STRATEGIST SPEAKS

P R E S E N T S

LIFE SCIENCES &

HEALTHCARE
INDUSTRY OUTLOOK
Key Components of Indian Healthcare industry
1. Pharmaceuticals 2. Healthcare delivery

$21.3 B ▪ Consists of all ethical drugs & doesn’t $138.3 B ▪ Consists of delivery networks of hospitals,
2020 domestic cover any consumer health products FY22 expected clinics and diagnostic centres
revenue revenue
▪ Key players: Sun Pharma, Lupin, Aurobindo ▪ Key players: Fortis, Apollo, Shalby,
Pharma, Dr. Reddy’s Laboratories AIIMS, Max, HCG
70% revenue 70% revenue of
driven by generics ▪ Impact due to COVID - Atmanirbhar Bharat ▪ Impact due to COVID –
Healthcare industry
3 launched with focus on COVID vaccine to: Universal immunization programs (UIP)
6.8% 5 year ✓ Accelerate development launched for COVID-19 leveraging 1.54 lakh
$7.22 B auxiliary nurse midwifes (ANMs)
CAGR (2106-20) ✓ Enhance production to >10 cr. per month FY21 FDI Inflow

3. Medical devices 4. Medical insurance

$10.36 B ▪ Consists of any device that is used for $7.9 B ▪ Includes health insurance and medical
FY20 revenue medical purposes & benefits patients FY21 revenue reimbursement facilities
▪ Key players: J&J, Novartis AG, Medtronics
10 15.6% CAGR ▪ Key players: Star Health, ICICI Lombard,
$2.51 B PLC, Baxter International
SBI health, Bajaj Allianz, United India Health
FY20 export revenue

$billio
▪ Impact due to COVID – No. of firms producing 5

ns
▪ Impact due to COVID -
the following increased due to demand shock:
36% expected Ventilators: 8 → 17 0 Indian government extended a ₹50 lakh
2016 2021 insurance coverage for healthcare workers
revenue CAGR Masks: 30 → 108
Rising medical insurance across the country for 1 year
(2020-2025) Sanitisers: 35 → 49 market 2016-2021

Source: 1. MarketLine – India pharmaceuticals 2. Statista – Indian Healthcare 3. IBEF – Healthcare Industry 5. IBEF – Medical devices
© Management Development Institute, Gurgaon | 2021 - 2022 2
India’s Strong Presence in Pharma Market
$42B $24.4B 3rd 10x 20% 62%

Total FY20 Rank globally in terms Market size growth Contribution to global Contribution to global
FY21 Exports
Revenue of production volume in 2 decades generics market vaccines demand

2020 Indian Pharma Industry Bright future ahead for the Pharma industry

Estimated 2030 Revenue ($ Billion)

India, the 3rd
largest
pharmaceutical producer in
the world has recorded
9.24% CAGR for $57 Bn
$21.3B international exports over the Exports
Domestic last decade (2012-2021) Domestic

$73 Bn
$42B
Pharma Industry
North America (34%)

Africa (18%)
India’s ambition to grow at ~12% CAGR over the next
$20.7B EU (15.7%)
decade & reach $130B by 2030 will be hugely
International
Others (32.3%) dependent on the exports reaching 3x value to $73B
exports

Source: 1. IBEF - Indian Pharmaceuticals 2. EY – Indian Pharma 2021 3. MarketLine – India pharmaceuticals 4. Statista – Indian Healthcare
© Management Development Institute, Gurgaon | 2021 - 2022 3
Growth Drivers of the Indian Pharma Market

1 Strong Demand

• Healthcare industry in
India is expected to reach
2 Increased Government
Spending

• Healthcare has become

one of India's largest
3 Attractive
Opportunities

• With schemes like

PMJAY, Ayushman
4 Rising Manpower in
India

• The number of trained

doctors have been
US$ 372 million by sector, both in terms of Bharat & National increasing from 2016
2022 which is a 2.5x revenue and health mission, India is at a steady rate of
growth from 2017 employment. Public an attractive hub for FDI 16.6% YOY
• This is due to rise in health spending is Investments • The number of medical
medical awareness and expected to reach 2.5 • Gross direct premium by colleges in India has
rising OOP(Out of Pocket) per cent of the health insurance grew by increased as well with a
spending country’s GDP by 2025
13.3% YOY(‘20 to ‘21) large pool of talented
professionals

