Tag Archives: key

Is Drug Price Control The Key Growth Barrier For Indian Pharma Industry?

Posted on by
Reply

The corollary of the above headline could well be: “Are drug price hikes the key growth driver for the Indian Pharmaceutical Market (IPM)?”

Whenever the first question, as appears in the headline of this article: “Is drug price control a key barrier to growth of the IPM?”, is asked to the pharma players, irrespective of whether they are domestic companies or multinationals (MNCs), the answer in unison would quite expectedly be a full-throated ‘yes’. Various articles published in the media, including some editorials too, also seem to be on the same page, with this specific view. 

Likewise, if the corollary of the above question: “Are drug price hikes the key growth driver for the IPM?”, is put before this same target audience, most of them, if not all, would expectedly reply that ‘in the drug price control regime, this question does not arise at all, as IPM has been primarily a volume driven growth story.’ This answer gives a feel that the the entire or a major part of the IPM is under Government ‘price control’, which in fact is far from reality

Recently, a pharma industry association sponsored ‘Research Study’, conducted by an international market research organization also became quite vocal with similar conclusion on drug price control in India. This study, released on July 2015, categorically highlights ‘price control is neither an effective nor sustainable strategy for improving access to medicines for Indian patients’. The report also underscores: “The consumption of price-controlled drugs in rural areas has decreased by 7 percent over the past two years, while that of non-price controlled products has risen by 5 percent.”

I argued on the fragility of the above report in this Blog on September 7, 2015, in an article titled, “Drug Price Control in India: A Fresh Advocacy With Blunt Edges”.

Nonetheless, in this article, going beyond the above study, I shall try to put across my own perspective on both the questions raised above, primarily based on the last 12 months retail data of well-respected AIOCD Pharmasofttech AWACS Pvt. Ltd. 

Pharma product categories from ‘Price Control’ perspective:

To put this discussion in right perspective, following AIOCD-AWACS’ monthly pharma retail audit reports, I shall divide the pharma products in India into three broad categories, as follows:

  • Products included under Drug Price Control Order  2013 (DPCO 2013), which are featuring in the National List of Essential Medicines 2011 (NLEM 2011) 
  • Products not featuring in NLEM 2011, but included in Price Control under Para 19 of DPCO 2013
  • Products outside the ambit of any drug price control and can be priced by the respective drug manufacturers, whatever they deem appropriate

The span of price controlled medicines would currently be around 18 percent of the IPM. Consequently, the drugs falling under free-pricing category would be the balance 82 percent of the total market. Hence, the maximum chunk of the IPM constitutes of those drugs for which there is virtually no price control existing in India.

According to the following table, since, at least the last one-year period, the common key growth driver for all category of drugs, irrespective of whether these are under ‘price control’ or ‘outside price control, is price increase in varying percentages: 

Value vs Volume Growth (October 2014 to September 2015):

Month DPCO Product      Gr% Non-DPCO Products Gr% Non-NLEM Para 19 Gr% IPM
2015 Value Volume Value Volume Value Volume Value Volume
September 2.8 1.2 10.9 1.1 11.5 9.0 9.9 1.4
August 3.3 (2.7) 14.5 2.4 15.2 13.7 13.0 1.6
July 5.1 (0.6) 14.2 4.1 11.8 9.9 12.9 3.3
June 5.6 (0.1) 16.2 6.2 14.6 11.7 14.8 5.0
May 5.3 (0.3) 12.1 3.4 7.2 4.3 11.0 2.6
April 11.1 5.3 18.4 9.6 11.9 9.6 17.2 8.7
March 17.6 9.5 21.7 13.0 15.6 13.2 20.9 12.2
Feb 13.9 7.6 20.0 10.1 14.4 9.9 18.9 9.6
Jan 6.9 1.8 14.0 3.7 NA NA 12.7 3.3
2014    
December 8.0 0.7 14.8 3.2 NA NA 13.6 2.7
November 3.1 (3.4) 12.6 0.3 NA NA 10.9 (0.4)
October (2.4) (5.7) 6.8 (1.7) NA NA 5.2 (2.6) 

Source: Monthly Retail Audit of AIOCD Pharmasofttech AWACS Pvt. Ltd 

Does ‘free drug-pricing’ help improving consumption?

I would not reckon so, though the pharma industry association sponsored above study virtually suggests that ‘free pricing’ of drugs would help improve medicine consumption in India, leading to high volume growth.

As stated earlier, the above report of IMS Health highlights, “The consumption of price-controlled drugs in rural areas has decreased by 7 percent over the past two years, while that of non-price controlled products has risen by 5 percent.”

On this finding, very humbly, I would raise a counter question. If only free pricing of drugs could help increasing volume growth through higher consumption, why would then the ‘price-controlled non-NLEM drugs under para 19’, as shown in the above table, have generally recorded higher volume growth than even those drugs, which are outside any ‘price control’? Or in other words, why is the consumption of these types of ‘price controlled’ drugs increasing so significantly, outstripping the same even for drugs with free pricing?

The right answers to these questions lie somewhere else, which I would touch upon now.

Are many NLEM 2011 drugs no longer in supply?

DPCO 2013 came into effect from from May 15, 2013. Much before that, NLEM 2011 was put in place with a promise that all the drugs featuring in that list would come under ‘price control’, as directed earlier by the Supreme Court of India.  Even at that time, it was widely reported by the media that most of the drugs featuring in the NLEM 2011 are either old or may not be in supply when DPCO 2013 would be made effective. The reports also explained its reasons. 

To give an example, a November 6, 2013 media report stated: “While the government is still in the process of fully implementing the new prices fixed for 348 essential medicines, it has realized that most of these are no longer in supply. This is because companies have already started manufacturing many of these drugs with either special delivery mechanism (an improved and fast acting version of the basic formulation) or in combination with other ingredients, circumventing price control.”

Just to give a feel of these changes, the current NLEM 2011 does not cover many Fixed-Dose Combinations (FDC) of drugs. This is important, as close to 60 percent of the total IPM constitutes of FDCs. Currently, FDCs of lots of drugs for tuberculosis, diabetes and hypertension and many other chronic and acute disease conditions, which are not featuring in the NLEM 201, are very frequently being prescribed in the country. Thus, the decision of keeping most of the popular FDCs outside the ambit of NLEM 2011 is rather strange.

Moreover, a 500 mg paracetamol tablet is under price control being in the NLEM 2011, but its 650 mg strength is not. There are many such examples.

These glaring loopholes in the NLEM 2011 pave the way for switching over to non-NLEM formulations of the same molecules, evading DPCO 2013. Many experts articulated, this process began just after the announcement of NLEM 2011 and a lot of ground was covered in this direction before DPCO 2013 was made effective.

