Value through Innovation17 April 2014

Healthcare policy and the market - Clear direction: On a growth path

Over the next eight to ten years, India stands to lose USD 236 billion due to stroke, cardiovascular (CV) disease (coronary heart disease, hypertension), diabetes and cancer. 60 % of the world’s CV disease burden is on India’s shoulders. Last year, India had 51 million diabetics and 39 million pre-diabetics (impaired glucose tolerance — IGT), estimated to reach 87 million diabetics and 64 million pre-diabetics by 2030. In the year 2000, a Lancet article reported 118.2 million hypertensives, which is estimated to reach 213.5 million in 2025. Every year, 1.6 million Indians suffer stroke and there are 8 million cancer cases. Interestingly, the current and future portfolio of BI India has products that cover exactly these therapeutic areas.

Against this backdrop, it would be expected that the government would invest a significant proportion of its GDP in health. The government has announced a major multi-billion dollar public-private partnership (PPP) initiative which by 2020 should make India one of the top five leading hubs of pharmaceutical innovation, with one out of every five to ten drugs discovered globally coming from India.

Another trend is the growth in the proportion of the population with healthcare insurance. At the same time, the disease profile of the people is changing from acute and infectious diseases to a chronic diseases. The medical infrastructure is improving and the middle class, with its rising disposable income, is quite ready to spend on health and to buy highquality, innovative medicines.

On 1 January 2005, the product patent era was rung in. It is to hoped that data exclusivity and incremental innovation will also eventually be protected. Guidelines on biosimilars are in progress. Changes in the regulatory environment are ensuring that patient safety is paramount and this will put an end to dubious clinic operators, thereby improving quality and compliance.

Booming market
India has already seen major launches of innovative medicines. Research process outsourcing is accelerating and health and pharmaceutical economics and outcomes research are slowly gaining in importance. The over-the-counter (OTC) industry is also booming, with increased focus on rural markets, as there is also money to be earned at the base of the pyramid – you just have to know how to reach people there. IMS estimates that the Indian pharmaceutical market had a volume of EUR 7.5 billion in 2011 and grew consistently by 12- 14 % for the last five years. In its report India Pharma 2020, Mckinsey & Company forecasted that the Indian market will be EUR 38 billion by 2020. If the industry makes supernormal efforts to take advantage of the opportunities presented, and generally enhances access and acceptability, the growth potential could even be as high as EUR 48 billion by 2020.

The Indian pharmaceutical industry is at a point where the country's pharmaceutical business is undergoing profound changes due to improvements in affordability, accessibility and acceptability.
Growth in the Indian healthcare sector is primarily due to rise in income, accompanied by increased public healthcare spending, greater patient awareness, expanded insurance coverage across the different income groups and improved medical infrastructure.

The major drivers of Indian healthcare can be broadly classified in four groups. The first is the epidemiological factor. India has shown phenomenal growth rates in life style-related diseases, such as CV and metabolic diseases. The second is the increased affordability of drugs due to sustained growth in incomes and extended insurance coverage. Third, accessibility to drugs is improving due to the expansion in medical infrastructure, new business models, launches of patented products and greater government spending on the healthcare system. And fourth, the acceptability of modern medicine and newer therapies is growing due to aggressive market creation by players, increasing patient awareness and improved diagnosis opportunities as well as a growing trend towards selfmedication.

Marked growth in the hospital market
The retail segment accounts for 80- 85 % of the market. However, consumption in hospital settings will rise to a 25-30 % market share by 2020. Drivers would be better infrastructure, an increase in the number of hospitals and early diagnosis and treatment due to increasing awareness.