The document provides an overview of the healthcare industry in India, with a focus on the medicine segment. It notes that healthcare has become one of India's largest sectors in terms of revenue and employment. The market functions through several key segments, including hospitals, pharmaceuticals, diagnostics, medical equipment and supplies, medical insurance, and telemedicine. It also discusses factors driving growth in the industry such as rising incomes and an aging population. Overall healthcare spending is expected to increase significantly in the coming years.

1. MEDICINE SEGMENT of HEALTHCARE INDUSTRY
MARKET ANALYSIS
Healthcare has become one of India's largest sectors - both in terms of revenue and
employment. The industry comprises hospitals, medical devices, clinical trials, outsourcing,
telemedicine, medical tourism, health insurance and medical equipment. The Indian
healthcare industry is growing at a tremendous pace due to its strengthening coverage,
services and increasing expenditure by public as well private players.
The Indian healthcare delivery system is categorised into two major components - public
and private. The Government, i.e. public healthcare system comprises limited secondary and
tertiary care institutions in key cities and focuses on providing basic healthcare facilities in
the form of primary healthcare centres (PHCs) in rural areas. The private sector provides
majority of secondary, tertiary and quaternary care institutions with a major concentration
in metros, tier I and tier II cities.
The healthcare market functions through five segments
 Hospitals
 Pharmaceuticals
 Diagnostics
 Medical equipment and supplies
 Medical insurance
 Telemedicine
Hospitals:
 Government Hospitals: It includes healthcare centres, district hospitals and general
hospitals.
 Private Hospitals: It includes nursing homes, mid-tier and top-tier private hospitals.
Pharmaceuticals: It includes manufacturing, extraction, processing, purification and
packaging of chemical materials for use as medications for humans and animals.
Diagnostics: Comprises business and laboratories that offer analytical or diagnostic services,
including body fluid analysis.
Medical equipment and Supplies: It includes establishment’s primarily manufacturing
medical equipment and supplies. E.g. surgical, dental, orthopaedic, ophthalmologic,
laboratory instruments etc.
Medical Insurance: It includes health insurance and medical reimbursement facility,
covering an individual’s hospitalisation expenses incurred due to sickness.
Telemedicine: It has an enormous potential in meeting the challenges of healthcare delivery
to rural and remote areas besides several other applications in education, training and
management in health sector.

2. MARKET SIZE: According to estimates, the overall Indian health care market today is US$ 65
billion, of which the hospital supplies and health care equipment segment is believed to be
only around US$ 4.5-5 million. Health care delivery, which includes hospitals, nursing homes
and diagnostics centers, and pharmaceuticals, constitutes 65 per cent of the overall market.
The Indian healthcare sector, one of the fastest growing industries, is expected to grow at a
compound annual growth rate (CAGR) of 17 per cent during 2011-2020 to touch US$ 280
billion. It is expected to rank amongst the top three healthcare markets in terms of
incremental growth by 2020.
Of total healthcare revenues in the country, hospitals account for 71 per cent,
pharmaceuticals for 13 per cent and medical equipment and supplies for 9 per cent.
The private sector has emerged as a vibrant force in India's healthcare industry, lending it
both national and international repute. It accounts for almost 72 per cent of the country’s
total healthcare expenditure.
Per capita Healthcare Expenditure has risen at a fast pace
 The per capita healthcare expenditure is estimated at a CAGR of 11.3 pre cent during
2008-15 (estimated) to USD91 Billion by 2015.
 This is due to rising incomes, easier to high-quality healthcare facilities and greater
awareness of personal health and hygiene.
 Greater penetration of health insurance aided the rise in healthcare spending, a
trend likely to intensify in the coming decade.
 Economic prosperity is dividing the improvement in affordability for generic drugs in
the market.

3. COMPETITIVE RIVALRY
PORTERS 5 FORCES ANALYSIS Increase in number of private players in the market
has led to increase in competition.
 However number of hospitals is still low compared to
the requirement. Therefore not much competition is
seen.
Threat of New Entrants Substitute Products
 Big threat of new
entrants in the
industry.
 Number of players has
increased
considerably in recent
times.
 Customers may go for
public hospitals which
are inexpensive.
 Customers might go for
E-Health.
Bargaining power of
supplies
Bargaining power of
customers
 High: Quality of
products and timely
delivery matter as
there are less number
of quality suppliers.
 Low: Trust and loyalty
however has increased
the number of options
given customers some
bargaining power.
GROWTH DRIVERS:

