Global Information Inc. would like to present a new market research report, "Healthcare, Regulatory and Reimbursement Landscape - India" by GlobalData.
In 2011, with a population of approximately 1.21 billion, India was the second most populated country in the world after China. The available data used for the age-wise population distribution affirms that the proportion of the population aged 0-15 years declined between 2006 and 2011, whereas the proportion of the working-age population increased to approximately 63% in 2011 from 61% in 2006 (NCP, 2011).
In the future, contrary to regional neighbors China and Japan, the proportion of the working-age population is expected to increase significantly. The rate of urbanization has also increased significantly, and it is estimated that the 34% of the population will be living in urban areas by 2020. In order to derive maximum benefit from the demographic shifts, the government is focusing on human capital development, education programs and employment. The large population base also drives demand for pharmaceuticals and high-quality healthcare services.
India is an emerging healthcare market and remains unsaturated due to the restrictions imposed by the limited penetration of healthcare insurance; poor access to healthcare facilities, especially in rural areas; a growing elderly population and its associated disease burden; and the improving regulatory environment. Increasing demand for high-quality healthcare services, increasing affordability, a growing medical tourism sector and the launch of new products will provide the necessary impetus for the growth of the pharmaceutical market.
The pharmaceutical market was valued at approximately $12.9 billion in 2010, and is dominated by low-priced domestically produced generic drugs. Therapeutic segments such as cardiovascular and respiratory are expected to grow in the coming years due to the shift in the trend from communicable diseases to non-communicable diseases. The biologics market is also undergoing rapid expansion, driven by government incentives and the loss of patent protection for several high-volume products. It expanded at a Compound Annual Growth Rate (CAGR) of 17% between 2005 and 2010.
On basis of the increasing incidence of various chronic diseases and growing unmet need, the pharmaceutical market is poised to grow at a CAGR of 15.4% from approximately $14.9 billion in 2011 to $54.1 billion in 2020. Some of the factors that will drive the market are increasing access to medicines, higher levels of affordability and better compliance rates due to growing general awareness of common diseases.
The medical device sector is experiencing steady growth. In 2011, it was valued at $7.1 billion, and is expected to grow at a CAGR of 8% from $7.8 billion in 2012 to $16.6 billion in 2020. In 2011, the main segments in the market were ophthalmic devices (39%), hospital supplies (9.1%) and diagnostic imaging devices (8.2%). The market is driven by factors such as growing awareness regarding the early detection and diagnosis of diseases, advancement of medical technology and the increase in the size of the elderly population.
Lack of clarity in the drug regulatory system and weak patent laws are a challenge for foreign multinational companies attempting to enter or expand in the Indian healthcare market
In India, the Central Drug Standard Control Organization (CDSCO) is the main regulatory authority for pharmaceutical products and medical devices, and works under the Ministry of Health and Family Welfare (MoHFW).
A license for the manufacture, sale, import, export and clinical trial of drugs or medical devices is obtained from the CDSCO following evaluation by a panel of experts and investigation by a drug inspector.
India currently has no specific regulations for medical devices which are freely imported into the country, except for implantable devices, diagnostic kits and sterile devices, which must be registered. In 2005, the government passed the Patents (Amendment) Act and replaced process patents with product patents. The law contains certain provisions which allow for the entry of generic drugs despite patent expiration, such as low-cost generics for life-threatening diseases. Some companies have experienced unexplained delays in the approval process, possibly caused by widespread corruption in the regulatory system. Many Multinational Companies (MNCs) are fighting patent cases in the courts to protect their patents, but no significant decision has so far being announced in their favor. In India, the whole drug regulation process, including pricing, is handled by four bodies under two ministries. These bodies are the CDSCO for drug regulation, the Department of Health for developing policies relating to accessible and affordable healthcare, the National Pharmaceutical Pricing Authority (NPPA) for price regulation, and the Department of Pharmaceuticals for the promotion of the pharmaceutical industry. However, due to a lack of coordination the present structure lacks efficiency.
Poor healthcare infrastructure in rural areas and lack of universal health coverage is hindering the growth of the healthcare market
The overall healthcare system is in a stage of development. Spending on healthcare increased gradually to 4.2% of Gross Domestic Product (GDP) in 2010, but remained below other emerging economies such as Brazil, Russia, China and South Africa. The current physical infrastructure is not sufficient to meet growing demand. There are currently 0.9 beds per 1,000 population, in addition to a lack of qualified staff and poor management. Services and medicines provided by public hospitals are either subsidized or available free-of-charge to a limited section of the population. The Insurance Regulatory Development Agency (IRDA) provides a regulatory framework to protect the interests of policy holders, and according to a report in 2010, approximately 159 million and 53 million people were covered under the private and public sectors respectively. The available data indicates that the level of penetration of health insurance in India is low despite a large population and good economic growth. In 2010, approximately 80% of the population was not covered by any form of health insurance. The main reason for the slow growth of the insurance industry is inadequate healthcare infrastructure in rural areas in which the majority of the population lives.
Poor implementation and monitoring of healthcare policies by the government contributes to the poor healthcare system
The Indian government is focusing on reducing the countrys disease burden. In 1994, it introduced the Pulse Polio Program for the eradication of polio, and as a result, India was declared polio-free in 2011, although sporadic cases are still being reported. In 2005, the MoHFW introduced a flagship program for rural healthcare services known as the National Rural Health Mission (NRHM). The main goals of the program are to provide universal access to public health services such as womens health, childrens health, water, sanitation and hygiene, immunization and nutrition, although scams and incidences of diverted funds have been reported (NRHM, 2005). Overall, the governments healthcare policy initiatives remain poor and inadequate.
Coalition politics is a major hindrance to economic growth and stability
Following the severe economic crisis in 1991, India has emerged as an economically strong and politically stable country. The crisis led the government to introduce economic reforms which promote privatization, globalization and liberalization. In 2010, according to the World Bank, its GDP was valued at approximately $1.7 trillion. Noteworthy and consistent economic growth over the last two decades has been due to the efficient performance of core sectors of the economy such as agriculture, manufacturing and service.
The economy is currently facing problems such as inflation, high fiscal deficit, softening of foreign trade and weakening of Foreign Direct Investment (FDI). On April 25, 2012, the global rating agency Standard and Poors downgraded the governments rating from BBB+ to BBB-, stating that the key reasons were the weakening of economic indicators and slow progress on fiscal reforms.
The volatility of coalition politics remains a perennial problem and is the main reason for the economic policy freeze. The United Progressive Alliance (UPA) is the current ruling coalition government, and its main political challenge is the revival of economic growth. Government borrowing is set to reach a record $113 billion in 2012. The account deficit is expected to reach 3.6%, which would significantly affect the governments ability to borrow and finance a stimulus package. In order to decrease fiscal deficit and increase FDI the government is considering a number of austerity measures, such as the Direct Tax Code (DTC), Goods and Service Tax (GST) and 51% FDI in multi-brand retail business.
With the US still struggling to emerge from the recession and in light of the current economic crisis in the Eurozone, Indias emergence from the present economic crisis is eagerly awaited.