Healthcare 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
Objective To study the various aspects of the Health care industry in India with respect to the Marketingsegmentation, issues at hand and opportunities of growth.
Flow of Presentation Brief Overview of Indian Medical Tourism HealthCare Sector Ayurveda Emerging and Re- Surgical Equipments emerging diseases Pharmaceuticals in India Indian healthcare Research and infrastructure Development Telemedicine Labour Force Health Insurance Market Survey Analysis (India) Recommendations Nutraceuticals Market
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 players India has become an attractive destination for Medical Tourism Clinical Studies Research and Development Programs There is massive growth potential and scope for expansioncopyright (your organization) 2003 5/5/2012
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.
Factors for the HealthCare boom in India 7 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
Top Health Care Companies and Hospital Chains 9 APOLLO LIFE SUN HEALTHCARE NICHOLAS PIRAMAL INDIA PVT. LTD WIPRO GE HEALTHCARE SERUM INSTITUTE OF INDIA LTD CIPLA CADILLA HEALTHCARE RANBAXY FORTIS 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 worlds 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 everybodys 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 Real-Time utilizing modern technology and Store and Forward telecommunications. (asynchronous): Various telemedicine Home Health usage models Telemedicine
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)
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 hospital Nursing expenses Diagnostic and medicine expenses Other 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 Investment Players are LIC and other private players
Market Segmentation Working Class Individuals Working Professionals with Family. Students Senior Citizens Small and Medium Enterprises/ Corporate Houses:
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
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-NUTRILITE Herb lifeDistribution channel: Multi-level Marketing
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
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 Singapore The Malaysian government is aggressively promoting medical tourism.
SOURCE OF FINANCIAL SUPPORT SOURCE: http://www.tourism.gov.in
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
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
Pharmaceuticals in India•The Indian pharmaceutical industry is the worlds second-largest byvolume.•Indias bio-tech industry clocked a 17 percent growth with revenuesof Rs.137 billion ($3 billion) in the 2009-10 financial year .•Bio-Pharmaceutical was the biggest contributor generating 60percent of the industrys 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 (contd) 42• 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.copyright (your organization) 2003 5/5/2012
Government’s RoleEncouraged growth of drug manufacturing in the early 1960s, and withthe Patents Act in 1970, enabled the industry to become what it is today.The patent act removed composition patents from food & drugs, and though itkept process patents, these were shortened to 5 to 7 years.Lack of patent protection made the Indian market undesirable for multinationalcompanies & while they went out, Indian companies took their place.They carved a niche in both the Indian & world markets with their expertise inreverse-engineering new processes for manufacturing at low costs.Very few companies have taken steps towards drug innovation, the industry hasbeen following the older model.
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 Ranbaxy 2 4,162.25 41.622 (taken over by Daiichi Sankyo in 2008) 3 Dr. Reddys 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.