Intense sales promotion and marketing of the same molecule/molecules in different Avatars, in a planned manner, have already started making NLEM 2011 much less effective than what was contemplated earlier. 

Some examples:

As I said before, there would be umpteen number of instances of pharmaceutical companies planning to dodge the DPCO 2013 well in advance, commencing immediately after NLEM 2011 was announced. Nevertheless, I would give the following two examples as was reported by media, quoting FDA, Maharashtra:

1. GlaxoSmithKline (GSK) Consumer Healthcare having launched its new ‘Crocin Advance’ 500 mg with a higher price of Rs 30 for a strip of 15 tablets, planned to gradually withdraw its conventional price controlled Crocin 500 mg brand costing around Rs 14 for a strip of 15 tablets to patients. GSK Consumer Healthcare claimed that Crocin Advance is a new drug and therefore should be outside price control.

According to IMS Health data, ‘Crocin Advance’ achieved the fifth largest brand status among top Paracetamol branded generics, clocking a sales turnover of Rs 10.3 Crore during the last 12 months from its launch ending in February 2014. The issue was reportedly resolved at a later date with assertive intervention of National Pharmaceutical Pricing Authority (NPPA).

2. Some pharmaceutical companies reportedly started selling the anti-lipid drug Atorvastatin in dosage forms of 20 mg and 40 mg, which are outside price control, instead of its price controlled 10 mg dosage form.

Why DPCO 2013 drugs showing low volume growth?

From the above examples, if I put two and two together, the reason for DPCO 2013 drugs showing low volume growth becomes much clearer.

Such alleged manipulations are grossly illegal, as specified in the DPCO 2013 itself. Thus, resorting to illegal acts of making similar drugs available to patients at a much higher price by tweaking formulations, should just not attract specified punitive measures, but may also be construed as acting against health interest of Indian patients…findings of the above ‘research report’, notwithstanding, even if it is accepted on its face value.

In my view, because of such alleged manipulations, and many NLEM 2011 drugs being either old or not in supply, we find in the above table that the volume growth of ‘Price Controlled NLEM drugs’ is much less than ‘Price Controlled non-NLEM Para 19’ drugs. Interestingly, even ‘Out of Price Control’ drugs show lesser volume growth than ‘Price Controlled non-NLEM Para 19 drugs’.

Government decides to revise NLEM 2011:

The wave of general concerns expressed on the relevance of NLEM 2011 reached the law makers of the country too. Questions were also asked in the Parliament on this subject.

Driven by the stark reality and the hard facts, the Union Government decided to revise NLEM 2011. 

For this purpose, a ‘Core Committee of Experts’ under the Chairmanship of Dr. V.M Katoch, Secretary, Department of Health Research & Director General, Indian Council of Medical Research (ICMR), was formed in May 2014.

The minutes of the first and second meetings of the ‘Core Committee of Experts’, held on June 24, 2014 and July 2, 2014, respectively, were also made public. 

On May 5, 2015, the Union Minister for Chemicals and Fertilizers Ananth Kumar said in a written reply to the ‘Lok Sabha’ that “The revised NLEM would form the basis of number of medicines which would come under price control.” This revision is taking place in the context of contemporary knowledge of use of therapeutic products, the Minister added.

Would pharma sector grow faster sans ‘price control’?

If ‘drug price control’ is abolished in India, would pharma companies grow at a much faster rate in volume with commensurate increase in consumption, than what they have recorded during ‘limited price control’ regime in the country? This, in my view, is a matter of conjecture and could be a subject of wide speculation. I am saying this primarily due to the fact that India has emerged as one of the fastest growing global pharmaceutical market during uninterrupted ‘drug price control regime’ spanning over the last 45 years.

Nevertheless, going by the retail audit data from the above table, it may not be necessarily so. The data shows that volume growth of ‘out of price control’ drugs is not the highest, by any measure. On the contrary, it is much less than ‘price controlled drugs under para 19 of DPCO 2013′, which are mainly prescribed for non-infectious chronic diseases on a large scale.

I am referring to AIOCD-AWACS data for just the last 12 months, because of space constraint, but have gone through the same for the entire DPCO 2015 period, till September’15. The reason for my zeroing in on DPCO 2015 is for the three simple reasons:

- The span of price control in this regime is the least, even lesser than DPCO 1995, which was 20 percent. 

- It is much more liberal in its methodology of ‘Ceiling Price (CP)’ calculation, over any other previous DPCOs

- It has also a provision, for the first time ever, of automatic price increases every year for price controlled drugs, based on WPI.

A safeguard for patients?

Medicines enjoy the legal status of ‘essential commodities’ in India. Thus, many believe that ‘drug price control’ is a ‘pricing safeguard’ for Indian patients, especially for essential medicines and ‘out of expenses’ for drugs being as high as over 60 percent.

In the prevailing health care environment of India, the situation otherwise could even be possibly nightmarish. The key reason for the same has been attributed to ‘market failure’ by the Government, for most of the pharmaceutical products, where competition does not work. I discussed this issue in my article titled, “Does ‘Free-Market Economy’ Work For Branded Generic Drugs In India?” of April 27, 2015, in this Blog.

In India, ‘drug price control’ has successfully passed the intense scrutiny of the Supreme Court, along with its endorsement and approval. Any attempt of its retraction by any Government, without facing a tough challenge before the Apex Court, seems near impossible.

Conclusion: 

The fundamental reasons for overall low volume growth, or in other words, price-increase driven value growth of the IPM, I reckon, lie somewhere else, which could be a subject matter of a different debate altogether.

As I said in the past, IPM grew at an impressive speed consistently for decades, despite ‘drug price control’, and grumbling of the industry for the same. This high growth came from volume increase, price increase and new product introductions, the volume growth being the highest.

Most of the top 10 Indian pharma players, came into existence and grew so fast during the ‘drug price control’ regime. The  home-grown promoter of the numero-uno of the IPM league table, is now the second richest person of India. These are all generic pharma companies.

Generally speaking, Indian pharma shares even today attract more investors consistently than any other sector for such a long time. Granted that these companies are drug exporters too, but they all gained their critical mass in partly ‘price controlled’ Indian market. The criticality of the need for consistent growth in the domestic market, by the way, still remains absolutely relevant to all the pharma players in India, even today, despite…whatever.

Growth oriented overall Indian pharma scenario remaining quite the same, ‘drug price control’ with a current span of just around 18 percent of the IPM, can’t possibly be a growth barrier. Otherwise, how does one explain the highest volume growth of ‘price controlled non-NLEM drugs’, which is even more than ‘out of price-control drugs’?