5 6 7 “
COVID Vaccines & Change in government Private Equity- Venture
Boosters role Capitalist investment

• Credit incentive program • The change in the • Private equity (PE), An EY Report states,
worth Rs 500 billion to government’s role from venture capital (VC) that the Indian
boost healthcare provider to payer has investments into the
infrastructure expanded the financial risk
healthcare industry has
healthcare industry during
• Allocation of Rs.35,000 protection coverage to the the first half of the year 10x from
grown
marginalized 2021 has seen a jump
crores for COVID 19
vaccines and boosters. • Private sector partnerships to $3.01 billion, as $4.2 Bn(‘03) to
76 countries have shown through health PPPs are compared to $1.72
interest in using the gradually gaining billion in the same period $41.7Bn(‘21) “
COWIN portal acceptance, thereby of the previous year in just 18 years
improving access to care

Source: 1. IBEF - Indian Pharmaceuticals 2Statista - Indian Healtcare Industry 3. MarketLine – India pharmaceuticals 4. Business Standard - COVID 19
© Management Development Institute, Gurgaon | 2021 - 2022 4
Latest Trends in the Indian Healthcare Market
1. Public Private Partnerships 2. Merger and Acquisition 3. Government Policy Support

• ~ $275 Billion industry in next 10 • M&A deals in healthcare sector ▪ NHS(National Health Mission) given a
years, thus paving way for PPPs increased by a whooping 155% to Rs. grant of US $ 4.88 billion for expansion
7615 Cr of health services to rural areas
• Tie-up between major Private Hospital
chains (Apollo, Narayana, Manipal • There was 1 M&A deal in 2017 in the ▪ Goal of 1 million healthcare
Hospitals) and Government healthcare sector in India and in 2020, professionals by 2022
there were 7 deals
• The government has rolled out ▪ PMJAY(Pradhan Mantri Jan Arogya
NHRM(National Rural Health Mission) • M&A deals jumped to $1.9 billion as Yojna) where 125Mn families were
by tying up with private hospitals to compared to $772 million during same enrolled to receive treatment from both
provide advanced healthcare in rural period of previous year public and private hospitals
areas

4. Telemedicine Industry Key Facts and Figures for Indian Healthcare

• $1314 Million Industry in India

• The Indian telemedicine industry is

$372 Bn 22.09% 1.6% 16.67%
Healthcare Industry Percentage of Healthcare Growth of Life
expected to reach $5.5 Bn dollars by Healthcare Industry
2020 fueled by a CAGR of 31% Size India4 CAGR from 20164 sector spend of India’s Expectancy from 1990
GDP4 to 20194
• Provide treatment of rare and
complex diseases in rural India $1314Mn $200 Bn 4th Rank 20%
Telemedicine Industry Percentage of the
Spend on Medical In terms of
Size India3 Indian population with
Infrastructure by 20244 employment4
a medical insurance4

Source: 1. IBEF - Indian Pharmaceuticals 2. EY – Indian Pharma 2021 3. PWC - Public Private Partnerships 4. Statista – Indian Healthcare
© Management Development Institute, Gurgaon | 2021 - 2022 5
AI & IoT are Revolutionising Healthcare
➢ Breast Cancer screening
▪ AI software have provided low cost, easy to operate solutions to detect breast cancer at early stages
▪ Contactless, painless & radiation free process increases the reach of diagnosis to a wider audience

➢ Preliminary symptoms based diagnosis

▪ AI helping diagnose diseases by comparing preliminary symptoms against the repository of all
Care delivery symptoms
▪ Helps saves doctor’s time for medical cases which require immediate and urgent attention

➢ ICU vitals monitoring

▪ IOT sensors in ICUs detect spikes in vitals on continuous basis & trigger alarms when required
▪ Tracked data is used to create dashboards to get an accurate analysis & save doctor’s manual efforts

