Indian Health Care industry

1. 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

2. Objective
To study the various aspects of the Health care
industry in India with respect to the Marketing
segmentation, issues at hand and opportunities of
growth.

3. 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

4. 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 expansion
copyright (your organization) 2003 5/5/2012

5. 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.

6. 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.

7. 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

8. Increasing Demand from Within the Country
8

9. 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

10. 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

11. 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

12. 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

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

14. 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.

15. 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.

16. 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.

17. 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.

18. 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)

19. 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

20. 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)

21. The Health Insurance
Market of India

22. 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

23. 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.

24. 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

25. Market Segmentation
 Working Class Individuals
 Working Professionals with Family.
 Students
 Senior Citizens
 Small and Medium Enterprises/ Corporate Houses:

26. 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

27. Industry Statistics

28. 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.

29. NUTRACEUTICALS MARKET
 Dietary supplements
 To fill nutritional deficiencies in food
 To prevent diseases

30. Segmentation
 Functional foods
 Functional beverages
 Mineral supplements

31. Challenges
 Lack of awareness
 Lack of Trust among People
 Lack of regulations
 Expensive Products

32. Major Companies
 Amway India-NUTRILITE
 Herb life
Distribution channel: Multi-level Marketing

33. MEDICAL TOURISM

34. 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

35. 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

36. 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.

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

38. SOURCE OF FINANCIAL SUPPORT
SOURCE: http://www.tourism.gov.in

39. 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

40. 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

41. 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.

42. 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

43. 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.

44. 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.

45. 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.

46. 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. Reddy's Laboratories 3,763.72 37.637
4 Sun Pharmaceutical 2,463.59 24.635
5 Lupin Ltd 2,215.52 22.155
6 Aurobindo Pharmaceutical 2,081.19 20.801
7 GlaxoSmithKline 1,773.41 17.734
8 Cadila Healthcare 1,613 16.13
9 Aventis Pharmaceutical 983.80 9.838
10 Ipca Laboratories 980.44 9.8044

47. 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.

48. 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.

49. 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.

50. 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.

51. 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.

52. 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.

53. Survey Analysis & Recommendations

54. Thank You
54