Be that as it may, in my view, implementation of public funded ‘Universal Health Care (UHC)’ by the Indian Government, in any form or calling it by any other name, can possibly replace DPCO. Similar measures have been adopted by all the member countries of the ‘Organization for Economic Co-operation and Development (OECD)’ in this area, though following different paths, but nevertheless to attain the same goal.

Lamentably enough, the incumbent Government too has not ‘walked the talk’ on its number of assurances related to this core issue of health care in India.

Still, the hope lingers!

By: Tapan J. Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

 

Would ‘Empowered Patients’ Hold The Key For Rapid Progress of Healthcare In India?

Posted on by
Reply

Empowered patients would eventually hold the key of rapid progress of healthcare all over world. It has to happen in India too and is just a matter of time.

One such approach has recently been initiated in America. ‘The Patient-Centered Outcomes Research Institute (PCORI)’, established through 2010 Patient Protection and Affordable Care Act of the United States, helps its people in making informed healthcare decisions to significantly improve healthcare delivery and outcomes. Active promotion of high integrity, evidence-based information that comes from intensive research, ably guided by patients, caregivers and the broader healthcare community, forms the bedrock of this Institute.

PCORI ensures that, patients and the public at large have information that they can use to make decisions that reflect their desired health outcomes.

This initiative can be termed as one of the key steps towards ‘Patients Empowerment’ in the United States, setting a good example for many other countries to follow, across the world.

Come May 2014, the new Union Government of India, with its much touted focus on healthcare, would probably find this Act worth emulating.

Changing doctor-patient relationship:

In good old days, well before the accelerated use of Internet became a way of life for many, patients used to have hardly any access to their various health related information. As a result doctors used to be the sole decision makers to address any health related problem of patients, sitting on a pedestal, as it were.

Any patient willing to discuss and participate in the decision making process of his/her ailments with the doctors, would in all probability be frowned upon with a condescending question – “Are you a doctor?” Clearly indicating – ‘Keep off! I am the decision maker for you, when you are sick”. This situation, though changing now even in India, rather slowly though, needs a radical transformation with clearly established individual ‘patient empowerment’ mechanism in the country.

Individual ‘Patient Empowerment’:

Just as PCORI in the US, Government of India too needs to encourage individual ‘Patient Empowerment’ by making him/her understand:

  • How is the healthcare system currently working on the ground?
  • What are the key drivers and barriers in getting reasonably decent healthcare support and solution in the country?
  • What should be done individually or collectively by the patient groups to overcome the obstacles that come on the way, even in rural India?
  • How should patients participate in his/her healthcare problem solving process with the doctors and payor?

The essence of ‘Patient Empowerment’:

‘Natural Health Perspective’ highlighted ‘Patient Empowerment’ as follows:

  • Health, as an attitude, can be defined as being successful in coping with pain, sickness, and death. Successful coping always requires being in control of one’s own life.
  • Health belongs to the individual and the individuals have the prime responsibility for his/her own health.
  • The individual’s capacity for growth and self-determination is paramount.
  • Healthcare professionals cannot empower people; only people can empower themselves.

It started in America: 

Much before PCORI, the movement for ‘Patient Empowerment’ started in America in the 70’s, which asserts that for truly healthy living, one should get engaged in transforming the social situation and environment affecting his/her life, demanding a greater say in the treatment process and observing the following tenets:

  • Others cannot dictate patients’ choice and lifestyle
  • ‘Patient Empowerment’ is necessary even for preventive medicines to be effective
  • Patients, just like any other consumers, have the right to make their own choices

Thus, an ‘Empowered Patient’ should always play the role of a participating partner in the healthcare decision making or problem solving process.

‘Patient empowerment’ is a precursor to ‘Patient-Centric’ approach:

In today’s world, the distrust of patients on the healthcare system, pharmaceutical companies and even on the drug regulators, is growing all over the world. Thus, to help building mutual trust in this all important area, the situation demands encouraging ‘Empowered Patients’ to actively participate in his/her medical treatment process.

In India, as ‘out-of-pocket’ healthcare expenses are skyrocketing in the absence of a comprehensive, high quality and affordable Universal Health Coverage (UHC) system, the ‘Empowered Patients’ would increasingly demand to know more of not only the available treatment choices, but also about the medicine prescription options.

‘Patient Empowerment’ is the future of healthcare:

Even today, to generate increasing prescription demand and influence prescription decision of the doctors, the pharmaceutical companies provide them with not just product information through their respective sales forces, but also drug samples and a variety of different kinds of gifts, besides many other prescription influencing favors. This approach is working very well, albeit more intensely, in India too.

Being caught in this quagmire, ‘Empowered Patients’ have already started demanding more from the pharma players for themselves. As a result, many global majors are now cutting down on their sales force size to try to move away from just hard selling and to gain more time from the doctors.  Some of them have started taking new innovative initiatives to open up a chain of direct web-based communication with patients to know more about the their needs in order to satisfy them better.

In future, with growing ‘Patient Empowerment’ the basic sales and marketing models of the pharmaceutical companies are expected to undergo a paradigm shift. At that time, so called ‘Patient-Centric’ companies of today would have no choice but to walk the talk.

Consequently, most pharma players will have to willy-nilly switch from ‘hard-selling mode’ to a new process of achieving business excellence through continuing endeavor to satisfy both the expressed and the un-expressed or under-expressed needs of the patients, not just with innovative products, but more with innovative and caring services.

In the years ahead, increasing number of ‘Empowered Patients’ are expected to play an important role in their respective healthcare decision making process, initially in the urban India. Before this wave of change effectively hits India, the pharmaceutical players in the country should pull up their socks to be a part of this change, instead of attempting to thwart the process.

‘Empowered Patients’ can influence even the R&D process:

Reinhard Angelmar, the Salmon and Rameau Fellow in Healthcare Management and Professor of Marketing at INSEAD, was quoted saying that ‘Empowered Patients’ can make an impact even before the new drug is available to them.

He cited instances of how the empowered breast cancer patients in the US played a crucial role not only in diverting funds from the Department of Defense to breast cancer research, but also in expediting the market authorization and improving market access of various other drugs.

Angelmar stated that ‘Empowered Patients’ of the UK were instrumental in getting NICE, their watchdog for cost-effectiveness of medicines, to change its position on the Age-related Macular Degeneration (AMD) drug Lucentis of Novartis and approve it for wider use than originally contemplated by them.

Patient groups such as the Cystic Fibrosis Foundation (CFF) reportedly fund directly to develop novel therapies that benefit patients in partnership with industry.

