1. INDIAN HEALTHCARE SCENARIO
 

India's healthcare sector has been growing at a frenetic pace in the past few years. The healthcare sector in India has estimated to be worth US$ 40 billion by 2012, according to Pricewaterhouse Coopers in its report, 'Healthcare in India: Emerging market report 2007'. Revenues from the healthcare sector account for 5.2 % of the GDP, making it the third largest growth segment in India. Indian government has allowed foreign direct investment upto 51% in hospital services and upto 26% in healthcare insurance. Also, government has reduced custom duty on medical equipments by 5% and import duty on life saving equipment has been reduced from 25% to 5%. Moreover, Healthcare costs in India are about 1/10 of those in other countries.

1.1Investments

The opportunities presented by the healthcare sector have made it a major draw for potential investors.

Medical care services provider Apollo Hospitals group will invest about US$ 235.69 million in the next 18 months to set up 15 hospitals in tier-II and tier-III cities in India.

• The Indian government plans to invest US$ 177.22 million across the golden quadrilateral (GQ) project, to develop nearly 140 trauma care centers on the 6,500 km long north-south and east-west corridors.
  
  
• Competitor Fortis Healthcare Ltd will add 28 hospitals to its 12-hospital chain by 2012.
  
  
• George Soros's fund Quantum and BlueRidge bought 10 % in Fortis Healthcare.
  
  
• Manipal Health Systems raised over US$ 20 million equity from IDFC Private Equity Fund.
  
  
• Bangalore-based HealthCare Global Enterprises raised over US$ 10 million in equity from IDFC.
  
  
• Metropolis Health Services, a diagnostic chain, raised over US$ 8 million in equity from ICICI Venture.
  
  
• Investment firms Apax Partners, IFC and Trinity Capital have invested over US$ 200 million in hospital firms.
  
  

1.2 Private Healthcare

With private healthcare driving a large chunk of healthcare in India, the stage is set for private healthcare players to take the wing.

• Global Hospitals in Hyderabad, which had a modest beginning as a 150-bed facility dedicated to multi-organ transplantation in Hyderabad, is set to invest close to US$ 178 million in a couple of years to set up hospitals in other metropolitan cities.

• Mumbai-based healthcare firm Wockhardt Hospitals is planning to set up 14 super-specialty hospitals across the country over the next two years, which could entail an investment of up to US$ 152 million.

• Apollo Hospitals, Asia's largest healthcare group, is planning to expand its operations by setting up 50 hospitals across the country, including many in tier-II cities. It will invest US$ 5-9 million in each of the facilities.
  

1.3 Dentistry in India

Dental treatment in India is becoming increasingly popular with foreign visitors. Dental treatment is sometimes not reimbursed by the national health schemes of some countries and is expensive. They can come to India and get their teeth fixed at a fraction of the cost back home.

A dentist can charge US Dollars 300 to 400 for a filling. It costs only US Dollars 20 in India. A root canal is US Dollars 3,000 in the West but only US Dollars 70 to 100 in India. Dentures can cost US Dollars 1000 overseas but only US Dollars 200 in India.

In the UK, where National Health Service covers dental health, a root canal patient will have to wait for over a year. The choice would be between bearing the pain and visiting a private doctor and paying an exorbitant fee. Britishers are taking the third option. Curing their teeth while touring India.

Some medical insurance firms in the UK are taking the initiative and are coming up with plans to sell India as a destination for pleasure-cum-business tourism.

There exists a highly energetic community of 80,000 dentists, offering world-class standards while serving an astonishing one billion population. The dentist population ratio of 1:300,000 in the 1960s stands at 1:22,000 today, demonstrating the vitality of the profession. Like anywhere else in the world, urban bias exists in India. Government hospitals and establishments treat 25% to 30% of the population for their dental ailments, while the remainder seeks treatment thorough private clinics.

Dental equipment and materials used by the profession are provided by both indigenous and international companies. A favorable import duty structure has boosted global trading and created opportunities for international dental manufacturers to establish joint ventures, tapping into the enormous market potential of this liberalized vibrant economy.

The 92nd FDI World Dental Congress at New Delhi is the perfect event through which to expose the untapped potential of the Indian dental profession and market to the rest of the world.

The Indian Dental Association, with its strong global affiliations, focuses on supporting dentists and dental students while working to improve dentistry in India.

Here is a small price comparison chart for tourist information:

1.4 Medical equipments and IT

With the potential of the healthcare sector being what it is, ancillary industries such as healthcare equipment and information technology in healthcare are also witnessing a spurt.

