Market Analysis for Medicines Segment of Healthcare Sector

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Market Analysis forMedicines Segment of Healthcare

Industry

Executive Summary

•India among the top three healthcare markets in terms of incremental growth by 2020 • India, sixth largest market globally in terms of size in 2014 •Indian healthcare sector expected to advance at a CAGR of 22.87 per cent during 2015–20•Indian pharmaceutical sector accounting for 2.4 per cent of global pharmaceutical industry in value terms and 10 per cent in volume terms •Generics market expected to grow to USD26.1 billion by 2016 from USD14.2 billion in 2015•Major Growth drivers: Rising income levels, ageing population, growing health awareness and changing attitude towards preventive healthcare•Regulatory environment: Conducive policies for encouraging FDI, tax benefits, favorable government policies coupled with promising growth prospects have helped the industry attract private equity, venture capitals and foreign players

Structure of Healthcare and Pharmaceuticals industry in India

Source: Dun & Bradstreet report, 2014

Generic Drugs: Largest segment of Indian Pharma Market

• Generic drugs: 71 per cent of market share (in terms of revenues)

• India, largest provider of generic medicines globally• Over the Counter (OTC) medicines and Patented drugs

constitute 19 per cent and 10 per cent, respectively, of total market revenues of USD20 billion

•Largest share (16 per cent) in the Indian pharma market

•The cardiovascular segment represents 13 per cent of the market share; its contribution is likely to rise due to the growing number of cardiac cases in India

•Gastro-intestinal contributes 11 per cent of the total value

•Top five segments contribute nearly 57 per cent to the total drugs consumption

Anti-infective drugs: Lead the Indian Pharma Market

Trends in the medicine segment• Notable shift from communicable to lifestyle diseases

• Problems due to modern-day living due to increased urbanization• Increased demand for specialized care

• Increased demand for healthcare services in Tier II & tier III cities• Government relaxations to encourage demand for quality facilities during expansion

• Emergence of telemedicine• Telemedicine market in India valued at USD7.5 million, and is expected to rise at a CAGR of 20 per cent by 2017• Telemedicine seen as a growth opportunity by big players in Medicine segment• Helps in market expansion- increases outreach (especially to semi-urban and rural areas)• Low-cost consultation and diagnosis facilities by means of internet and telecommunication

• Mobile based health delivery• Strong mobile technology infrastructure and launch of 4G to drive mobile health initiatives in the country• Currently, about 20 mhealth initiatives in the country for spreading awareness about family planning and other

ailments• Mobile health industry in India is expected to reach USD0.6 billion by 2017

• Technological initiatives• Digital Health Knowledge Resources, Electronic Medical Record, Mobile Healthcare, Electronic Health Record,

Hospital Information System and PRACTO have gained wide acceptance• Healthcare sector’s spending on IT products and services is expected to have risen to USD1.2 billion in 2014

Growth drivers• Growing demand

• Rising incomes and affordability• Growing elderly population, changing disease patterns • Growing number of stress-related diseases due to change in lifestyle• Better awareness of wellness, preventive care and diagnosis

• Supportive government policies• Reduction in approval time for new facilities• Focus on specialized pharma education• Encouraging policies for FDI in medicinal segment of healthcare• Reduction of customs duties and excise duties on various medicines and life-saving equipments

• Innovation • Expanding R&D and distribution facilities• Use of modern technology

• Increasing investments• Lucrative M&A opportunities• Rising FDI and private sector investments• Foreign players setting R&D centers• Increasing penetration of chemists

Opportunities in India•Strong demand• Healthcare revenue set to reach USD280 billion by 2020• Rising incomes, greater health awareness, lifestyle diseases and increasing access to insurance will

contribute to growth• Due to increasing population and income levels, demand for high-end drugs is expected to rise• Demand for generic medicines in rural markets has seen a sharp growth

•Quality of medical services• Availability of well-trained medical professionals• Low cost of high-quality medical services offered compared to its peers in Africa and Asia

•Favorable Government policies• Objective: To develop India as a global healthcare hub• Reduced excise and customs duty, and exemption in service tax• Creation of new drug testing laboratories and further strengthening of the 31 existing state laboratories• Reduced approval time for new facilities to boost investments • 100% FDI in Pharmaceuticals

References•www.ibef.org•www.nasscom.in•www.cci.in•www.icra.in•www.crisilresearch.co•www.deloitte.comwww.indus.org

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