Meeting with the challenge of change:

To effectively respond to the challenge posed by the ‘Empowered Patients’, some pharmaceutical companies, especially in the US, have started developing more direct relationship with them. Creation of ‘Patient Empowered’ social networks may help addressing this issue properly.

Towards this direction, some companies, such as, Novo Nordisk had developed a vibrant patient community named ‘Juvenation’, which is a peer-to-peer social group of individuals suffering from Type 1 diabetes. The company launched this program in November 2008 and now the community has much over 16,000 members, as available in its ‘Facebook’ page.

Another example, Becton, Dickinson and Co. had created a web-based patient-engagement initiative called “Diabetes Learning Center” for the patients, not just to describe the causes of diabetes, but also to explain its symptoms and complications. From the website a patient can also learn how to inject insulin, along with detailed information about blood-glucose monitoring. They can even participate in interactive quizzes, download educational literature and learn through animated demonstrations about diabetes-care skills.

Many more Pharmaceutical Companies, such as Pfizer, Johnson & Johnson, Novartis, Boehringer Ingelheim, AstraZeneca, Bayer, GlaxoSmithKline, Sanofi, Roche and Merck are now directly engaging with the customers through social media like Twitter, Facebook etc.

Technology is helping ‘Patient Empowerment’:

Today, Internet and various computer/ iPad and smart phone based applications have become great enablers for the patients to learn and obtain more information about their health, illnesses, symptoms, various diagnostic test results, including progress in various clinical trials, besides product pricing.

In some countries, patients also participate in the performance reviews of doctors and hospitals.

Conclusion:

Increasing general awareness and rapid access to information on diseases, products and the cost-effective treatment processes through Internet, in addition to fast communication within the patients/groups through social media like, ‘Twitter’ and ‘Facebook’ by more and more patients, I reckon, are expected to show the results of ‘Patient Empowerment’ initiatives, sooner than later, even in India.

Accelerated ‘Patient Empowerment’ initiatives with modern technological support, would help the patient groups to have a firm grip on the control lever of setting truly patient centric direction for the healthcare industry.

Working in unison by all stakeholders towards this direction, would herald the dawn of a new kind of laissez-faire in the healthcare space of India, the sole beneficiary of which would be the mankind at large.

By: Tapan J. Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

 

Medical Tourism: A key growth driver in the healthcare space of India

Posted on by
Reply

Since the last several years medical tourism is fast evolving as one of the key growth drivers of the healthcare sector, especially, in the western world like, the United States of America (USA) and the United Kingdom.

Dr. Fred Hansen in his article titled, “A revolution in healthcare medicine meets the marketplace (January 2008)” highlighted that the increasing number of high-quality healthcare facilities in developing coun­tries are catering to medical tourists from the developed countries. Among them there are many uninsured Ameri­cans. Medical services outside USA in the developing countries are much cheaper. On average it is around 80%. For example, a cardiac surgery, which will cost more than US$ 50,000 in the United States, can be availed for US$ 20,000 in Singapore, US$ 12,000 in Thailand and between US$ 3,000 and US$ 10,000 in India.  For this reason, Dr. Hansen predicted that the number of Americans traveling abroad for healthcare is expected to increase from around 1.3 million in 2008 to 6 million by 2010.

It has been reported that about 500,000 foreign patients traveled to India for medical care in 2005 from an estimated 150,000 patients in 2002 mainly from USA, UK and the Gulf countries for low-priced high quality healthcare in various disease areas. More and more people from these countries are finding the prospect of quality and value added medical care in countries like India financially attractive.

The Global Market:

In 2006 the global market for medical tourism was around US$ 60 billion. According to McKinsey & Company, this market could expand to US$100 billion by 2012.

An evolving sector in India:

Thus, medical tourism is fast establishing itself as an evolving area of business in the global healthcare space. In that space, India is fast emerging as one of the most preferred medical tourism destinations in the world.

This healthcare sector in India, despite being smaller compared to the western world, is surging ahead both at the national and the regional levels with enormous potential for future growth,  if explored appropriately with a carefully worked out strategic game plan from the very nascent stage of its evolution process.

Economic Times, in its January 6, 2009 edition reported, “Indian medical tourism to touch Rs 9,500 Crore (around US $ 2.1 billion) by 2015”.  Another report titled “Booming Medical Tourism in India”, published in December 2010 estimated that the medical tourism industry will generate revenues of around US$ 3 billion by 2013, although with a market share of just around 3%  the of global medical tourism industry.  Thus, in medical tourism, India still remains a smaller player with enormous growth potential.

The key reason and influencers:

The most common reason for medical tourism globally is lack of (adequate) health insurance. The most common emerging destinations of medical tourism in the world are Thailand, Singapore, Costa Rica, Panama, Brazil, Mexico, Malaysia and India.

Other factors influencing Medical Tourism particularly in India are as follows:

  1. Significant cost advantages.
  2. High quality treatment and hospital stay with the  world class medical technological support
  3. Rigid compliance with international treatment standards
  4. No language barrier with the western world
  5. Government taking active steps and interest in the medical tourism sector.

In all these five areas the significant advantages that India offers will need to be adequately encashed in a sustainable manner.

Significant cost advantage in India: The patients from other countries of the world who come to India for medical care not only get world class healthcare services, but also are offered to stay in high-end ‘luxury’ hospitals fully equipped with the latest television set, refrigerator and even in some cases a personal computer. All these are specially designed to cater to the needs of these groups of patients.

Moreover, according to John Lancaster of The Washington Post ( October 21, 2004) Indian private hospitals have a better mortality rate for heart surgery than American hospitals.

Cost Comparison: India vs UK:

Nature of Treatment

Treatment Approximate Cost in India ($) *

Cost in other Major Healthcare Destination ($) *

Approximate Waiting Periods in USA / UK    (in months)

Open heart Surgery

4,500

> 18,000

9 – 11

Cranio-facial Surgery and skull base

4,300

> 13,000

6 – 8

Neuro-surgery with Hypothermia

6,500

> 21,000

12 – 14

Complex spine surgery with implants

4,300

> 13,000

9 – 11

Simple Spine surgery

2,100

> 6,500

9 – 11

Simple Brain Tumor -Biopsy -Surgery

1,000 4,300

> 4,300 > 10,000

6 – 8

Parkinsons -Lesion -DBS

2,100 17,000

> 6,500 > 26,000

9 – 11

Hip Replacement

4,300

> 13,000

9 – 11

* These costs are an average and may not be the actual cost to be incurred.

