The Healthcare Markets of India: Pharmaceuticals, Medical Devices and Health Tourism

India is the second most populous country in the world with 1.3 billion people, more than a sixth of the world’s population. However, India has a weak public healthcare system and the bulk of the people cannot afford proper healthcare. India spends only around 4.8% of its national GDP towards healthcare goods and services (compared to 18% by the US). Additionally, there are wide gaps between the rural and urban populations in its healthcare system, which worsen the problem.

Public healthcare

The urban centers have numerous private hospitals and clinics, which provide quality healthcare. These centers have better doctors, access to preventive medicine, and quality clinics, which result from the better profitability for investors compared to the not-so-profitable rural areas. In major urban areas, the quality of medical care is close to and sometimes exceeds first-world standards. Indian healthcare professionals have the advantage of working in a very biologically active region exposing them to treatment regimens of various kinds of conditions. The quality and amount of experience is arguably unmatched in most other countries.

In contrast, a staggering 70% of the population still lives in rural areas and has no or limited access to hospitals and clinics. Consequently, the rural population mostly relies on alternative medicine and government programs in rural health clinics. The non-availability of diagnostic tools and increasing reluctance of qualified and experienced healthcare professionals to practice in under-equipped and financially less lucrative rural areas is becoming a big challenge. Although rural medical practitioners are highly sought after by residents of rural areas, as they are more financially affordable and geographically accessible, only 2% of doctors are in rural areas where 68% of the populations live. The National Rural Health Mission (NRHM) was launched in April 2005 by the Government to provide effective healthcare to rural people with a focus on 18 states having poor public health indicators and/or weak infrastructure.

For primary healthcare, the Indian government spends only about 30% of the country’s total healthcare budget. This is just a fraction of what the US and the UK spend every year. India also faces a growing need to fix its basic health concerns in the areas of HIV, malaria, tuberculosis, and diarrhea. Sadly, only a small percentage of the population has access to quality sanitation, which further exacerbates some key concerns above.

Pharmaceutical market

In the global pharmaceuticals sector, India plays an important role. According to the Indian Brand Equity Foundation (IBEF), the Indian pharmaceuticals market is the third largest in terms of volume and thirteenth largest in terms of value. Branded generics dominate the pharmaceuticals market, constituting nearly 70 to 80 percent of the market. India is the largest provider of generic drugs globally with the Indian generics accounting for 20 percent of global exports in terms of volume. Presently, over 80 percent of the antiretroviral drugs used globally to combat AIDS are supplied by Indian pharmaceutical firms.

The government started to encourage the growth of drug manufacturing by Indian companies in the early 1960s, and with the Patents Act in 1970. However, economic liberalization in 1990s by the former Prime Minister P.V. Narasimha Rao and the then Finance MinisterDr. Manmohan Singh enabled the industry to become what it is today. This patent act removed composition patents from food and drugs, and though it kept process patents, these were shortened to a period of five to seven years. The lack of patent protection made the Indian market undesirable to the multinational companies that had dominated the market. Whilst the multinationals streamed out, Indian companies carved a niche in both the Indian and world markets with their expertise in reverse-engineering new processes for manufacturing drugs at low costs.

Medical devices sector

The medical devices sector is the smallest piece of India’s healthcare pie. However, it is one of the fastest-growing sectors in the country like the health insurance marketplace. Till date, the industry has faced a number of regulatory challenges, which has prevented its growth and development.

Recently, the government has been positive on clearing regulatory hurdles related to the import-export of medical devices, and has set a few standards around clinical trials. According to The Economic Times, the medical devices sector is seen as the most promising area for future development by foreign and regional investors, as they are highly profitable and always in demand in other countries.

Health Tourism

The health tourism in India is very famous in the world owing to its strong private healthcare system, which provides affordable and quality medical treatment for people from abroad. It is very appealing as people can also take advantage of exotic vacations in India. The rapid development of health tourism in India has been attributed to the following advantages:

  1. Low medical treatment cost. The major reason for people visiting India from developed countries (such as USA and UK) is the affordable treatment cost, which is almost 80 to 90% cheaper than the treatment available in their own country. According to one report of the Confederation of Indian Industry (CII), the average medical cost in India is about one tenth of that in developed countries. For instance, a thoracotomy can cost around 150,000 dollars in USA, while in India the cost is around 3,000 to 10,000 dollars even in the best hospitals. Medical treatment is cheaper for foreign nationals also because Indian rupee is weaker as compared to US Dollars and Great British Pounds.
  2. High quality medical level. In India, the private healthcare systems play an important part. The private hospitals in India have good recognition in the world with first-class medical level. Although most of the public hospitals have poor medical conditions, many private hospitals have excellent conditions, even better than those in some western hospitals. These private hospitals have various most advanced medical devices. More importantly, the high operation success rate enables them to enjoy a good reputation. Additionally, most of the hospital staff can speak English, which provides excellent communication with patients from all over the world.
  3. Short treatment waiting time. Another important reason for people to travel to India for the treatment is the long treatment waiting time in western countries. In UK, for example, one patent requiring a knee graft operation provided by the National Health System (NHS) may need to wait 18 months, while in India the waiting time can be as short as 5 days.
  4. Government support. The Indian government has adopted a series measures and policies since 2002 to develop its medial tourism. For instance, the government has cut the import duties of the medical devices for the private hospitals, enabling them to be equipped with the advanced diagnosis and treatment hardware. The new reforms in medical visa also provided enough boosts for people to visit India.

With affordable drug and treatment cost, the shorter waiting time, world-class services, state-of-the-art technology and highly qualified surgeons & hospitals, medical tourism is growing at a fast pace in India. It is the key driver of Indian healthcare sector enhancement. The number of medical tourists visiting India is expected to grow at a compound annual growth rate of 19 to 20%. While foreign nationals visit India as a patient, they also help to generate revenue for the country by using other recreational facilities and hospitality services such as massage and yoga therapy, hotels and travel, etc. This improves the employment opportunities in these sectors.

 

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About Dr. Huanpo Ning

Dr. Huanpo Ning is a PhD at Donghua University, Shanghai and is TforG's correspondent in the AsiaPac region. He reports on the local healthcare markets & trends, and investigates the latest healthcare reforms in the region.