4. RISE IN INCOME, AGEING POPULATION TO BE KEY HEALTHCARE DEMAND DRIVERS
Consumer Healthcare falls under the following medicine segments
 OTC – Over the counter drugs
 VDS – Vitamins and dietary supplements
 Weight Management
 Sports Nutrition
The increasing offer of consumer health products in the retails led to an expansion in
distribution channels such as Store based channels which include grocery retailers
(discounters, health food shops, hypermarkets, small retailers such as convenience stores,
super markets and others), non grocery retailers such as chemists/pharmacies,
parapharmacies/drugstores, healthcare specialist retailers, department stores, mass
merchandisers, variety stores, warehouse clubs and non-store based retailing such as
vending, homeshopping, internet retailing and direct selling.
The emerging global trend of fitness and participation in sporting activities has led the
growth in sports nutrition such as sizes and shares of protein products (bars, powders,
ready-to-drink beverages etc) and non-protein products.
Key Consumer Health 2012 research highlights
The consumer health industry was up 6% in retail value terms in 2011. An array of new
products, affordable brands and an increasing interest in self care contributed to the
positive outcomes. Dietary supplements, cough, cold and allergy (hay fever) remedies, and
vitamins remained the strongest categories in consumer health accounting for 53% share of
retail value sales.
The major forces driving growth in Consumer Health are dictated by increasing health
expenditures and their financial burden on GDP, broadening consumer health opportunities
under self-care settings. However, stricter regulatory environments are creating new
challenges for the industry. Good manufacturing practices (GMPs), along with innovation in
 Rising income mean a steady growth in
the ability to access healthcare and
related services.
o Per capita income is expected to
increase at a CAGR of 7.33 per
cent over 2014-18.
o Per capita expenditure on
healthcare in India was
estimated by 2015 was USD 88.7.
 Moreover, changing demographics will
also contribute to greater healthcare
spending which is likely to continue with
the rise in population.

5. formulation, indication, delivery mechanisms and packaging, are bringing new options to
consumers in all countries. People more than ever are continuing to embrace consumer
health options as part of disease prevention, promotion of wellness, and preparation for old
age.
Unconventional Retail Channels Continue To Be the Strongest
Beauty specialist retailers, other healthcare specialist retailers, home shopping and internet
retailing emerged as the strongest growing channels in 2014, with 30%, 24%, 23% and 22%
respective increases. The growth was driven by vitamins and dietary supplements, sports
nutrition and weigh management. Although the biggest retail channel continued to be
chemists/pharmacies, the reach of these unconventional channels continued to grow in
2014. This was observed as most of these smaller retail channels in the case of store-based
retailing allowed consumers to shop for more than one type of product under the same
roof, thereby allowing them to save time and provide them with the convenience of one-
stop shopping. In the case of non-store retailing, these unconventional retail channels
provided consumers with the lowest prices with the convenience of sitting at home and
shopping. Hence, these retail channels enjoyed a good year in 2014.
CONSUMER EXPENDITURE ON HEALTH GOODS AND MEDICAL SERVICES: VALUE 2009-2014(INR Bn)
2009 2010 2011 2012 2013 2014
Pharmaceuticals,
medical
appliances/equipment
733.3 800.9 858.8 979.0 1088.8 1237.0
Outpatient 517.8 571.4 617.6 707.6 790.0 902.0
Hospital Services 264.9 291.5 314.4 359.7 401.1 457.3
Total 1516.1 1663.8 1790.8 2046.2 2279.9 2596.4
0
500
1000
1500
2000
2500
3000
2009 2010 2011 2012 2013 2014
Pharmaceuticals,medical
appliances/equipment
Outpatient
Hospital Services
Total

6. Sales of Consumer Health by Category: Percentage 2009-2014
Self-medication/self-care and Preventive Medicine
There was an increasing trend of consumers preferring to opt for self-medication in recent
years. This trend was prominent mostly amongst urban consumers who have hectic
lifestyles and are pressed for time. These consumers find it difficult to take time to visit a
doctor for common ailments such as headaches, joint pain, coughs, colds, fevers and
digestive issues, and prefer to self-medicate. The number of doctors in India is low
compared with the population, and results in long queues at clinics. This also acts as a
deterrent for urban consumers to visit a doctor for common ailments.
Previously, most families used traditional home remedies for common ailments. However,
as nuclear families have become the norm in urban areas, especially in metros, the
commonly used traditional home remedies are less frequently being passed on to the
younger generation. As a result, these consumers are opting for readily available OTC
products for common ailments. The trend of traditional home remedies is still prevalent in
rural areas, with consumers not having enough access to OTC products. Manufacturers are
aiming to increase the distribution and presence of such products in rural areas in order to
make them available to rural consumers. The trend of rural consumers shifting to OTC
products will only increase in the coming years.
Urban consumers also became more conscious about their health in recent years, and have
opted for preventive medication such as chyawanprash to increase their immunity. Demand
for these preventive medications is also on the rise due to consumers having hectic work
lives, and being unwilling to miss any working days. Manufacturers such as Emami, Dabur
OTC
Sports
Nutrition
Vitamins
and
Dietary
supplem
ents
Weight
Manage
ment
Herbal/T
raditiona
l
products
Allergy
Care
Paediatri
c OTC
Healthca
re
Consume
r Health
2013/14 10.3 19 9.3 22.4 10.9 0 9.9 11.1
2009-14 CAGR 11.7 16.6 12.5 49.9 11.8 0 19.1 13.7
0
10
20
30
40
50
60
AxisTitle

7. India, GlaxoSmithKline and Amrutanjan Health Care have recruited a number of celebrities
and sports stars to endorse their brands and increase awareness.
The prominent brand Zandu Pancharishta has the Indian cricket team captain MS Dhoni and
Padma Vibhushan Pandit Birju Maharaj as brand ambassadors. Sona Chandi Chyawanprash
has the popular Bollywood star Shahrukh Khan as its brand ambassador, Zandu Kesari Jivan
has Pandit Birju Maharaj as its brand ambassador and Dabur India’s popular product Dabur
Chyawanprash also has the Indian cricket team captain MS Dhoni as its brand ambassador.
Aggressive promotions and branding measures by manufacturers have ensured there is
increased awareness of their brands and the benefits these products offer consumers.