(Source: Health Line)

Most popular treatment areas:

The most popular treatment areas are as follows:

  1. Alternative medicines
  2. IVF treatment
  3. Bone-marrow transplant
  4. Cardiac bypass
  5. Eye surgery
  6. Dental care
  7. Cosmetic surgery
  8. Other areas of advanced medicine

The key components:

The following four basic components constitute the medical tourism industry:

• Healthcare providers: Hospitals, mainly corporate hospitals and doctors • Payers: Medical/ Health insurance companies • Pharmaceutical Companies: for high quality affordable medicines • IT companies : operating in the healthcare space Key drivers and barriers to growth: Following are the key growth drivers:

  1. Government support through policies and initiatives
  2. High quality, yet low cost care
  3. Much less or no waiting time
  4. World class private healthcare infrastructure
  5. Rich source of natural and traditional medicines. Ministry of Tourism is also promoting the traditional systems of medicines, like,  Ayurveda, Siddha, and Yoga to project India as a the destination of choice for even spiritual wellness and healing

In future, the world class and low cost private sector healthcare services are expected to drive the growth of the medical tourism in India. However, any shortages in the talent pool and inadequate other basic infrastructural support like, roads, airports and power could pose to be barriers to growth, if not addressed immediately.

The PPP model:

Currently the government has started adopting a Public Private Partnership (PPP) Model to provide world class healthcare services through medical tourism both at the national and the state levels. This PPP model has been designed in such a way that continuous improvement in healthcare infrastructure takes place through the private sector resources ably supported by the public sector in terms of policy, budgetary and fiscal support towards such initiatives.

US apprehension about growing Medical Tourism of India:

India Knowledge@Wharton in its June 2, 2011 issue reported as under:

  • In the past, US President Barack Obama had singled out India for what he sees as the country usurping American jobs and business.
  • In May 2009, he removed some tax incentives for US companies who allegedly preferred to outsource rather than create domestic jobs. “Buffalo before Bangalore” was his rallying call at the time.
  • In April 2011, he told a town hall gathering in Virginia that Americans shouldn’t have to go to India or Mexico for “cheap” health care. “I would like you to get it right here in the U.S.,” he said. 

Conclusion:

As we have noted above, due to global economic meltdown even many corporate business houses in the developed world are under a serious cost containment pressure, which includes the medical expenses for their employees. Such cost pressure prompts/ could prompt them to send their employees to low cost destinations for treatment, without compromising on the quality of their healthcare needs. This trend could offer an additional significant growth opportunity in the medical tourism sector in India.

India should keep in mind that other countries, in quite close proximity to ours, like, Thailand, Singapore and Malaysia will continue to offer quite tough competition in the medical tourism space of our country.

However, superior healthcare services with a significant cost advantage at world class and internationally accredited facilities, treated by foreign qualified doctors, supported by English speaking support staff and equipped with better healthcare related IT services will only accelerate this trend in favor of India.

Thus it is a time to say, ‘medical tourism in India – Ahoy!’

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Access to affordable healthcare to 65% of Indian population still remains a key issue even after six decades of independence of the country.

Posted on by
Reply
Despite so much of stringent government control, debate and activism on the affordability of modern medicines in India, on the one hand, and the success of the government to make medicines available in the country at a price, which is cheaper than even Pakistan, Bangladesh and Sri Lanka, on the other, the fact still remains, about 65% of Indian population does not have access to affordable modern medicines, as compared to just 15% in China and 22% in Africa.The moot question therefore arises, despite all these stringent price regulation measures by the government and prolonged public debates over nearly four decades to ensure better ‘affordability of medicines’, why then ‘access to modern medicine’ remained so abysmal to a vast majority of the population of India, even after sixty years of independence of the country?This vindicates the widely held belief that in India no single minister or ministry can be held accountable by the civil society for such a dismal performance in the access to healthcare in the country. Is it then a ‘system flaw’? May well be so.

Poor healthcare infrastructure:

As per the Government’s own estimate, India falls far short of its minimum requirements towards basic public healthcare infrastructure. The records indicate, as follows:

1. A shortage of 4803 Primary Health Centres (PHC)

2. A shortage of 2653 Community Health Centres (CHC)

3. No large Public Hospitals in rural areas where over 70% of the populations live

4. Density of doctors in India is just 0.6 per 1000 population against 1.4 and 0.8 per 1000 population in China and Pakistan respectively, as reported by WHO.

The Government spending in India towards healthcare is just 1.1% of GDP, against 2% of China and 1.6% of Sri Lanka, as reported by the WHO.

Some good sporadic public healthcare initiatives to improve access:

The government allocation around US$2.3 billion for the National Rural Health Mission (NRHM), is a good initiative to bring about uniformity in quality of preventive and curative healthcare in rural areas across the country.
While hoping for the success of NRHM, inadequacy of the current rural healthcare infrastructure in the country with about 80 percent of doctors, 75 percent dispensaries and 60 percent of hospitals located only in the urban India may encourage the skeptics.

PPP to improve access to medicines:

At this stage of progress of India, ‘Public Private Partnership (PPP)’ initiatives in the following four critical areas could prove to be very apt to effectively resolve this issue

1. PPP to improve affordability:

It appears that in earlier days, the policy makers envisaged that stringent drug price control mechanism alone will work as a ‘magic wand’ to improve affordability of medicines and consequently their access to a vast majority of Indian population.

When through stricter price control measures the access to medicines did not improve in any significant measure, the industry associations reportedly had jointly suggested to the government for a policy shift towards public-private-partnership (PPP) model way back in December 2006. The comprehensive submission made to the government also included a proposal of extending ‘concessional price for government procurement’ under certain criteria.

In this submission to the government, the industry did not suggest total price de-regulation for the pharmaceutical industry of India. Instead, it had requested for extension of the price monitoring system of the ‘National Pharmaceutical Pricing Authority (NPPA)’, which is currently working very effectively for over 80 percent of the total pharmaceutical industry in India. Balance, less than 20 percent of the industry, is currently under cost-based price control.

However, the argument of the NPPA against this suggestion of the pharmaceutical industry is that the market entry price of any formulation under the ‘price monitoring’ mechanism is not decided by the government. Hence without putting in place any proper price control/negotiation system to arrive at the market entry price of the price decontrolled formulations, the existing ‘price monitoring’ mechanism may not be as effective, as in future more and more high price patented non-schedule formulations are expected to be introduced in the market.

However, the government seems to have drafted a different drug policy, which has now been referred to a new Group of Ministers for approval. It is worth noting that to make the PPP proposal of the industry effective, the Ministry of Health, both at the centre and also at the state levels, will require to quickly initiate significant ‘capacity building’ exercises in the primary and also in the secondary healthcare infrastructural facilities. FICCI is reported to have suggested to the Government for an investment of around US$ 80 billion to create over 2 million hospital beds for similar capacity building exercises.