The soaring growth projections have prompted foreign medical equipment makers to float Indian subsidiaries -- 30 of them received import clearances in 2007 alone. Boston Scientific, Abbott, Becton Dickinson, Guidant, Medtronic, B Braun, Johnson & Johnson, DePuy, Advanced Medical Optics and Stryker are among the leading firms, whose Indian subsidiaries received approvals to import medical devices during the year.

Investments into the medical and surgical instruments segment amount to US$ 115.29 million over the period August 1991 to April 2007. A recent FICCI-Ernst & Young study has predicted 15-20 % growth for the Indian medical equipment market and estimated market size to be about US$ 5 billion by 2012.

Hospitals have realized that information technology (IT) can be an effective tool towards efficient systems. According to a report by Springboard Research, India has the fastest growing healthcare IT market in Asia, with an expected growth rate of 22 %, followed closely by China and Vietnam. In fact, the Indian healthcare technology market is poised to be worth more than US$ 254 million by 2012.

1.5 Medical Tourism

1.6 Ratings

In recognition of the quality of healthcare delivery services in India, a number of Indian hospitals have received accreditation from international agencies worldwide.

• Five hospitals in India -- Indraprastha Apollo Hospital (New Delhi), Apollo Hospital (Chennai), Apollo Hospital (Hyderabad), Wockhardt Hospital (Mumbai) and Shroff Eye Hospital (Mumbai) -- have been accredited to the leading healthcare accreditation agency in the United States, Joint Commission International (JCI).
  
  
• NHS of the UK has indicated that India is a favored destination for surgeries.
  
  
• The British Standards Institute has now accredited the Delhi-based Escorts Hospital.
  
  
• India's independent credit rating agency CRISIL has assigned a grade 'A' rating to super specialty hospitals like Escorts and multi specialty hospitals like Apollo.
  
  
• Wockhardt Hospital has an exclusive association with Harvard Medical International, the global arm of Harvard Medical School, the world's leading medical institution.
  
  
• Max Healthcare, in collaboration with Singapore General Hospital, is into clinical practice, research and training.
  
  

• The Indian pharmaceutical industry ranks 4th in terms of volume (with an 8 % share in global sales) globally.
  
  
• In terms of value it ranks 13th (with a share of 1 % in global sales) and produces 20-24% of the world's generic drugs (in terms of value).
  
  
• India is also one of the top five active pharmaceutical ingredients (API) producers (with a share of about 6.5 %).
  
  

According to a McKinsey study, the Indian pharmaceutical industry is projected to grow to US $ 25 billion by 2010 whereas the domestic market is likely to more than triple to US$ 20 billion by 2015 from the current US$ 6 billion to become one of the leading pharmaceutical markets in the next decade.

The following factors have fuelled the growth for the drugs and pharmaceutical market:

• A huge patient base
  
  
• Increasing incomes
  
  
• Improving healthcare infrastructure
  
  
• An increase in lifestyle-related diseases
  
  
• Penetration of health insurance
  
  
• Adoption of patented products
  
  
• Patent expiries and aging population in the US, Europe, and Japan
  
  

Contract research and manufacturing services (CRAMS) has become a promising medium for the Indian pharma industry, with India increasingly being viewed as global hub for CRAMS. Over the last 5 years the CRAMS industry has been contributing close to 8 %t of the total Indian pharmaceutical business. Developed countries are expected to further propel the CRAMS industry to grow at a CAGR of nearly 32 % from 2006 to 2013 as India offers global pharma companies both quality and cost advantage.

Contract research--including both drug discovery research and clinical research--has been growing at a phenomenal rate. While clinical trials represent 65 % of this market, new drug discovery makes up the remaining 35 %. Frost and Sullivan estimates outsourced contract research in India to reach US$ 2 billion by 2010. Similarly, according to a McKinsey report, the global clinical trial outsourcing to India in the pharmaceutical industry is estimated to be worth US$ 1.23 billion by 2010. Over 15 prominent contract research organizations (CROs) are now operating in the country which includes names such as Novartis, Johnson & Johnson, Pliva, Astra Zeneca, Bristol-Myers Squibb and GlaxoSmithKline among others.

Contract manufacturing is another new opportunity for the Indian pharmaceutical industry. Already, India has the largest number of US Food and Drug Administration (US FDA)-approved plants outside the US, with over 100 facilities. The Boston Consulting Group estimates that the contract manufacturing market for global companies in India would touch US$ 900 million by 2010.

