenges affecting regulatory decisionsMarket dynamics • Drug abuse • Tracking consignments • Inter-state selling • 25 Chains aggregating to ~2000 outlets • Less than 20% penetration across the pharmacy retails • Availability of qualified pharmacists across outlets Key challenges affecting regulatory decisionsMarket dynamics E-pharmacy Retail Pharmacy
  • 40. 392018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright 3.5 3.4 3.1 2.3 2 1.3 0 1 2 3 4 WHO* UK US Brazil China India Infrastructure Rollout Source: IBEF Sector Report, WHO Healthcare infrastructure In-patient beds/ 1000 Global average - 2.9 0. 3 3. 4 Rural India Urban India Note : * WHO Recommendation Over USD 200 bn to be spent on medical infrastructure by 2024 1.54 million doctors and 2.4 million nurses required to match infrastructure growth Additional ~3 million beds to match global average Improved access to services in lower tiered geographies e.g. Apollo, Fortis Hospital
  • 41. 402018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright 14.2 20.3 2.7 5.2 0 5 10 15 20 25 30 2016 2020 Hospital Retail Institutional Segment CAGR (2016-20) 17% 9% 16.9 25.5 Pharmaceutical Sales by Channel (USD Bn) Increased adoption of unbranded generics Savings from hospital specific unbranded generics Infrastructure roll out in SSH, tier 2 etc. Source: Primary Research, IMS health market reflection report, IMS Health, 2016, Healthcare industry in India, India Brand Equity Foundation, 2017, UC Analysis Increased relevance of purchase committee
  • 42. 412018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright Institutions: Four Levers to Win Partner with Institutions for Capability Building Develop a Marquee Account Strategy Expand into Lower Tier Geographies Leverage E- pharmacy and Retail Chain Growth
  • 43. 422018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright Contents  Country Context  Regulatory Changes  Pharmaceuticals  Medical Technology  Diagnostics  Institutions  Digital Health  Conclusion
  • 44. 432018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright Digital Healthcare Note: a) Market size does not include e-pharmacy b) Health and Wellness Analytics include consumer related analytics and may have an overlap with data analytics performed for enterprises such as with Big Data Source: Deloitte Analysis, Gartner, NASSCOM: India Health-tech products report 50% 23% 17% 8% 2% 0% 20% 40% 60% 80% 100% 2015 Administrative and Management Software Mobile Apps Healthcare Platforms Health and Wellness Analytics Wearables India Healthcare Software Market by Segment Some Players Wearables Health and Wellness Analytics Healthcare Platforms Mobile Apps Administrative and Management Software
  • 45. 442018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright Digital Strategy: Three Levers to Win Evaluate E-Detailing Customize Digital Strategies for Specific Therapy Areas/Marquee Accounts Establish Digital Reach with Caregivers, Clinicians and Patients
  • 46. 452018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright Contents  Country Context  Regulatory Changes  Pharmaceuticals  Medical Technology  Diagnostics  Institutions  Digital Health  Conclusion
  • 47. 462018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright Conclusion Large GDP; Low per Capita Income 4.7% of GDP Spend 154th on Healthcare Index 900+Mn Uninsured Financial InclusionFocus Price Caps - 2017 Gx: Genericization Policy Gx:Pharma Consolidation Gx:Strategy Modification OTC/Ayurveda Growth MedTech Value Segment Emergence Advanced Molecular Diagnostics Specialty/ Medical Tourism Growth Institutional Segment Growth E-pharmacy/ Retail Growth Healthcare Digitisation Tier 2 Healthcare Penetration Overview Pharma Healthcare Services MedTech Diagnostics Digitisation National Health Protection Scheme - 2018 Healthcare Landscape – Key Elements Legend
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  • 49. UNIVERSAL CONSULTING INDIA PVT LTD Shivsagar Estate D, Dr Annie Besant Road Worli, Mumbai 400018, India +91 22 66222100 strategy@universalconsulting.com www.universalconsulting.com 241 994-2018 Amsterdam Copenhagen Hamburg Mumbai New York Oslo Singap 2018 Universal Consulting India Pvt Ltd. All Rights Reserved.©Copyright