Frugal budgetary allocation towards healthcare could well indicate that the government is gradually shifting its role from public healthcare provider to healthcare facilitator for the private sectors to help building the required capacity. In such a scenario, it is imperative for the government to realize that the lack of even basic primary healthcare infrastructure leave aside other financial incentives, could impede effective penetration of private sectors into semi-urban and rural areas. PPP model should be worked out to address such issues, as well.

2. PPP to leverage the strength of Information Technology (IT) to considerably neutralize the healthcare delivery system weaknesses:

Excellence in ‘Information Technology’ (IT) is a well recognized strength that India currently possesses. This strengths needs to be leveraged through PPP to improve the process weaknesses. Harnessing IT strengths, in the areas of drug procurement and delivery processes, especially in remote places, could hone the healthcare delivery mechanism, immensely.

3. PPP in ‘Telemedicine’:

‘‘Telemedicine” is another IT enabled technology that can be widely used across the nation to address rural healthcare issues like, distant learning, disease prevention, diagnosis and treatment of ailments.
Required medicines for treatment could be made available to the patients through ‘Jan Aushadhi’ initiative of the Department of Pharmaceuticals (DoP), by properly utilising the Government controlled public distribution outlets like, ration shops and post offices, which are located even in far flung and remote villages of India.

4. PPP in healthcare financing for all:

Unlike many other countries, over 72 percent of Indian population pay out of pocket to meet their healthcare expenses.

While out of a population of 1.3 billion in China, 250 million are covered by insurance; another 250 million are partially covered and the balance 800 million is not covered by any insurance, in India total number of population who have some healthcare financing coverage will be around 200 million and the penetration of health insurance is just around 3.5% of the population. India is fast losing grounds to China mainly due to their better response to healthcare needs of the country.

As the government has announced ‘Rashtriya Swasthaya Bima Yojna (RSBY)’ for the BPL families, an integrated and robust healthcare financing model for all, is expected to address the affordability issue more effectively.

According to a survey done by National Sample Survey Organisation (NSSO), 40% of the people hospitalised in India borrow money or sell assets to cover their medical expenses. A large number of population cannot afford to required treatment, at all.

Conclusion:

An integrated approach by creating effective healthcare infrastructure across the country, leveraging IT throughout the healthcare space and telemedicine, appropriately structured robust ‘Health Insurance’ schemes for all strata of society, supported by evenly distributed ‘Jan Aushadhi’ outlets, deserve consideration of the government to improve access to affordable healthcare to a vast majority of population of the country, significantly.

Well researched PPP models in all these areas, involving the stakeholders, need to be effectively implemented, sooner, to address this pressing issue.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

India as a global pharmaceutical outsourcing hub: Some key advantages and the areas of improvement.

Posted on by
Reply
All over the world, pharmaceutical research and development pipelines are gradually getting dried up. Lesser and lesser blockbuster drugs are now coming up from the ‘mind to the market’. Currently the average annual turnover of over 90% of patented drugs is around US $150 million each. At the same time regulatory requirements to obtain the marketing approval are becoming more and more stringent, spiralling the R&D costs of the innovator companies very significantly.
The name of the game:

In today’s perspective of the global pharmaceutical industry, ‘competitive efficiency’ in speed of implementation of various projects and optimizing costs of operations, can be easily considered as the ‘name of the game’.
Such competitive efficiency is as much essential for a relatively quick turnaround from ‘the mind to market’ of New Chemical Entities (NCEs) or New Molecular Entities (NMEs), to reducing manufacturing costs through various outsourcing opportunities and/or innovative application of technology and spreading geographical marketing operational network.

Towards this direction, ‘Business Process Outsourcing’ in R&D, manufacturing, clinical trials etc. is now gradually emerging as one of the most critical ways to achieve this important objective. It is expected that gradually outsourcing of specialized manufacturing like, biopharmaceutical and sterile manufacturing and specialized processes like, improvements in catalyst activity, will be gaining grounds.

India is emerging as a potential outsourcing hub:

India is fast emerging as a key player in the outsourcing business of the global companies, with its high quality facilities, world class services at a very competitive cost, in various areas of pharmaceutical business operations. India is not only a vibrant democracy, it has now a good Intellectual Property Rights (IPR) system in place and offers very significant cost advantages both in contract research and contract manufacturing space, as compared to many other countries.

Many Indian pharmaceutical companies are scaling up their capacities and investing in establishing more number of world class facilities. Currently India has over 100 pharmaceutical plants approved by the US foods and drugs administration. Incidentally this number is the largest outside the USA.

The key advantages:

India with its total pharmaceutical market size of around US $ 14 billion offers both value and cost arbitrage, which are as follows:

1. Familiarity with the regulatory environment and requirements of the developed markets

2. Extensive global operations in the generics business

3. World class facilities

4. Lower employee wages

5. Large number of young workforce

6. High capacity of skilled labour (350,000 engineers/year)

7. High quality of engineers, process chemists

8. Low communication barriers due to high levels of English

9. Speed of operation

10. Cost effective IT infrastructure, facilitating all key business processes

Contract research investment strategies of the global companies in India:

Most common investment strategy in the collaborative arrangement is risk-sharing outsourcing co-development of a NCE/NME. For example, Johnson & Johnson (J&J) signed an outsourcing agreement with Advenus Therapeutics of India in November 2008 with a contract value of US $ 247 million including milestone and royalty payments in the areas of inflammation and metabolic diseases. In this contract Advinus will be responsible for development upto ‘the proof of concept’ (Phase II a) and then J&J will take over till commercialization of the molecule.

Areas of improvements:

1. Biotech contract research as a whole

2. Economies of scale in manufacturing products like, recombinant proteins, small interfering Ribonucleic Acid (siRNAs), vaccines, antibodies etc.

3. Fully integrated service offerings in contract research and contract manufacturing

4. In genomics and proteomics research

5. Pre-clinical research

In all these important areas our neighbouring country China seems to score over India

Conclusion:

Availability of world class contract research and manufacturing facilities and the ability of the domestic pharmaceutical industry to deliver the agreed deliverables in a cost-efficient manner with desired operational speed, make India a potential contract research and manufacturing hub of the world.