According to a report by global pharmaceutical market intelligence company, IMS Health the Indian generic manufacturers will grow to more than US$ 70 billion as drugs worth approximately US$ 20 billion in annual sales will face patent expiry in 2008. In fact, with nearly US$ 80 billion worth of patent-protected drugs to go off patent (including 30 of the best selling US patent-protected drugs) by 2012, Indian generic manufacturers are positioning themselves to offer generic versions of these drugs.

Already, Indian drug companies account for over 25 % of the total generic drug applications made to the FDA of US, which accounts for over half of the US$ 60 billion market. The US FDA's latest generic initiative GIVE (Generic Initiative for Value and Efficiency)-aimed at increasing the number and variety of generic medicines available to consumers and healthcare providers -- is expected to further fuel the export plans of Indian pharmaceutical companies.

Indian companies like Aurobindo Pharma, Wockhardt, Ranbaxy, Dr Reddy's Lab and Sun Pharma have been in the fore-front in this segment. out of the total 187 DMFs filed with the US FDA during October-December 2007, Indian companies alone accounted for 89 DMFs, accounting for a whopping 47.6 % of the total DMFs.

While Ranbaxy filed the highest number filings with 13 DMFs, Dr Reddy’s and Aurobindo Pharma followed next with 10 DMFs each.

The Indian biotech industry – accounting for 2 % of the global biotech market – has the potential to develop as a key player, generating revenues worth US$ 5 billion.
The domestic biotechnology industry is now a US$ 3 billion sector, registering 30 % growth in 2007-08 over the previous year. Furthermore, it is estimated that this sector will grow to occupy 140 million square feet by 2010, creating employment for a million by means of its products as well as its services
The Indian biotechnology sector - with its 'low cost, high value' proposition - has been growing at 35 % to 40 % annually for the last three years with over 340 companies. The domestic biotechnology industry, with growth rate of 30 % in 2007-08 over 2006-07, has grown to become a US$ 3 billion industry.
Bangalore especially has been at the helm of the country's biotech developments, what with:

Hyderabad has been a firm anchor for India's biotech industry, with the Genome Valley Project attracting foreign exchange worth US$ 1.24 billion from pharmaceuticals, biotech chemicals and allied chemicals' companies.

India's biotech sector is on the threshold of a colossal growth in the coming decade with investments flowing in from all corners. Investments in this sector crossed US$ 580 million in 2006–07, with outlays from companies like Jubilant, AstraZeneca, GE Healthcare and Biocon. India is becoming one of the most favored destinations for collaborative R&D, bioinformatics, contract research and manufacturing and clinical research.

• Deakin University of Australia proposes to establish a base in Bangalore, as part of their Deakin India Research Initiatives, with an investment of US$ 68 million in a research institute through which it aims at 400 PhDs in the biotech sector.
  
  
• The government's streamlined regulatory framework, policies and fiscal benefits have resulted in a functional genomics project with an investment of US$ 8 million.
  
  
• Biocon's AxiCorp investment heralds the company's European foray for biosimilars like recombinant human insulin.
  
  
• Avesthagen attracted over US$ 40 million from a leading European Venture Capital.
  
  
• Shapoorji Pallonji Biotech Park and the ICICI Knowledge Park have attracted investments of over US$ 100 million.
  
  

In the private sector, several multi-specialty hospitals perform orthopedic surgeries and treatment and these hospitals maintain a P&R unit to service its patient population.  Apollo Hospitals Group, MIOT Hospital, Chennai, Indian Spinal Injuries Centre, New Delhi, Sri Ramachandra Medical College and Research Institute, Chennai, Manipal Hospital, Bangalore  are some of the leading private sector hospitals maintaining orthopedic and P&R facilities. 

Large industrial houses, including the Tatas, Birlas, and Hindujas, have also established major multi-specialty hospitals in the country.  Several other private sector hospital projects are in various stages of development.  These developments are expected to support the demand for P&R products. 

In their efforts to stay competitive and to attract patients for treatment, many Indian private sector hospitals are going through International Standards Organization (ISO) programs to maintain and to document the service.  These ISO programs generally require the use of top-of-the-line instruments and equipment at all levels.

Aporhecaries Sundries Manufacturing Company (ASCO), Atlas Surgical Company, Kay & Company, Narang Enterprises, Wadia Group, Electrocare Systems and Services, are some of the leading manufacturers of P&R related equipment in India.  These firms are seeking new business opportunities via joint ventures.  Artificial Limbs Manufacturing Corporation (ALIMCO), Kanpur, manufactures and sells aids such as wheel chairs to disabled persons.  ALIMCO maintains four additional production facilities to increase the production capacity.   The P&R sector is at a budding stage in India and hence provides excellent opportunities for various international players to expand.