➢ Transmitting data from legacy biomedical devices

Operational ▪ IOT sensors attached to legacy biomedical devices in ICUs to capture & share data with smart hubs
▪ Smart hubs provide insightful & configurable digital charts which wasn’t possible with legacy devices
Excellence

➢ Patient Appointment scheduling

▪ Multiple channels of interaction (call/web/text) with hospitals makes the process of booking complex
▪ AI chatbots help retrieve patient’s medical history & past interactions to schedule appointments

➢ Indoor navigation
▪ Location awareness technology using IoT connects smartphones to beacons placed all over hospital
Customer ▪ Beacons detect patient’s locations & guide them to their destination inside the hospital with detailed
Experience navigation

Source:1. PwC – Emerging technologies in Healthcare

© Management Development Institute, Gurgaon | 2021 - 2022 6
Future of API industry in India
Dependence on China for API imports China’s power of dictating price changes

API imports by country (2019) Price increase of APIs (%, 2013-2019)

Diaminodiphenyl sulfone 565%
China 68%
Folic acid 239%
Other 20%
Diclofenac sodium 134%
U.S. 4%
Ibuprofen 108%
Italy 3%
India’s dependence on China Due to China’s high bargaining
for API imports has increased Furosemide IP 91% power, increased cost of APIs
Singapore 3% from 1% in 1991 to ~70% in directly affects the final cost of
Albendazole IP 59%
Hong Kong 2% 2019 drugs produced in India
Paracetamol 42%

Measures to revive API Industry in India

Immediate measures Long term measures

Faster Clearances Infrastructural Support

Bring approval process of APIs down to 2 months Establish dedicated zones to build mega parks for API production
Remove restrictions on quantity of APIs being produced Setup common utilities to make smaller units economically viable

Fiscal Stimulus Industry Academia Initiatives

Incentivise production where dependence on China is very high Facilitate collaboration between industry & academic institutes
Set tariff on imported APIs & provide subsidy on production value Invest on research & development of newer processes & technologies

Accommodative Pricing Policy Alternative Sources of Import

Exclude formulations priced under ₹5/unit from price control Adopt alternate sources for APIs which hold high strategic value
Revise price caps where API prices have increased significantly Reduce China’s monopoly by opting for multiple sources of APIs

Source: 1. Statista – API Imports 2.PwC – Reviving India’s API industry

© Management Development Institute, Gurgaon | 2021 - 2022 7
Impact & Emerging Trends due to COVID-19
Impact Emerging Opportunities

Reduction in Hospital Visits(OPD & IPD)*

▪ People have expressed fear in visiting hospitals and were concerned Rising Adoption of AI enabled
about health management post COVID tech
▪ A survey conducted reveals, 82% people are willing to delay
elective surgical procedure by 6 months – 1 year
Mobile based health care delivery
Burden on Payers and Providers** & health care delivery at home
▪ 1.1 Mn COVID related health claims filed since Mar’20 a 56% rise
in a YOY basis
▪ Several general insurers reported loss ratios above 100% for Covid-
specific covers; these will inevitably require price revisions Expansion to Tier-II and Tier-III
cities
Emergence of Tele-Medicine
▪ ~15-20% of healthcare ecosystem to shift to virtual care by 2025
▪ Practo,Lybrate,1MG,Mfine have become Unicorn startups in the Increasing penetration of health
telemedicine sector insurance
▪ With influx of FDI and regulatory relaxation by medical bodies, foreign
patients can consult Indian doctors due to cheap consultation fees

* OPD refers to Out Patient Department and IPD refers to In Patient Department
** A payer or a payor is a company that pays for medical services. A typical example of a payer is a health insurance company
A provider is a company that administers medical services to the common man. Examples are hospital, clinic, pharmacy

Source: 1. Deloitte - Impact of COVID-19 2. NCBI - Payer and Provider Paper 3 . NCBI - Telemedicines
© Management Development Institute, Gurgaon | 2021 - 2022 8
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