India can expect to compete effectively in these areas with any other countries, including China, provided the improvement areas, as indicated above, are addressed with equal speed of action and with a missionary zeal.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Envisaging ‘five emerging key strategic changes’ in the Indian Pharmaceutical Industry

Posted on by
Reply
In India, the domestic pharmaceutical market has clocked a CAGR of around 13% to 14% since the last five years. Currently, the market is dominated by the drugs for mass ailments. However, such trend has already started showing a shift towards ailments related to the life-style of patients. This emerging trend is expected to fast accelerate in future.All such factors put together, driven by the following key drivers for growth backed by strong logistics support and hopefully improving healthcare delivery system are expected to contribute significantly towards faster growth of the Indian pharmaceutical industry, as we move on.Key growth drivers:

The growth drivers may primarily be divided into two categories:

- Local and
- Global

Local:

• Rapidly growing more prosperous middle class population of the country.

• High quality, cost effective, domestic generic drug manufacturers who will have increasing penetration in both local and emerging markets.

• Rising per capita income of the population and in-efficiency of the public healthcare system will encourage private healthcare systems of various types and scales to flourish.

• Expected emergence of a robust healthcare financing/insurance model for all strata of society.

• Fast growth in Medical Tourism.

• Evolving combo-business model of global pharmaceutical companies with both patented and generic drugs boosting local outsourcing opportunities.

Global:

Global pharmaceutical industry is going through a rapid process of transformation. Cost containment pressures due to various factors are further accelerating this process. Some of the critical effects of this transformation process like Contract Research and Manufacturing Services (CRAMS) will drive growth of many Indian domestic pharmaceutical players.

Expecting the need for ‘New Strategic Changes’ of radically different in nature:

The impact of many of these evolutionary changes is being felt in India already. However, some more radically different types of changes, which the industry has not experienced, as yet, are expected to be felt as the country moves on to satisfy the desired healthcare needs of its population while fully encashing the future growth opportunities of the Indian pharmaceutical industry.

Five ‘New Strategic Changes’ envisaged:

Five new key strategic changes, in my view, will be as follows:

1. As the country will move towards an integrated and robust healthcare financing system:

• Doctors will no longer remain the sole decision makers for the drugs that they will prescribe to the patients and the way they will treat the common diseases. Healthcare providers/ medical insurance companies will start playing a key role in these areas by providing to the doctors well thought out treatment guidelines.

• For a significant proportion of the products that the pharmaceutical companies will sell, tough price negotiation with the healthcare providers/ medical insurance companies will be inevitable.

• Health Technology Assessment (HTA) or outcome based pricing will play an important role in pricing a healthcare product.

2. An integrated approach towards disease prevention will emerge as equally important as treatment of diseases.

3. A shift from just product marketing to marketing of a bundle of value added comprehensive disease management processes along with the product, will be the order of the day

4. Patents will be granted on truly innovative medicines and incremental innovation to be protected within the patent life of the original product only or separately for a much lesser period.

5. Over the counter medicines, especially originated from natural products for common and less serious illness, will curve out a larger share as the appropriate regulations will be put in place.

Conclusion:

With the above changes in the ball game of the Indian pharmaceutical industry, it may not be easy for the local players to adapt to such changes sooner and compete with the global players on equal footing. Those Indian Pharmaceutical companies who are already global players on their own rights, will be well versed with the nuances of this new game, within the country. These domestic companies, in my view, will offer a tough competition to the global players, especially, in the generic space.

However, so far as other domestic players are concerned, the new environment could prove to be a real tough time for them, further accelerating the process of consolidation within the Indian pharmaceutical industry. So the ‘writing on the wall’ appears to be ‘prepare now’ or ‘perish’.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

New Drug Policy 2009 – suggesting key elements for a strategic shift in the policy framework

Posted on by
Reply
The new drug policy of the Government of India (GoI) is long overdue. Despite so many reform measures taken by various Governments over last two decades, Indian Pharmaceutical Industry has not seen a new ‘drug policy’since 1995.As an individual who has been closely observing the pharmaceutical industry during this period, I would expect the new UPA Government to work out a new ‘drug policy’, without further delay, after having a fresh look at the current policy, which has outlived its time. The new ‘drug policy’should be aimed at achieving inclusive growth, keeping pace with the progressive outlook and aspirations of young India.Broad policy objectives:

The broad objective of the new ‘Drug Policy’ should undoubtedly be ‘ensuring access to affordable modern medicines to all’, clearly addressing the following key elements, in detail:

1. Affordability:

• The new policy should ensure adequate availability of all ‘National List of Essential Medicines’ (NLEM) at affordable prices.

• ‘Jan Aushadhi’ initiative of the Department of Pharmaceuticals (DoP) should be strengthened further through public-private-partnership (PPP) initiatives, using strong public distribution outlets like ration shops and post offices for effective rural penetration of the scheme.

2. Access:

• Around 65% of the Indian population does not have access to affordable modern medicines even today, against 47% in Africa and 15% in China.

• GoI should make effective use of its existing initiatives, take some new initiatives and dovetail them as follows:

- ‘National Rural Health Mission’ (NRHM): to create rural healthcare infrastructure.

- ‘Jan Ausadhi’ scheme: to extend the reach of affordable medicines to a vast majority of
rural population.

- Innovative ‘Health Insurance Schemes’ to be worked out for all sections of the society through PPP, like for example, ‘Yashasvini’, pioneered by Dr. Devi Shetty of Bangalore and the Government of Karnataka, which is possibly the world’s cheapest comprehensive Health Insurance scheme, at Rs.5 (11 cents) per month, for the poor farmers of the state.

3. Research & Development:

• Patents (Amendment) Act, 2005 ushered in a new paradigm for the pharmaceutical industry of India. There is a great opportunity for the domestic Indian pharmaceutical companies to discover, develop and market their own New Molecular Entities (NMEs) throughout the world. The new policy should plan to provide adequate fiscal incentives for R&D initiatives taken by the pharmaceutical industry of India.

• R&D in India costs almost a fraction of equivalent expenditure incurred in the west. Because of availability of highly skilled manpower with proficiency in English together with cost advantages, the country has the potential to become the largest global hub for ‘Contract Research’ and other R&D related work being outsourced by the global Pharmaceutical Companies.

• As India is poised to be a global hub for Clinical Trials, the new policy should extend adequate support to companies carrying out clinical studies in India not only to help them record a healthy growth, but also to attract more ‘foreign direct investments’ (FDI) for the country.

4. Exports:

• The Ministry of Chemicals & Fertilizers reported in its ‘Annual Report of 2006-07′ that exports of Drugs & Pharmaceuticals have doubled during the last four years. To give greater boosts to exports PHARMEXIL should be further strengthened to act as an effective nodal centre for all pharmaceutical exports, together with the responsibilities for conducting extensive promotional activities to accelerate growth for this sector.

• It is estimated that in the next three years sales of over U.S.$ 60 billion being generated by some blockbuster pharmaceutical products patented in the western countries and not in India, will go off patent. This will open the door of significant opportunities for Indian pharmaceutical exports. GoI should help the domestic pharmaceutical companies to encash this opportunity through adequate financial measures and other support, wherever required.

5. Employment generation:

• Indian pharmaceutical industry with its encouraging pace of growth is making good contribution towards employment generation initiatives of the country, both within skilled and unskilled sectors of the population.

• With projected CAGR of around 14%, the employment opportunity, especially for the qualified professionals is expected to increase significantly in the coming years, across the industry, from core pharmaceutical sectors, right through to contract research, manufacturing services (CRAMS) and clinical trials space.

• Recommendations to be provided in the new drug policy should further accelerate such employment generation opportunity by the industry.

6. Contribution to Economic Growth of the Country:

• The new ‘drug policy’ should also address how will the pharmaceutical industry in India contribute more to the economic development of the country through various reform measures, in areas like, R&D, CRAMS, Clinical Trial (CT) and also towards health insurance, for all strata of society.

Innovative new ‘drug policy’ initiative of the new government will not only ensure a stimulating inclusive growth for the industry, but also will help attract adequate FDI for the country.

Broad Strategic shift towards ‘Access to affordable modern medicines for all’:

Ensuring ‘access to affordable modern medicines for all’ should be made one of the key objectives of the DoP. Resorting to populist measures like ‘drugs price control’ may sound good. Unfortunately at the ground level, it has not helped a vast majority of 650 million population of India, thus far.

Therefore, ‘Drugs Price Control’ since 1970 has not been able to ensure ‘access to affordable modern medicines’ to more than just 35% of Indian population. The new ‘drug policy’ should, therefore, shift its focus from ‘Price Control’ to ‘Price Monitoring’, which has been proved to be of great success to keep medicines affordable to the common man, as indicated by the ‘National Pharmaceutical Pricing Authority’ (NPPA). However, for government purchases, made to address the healthcare needs of the ‘common man’ there should always be room for price negotiation with the concerned companies, as is being practiced in many countries of the world.

Conclusion:

To achieve the proposed ‘new drug policy objective’ of ‘ensuring access to affordable modern medicines for all’, the policy makers should try to think ‘outside the box’. ‘The old wine in a new bottle’ policy will just not be enough.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Key business strategies of global pharmaceutical industry are undergoing a radical change, while in India we are still thinking within the box. Who cares about the global clue?

Posted on by
Reply
One of the leading consulting companies, PricewaterhouseCoopers (PwC) in its report of June 2007 titled “Pharma 2020: The vision –Which path will you take?” postulated that the business model followed by the global pharmaceutical companies is, “economically unsustainable and operationally incapable of acting quickly enough to produce the types of innovative treatments demanded by global markets”.
R&D is failing to deliver:Datamonitor highlighted that drugs worth U.S$ 140 billion will go off patent by 2016. Thus the value turnover that will be lost because of number of drugs going off-patent will be almost impossible to replace by this time. Many analysts have been expressing concerns about gradual but steady decline in pharmaceutical R&D productivity since quite some time. During this period, most of the research based companies could afford only a small increase in their R&D budget, while marketing and other overhead expenditures registered a significant increase.

Single global process of Drug Regulatory approval…is possible…but is it probable?

PwC in the same report touched upon another interesting possibility within the R&D space of the global pharmaceutical industry. It indicated that the research based pharmaceutical companies will gradually switch over from, “Classic model of drug development that ends in regulatory approval to ‘live licenses’ that allow for narrow product launches followed by gradually expanding approvals as drugs are continuously tested.”

Most interestingly, the report also forecasted that by 2020, the drug regulators across the world will work together under a collaborative framework to arrive at uniform and single global process of drug regulatory approval. If it materializes, the process will indeed be path breaking in every sense.

Global pharmaceutical market will register significant growth:

Following this trend, the report highlighted, that the global pharmaceutical sales will touch U.S$ 1.3 trillion by 2020, almost double of what it is today. High growth of emerging markets and the aging global population are expected to be the key growth drivers.

During this period E7 countries like, Brazil, Russia, India, China, Mexico, Turkey and Indonesia are expected to contribute around 20% of Global Pharmaceutical turnover. Keeping pace with the economic progress, the disease pattern of these countries are also changing, from infectious diseases to non-infectious chronic illnesses, like diabetes, hypertension, just as we now observe in the developed world.

Together with this change, many predict that ‘greenhouse effect’ arising out of global warming process will have significant impact on health of the global population, resulting in large scale re-emergence of diseases like malaria and cholera together with various types of respiratory disorders.

Radical change is envisaged in pharmaceuticals marketing:

In April 2009, PwC came out with another interesting report titled, “Pharma 2020: Challenging business models, which path will you take?” on the future of the global pharmaceutical industry.

As the time progresses global pharmaceutical companies will need to understand the shift in ‘perceived value’ that is taking place within patients, medical profession and the community as a whole towards healthcare delivery. Just an innovative medicine will no longer be able to satisfy their ‘value expectations’. Pharmaceutical companies will have to offer a ‘bundle of benefits’, combining the innovative products with related health services, for which the market will not hesitate to pay a reasonable premium.

Thus in future, global pharmaceutical companies will need to collaborate with disease management specialists for a “holistic offering” to address an ailment rather than just treatment of the disease with medicines. Such “value added and innovative” marketing strategies will differentiate business success from failure, in 2020.

In the recent report PwC advocates that to be successful, in future, global pharmaceutical companies will need to change their ball game almost radically. The future strategy will focus on collaborative arrangements between various allied healthcare establishments and the pharmaceutical companies to offer a “holistic solution” to the patients in all disease areas.

That means, global manufacturer of an anti-diabetic drug will need to offer along with the innovative drug, counseling on diet regimen, suggesting exercise programs and their follow-up, reminders for regular and timely intake of medicines and many more. Who knows?

“Better late than never”:

In any case, to excel in business at a time when the global pharmaceutical business model is undergoing a fundamental shift; there is a need to keep on investing more towards R&D, which will continue to remain the ultimate growth engine of pharmaceutical business, the world over. At the same time, there will be a dire need to prune expenditure in innovative ways and that opens the door for global outsourcing of various business processes from most cost efficient countries having world class facilities.

Domestic pharmaceutical players, if start mustering all resources to avail these global opportunities, India can soon become a global hub for pharmaceuticals outsourcing, outracing China which is currently placed ahead of India, in this field. As the good old saying goes, I shall always wish, “better late than never”.

By Tapan Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.