Healthcare Industry

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Healthcare industry in India has seen a phenomenal growth in the last decade. The market comprises healthcare organizations (hospitals, nursing homes, diagnostic centers, dental hospitals, clinics, ayurveda hospitals, etc.), persons (doctors, dentists, nurses, and other caregivers), and health insurance providers. Private companies play a greater role than the public sector in providing healthcare services as this sector is expected to be financially stronger and well managed. With the growth of the Indian middle class segment, shift toward private healthcare services to obtain more value and service is expected. Indian healthcare industry is at growing stage and is thereby not subjected to strict regulations by the government. There is a general liberalization of trade and investment owing to which most devices do not need import license. Further, no restrictions have been imposed on refurbished medical equipments. In addition, tariff rates applicable on refurbished medical equipments are same as new equipment, which ranges from 5 to 30 percent. The report forecasts the IT spending of the Healthcare Industry in India over the period 2008-2012.The report also segments the total healthcare IT market in India by technology type. Further, the report discusses the market trends, growth drivers and growth barriers that characterize the Healthcare Industry in India. The report also profiles some of the key vendors in the Healthcare Industry in India. TechNavio Insights is a set of reports based on TechNavio – a market intelligence platform for the IT industry. It builds on the intelligence available within TechNavio, and leverages on the custom research experience of the 'Technology Navigators'. TechNavio is built on years of experience of Infiniti Research in deep dive custom research and consulting for over 30 Fortune 500 companies and numerous large and mid-sized companies.

Health care industry plays an important part in the economy of a country. The health care industry determines the GDP or the gross domestic product of any country. It also determines exports status, employment, capital investment etc. Health care segment provides employment openings to many individuals directly associated with the health care sector or other associated sectors, related to the health care industry in some way or the other. Efforts are usually made to keep the dollars rolling within the country economic set up. Businesses dealing in health care adds to the already existing economy by buying utility programs, by paying taxes for property etc.,. The health care industry consists of the following: • Dentists and doctors Protective care and nursing Pharmacies Allied medical, health services Hospitals The present era is likely to be dominated by expansion of demands in the market, increasing prices and increasing awareness among the customers. Such changes will trigger a change in the health care industry scenario for the better. The year of 1990 witnessed a sluggish rate of growth, the health expenses per capita marked an all time low. The sluggish nature could be due to the fact that several health programs were implemented efficiently. !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! Healthcare industry trend

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Health care industry trends manifest an upward growth but several areas need to be attended to for enhancing health care services for the common man. Different countries like Indonesia, Russia, Mexico, Brazil, India, Turkey and China comprise approximately 1/5th of the worldwide health care sales. Health care industry trends also suggest that the medical related conditions in the developing countries which are chronic in nature, will be similar to the ones existing in the developed countries. In order to meet international standards, the existing health care industry is required to alter the mode of operation for generation of higher revenue and greater contribution to the Gross Domestic Product of the country.

Facts about the health care industry trends:
• • The cost related to health care was seen to rise in the 90s. Americans not possessing any health care coverage or any kind of health insurance attained the 42 million mark. It has been anticipated that the elderly sick people will impose considerable stress on the health care sector of US. The total number of different health care programs and different health care insurance coverages are likely to increase in the coming years. There has been an escalation in the medical plans from 42.5 million in the year 2006. The health care industry trends also show that it is likely to attain 70.2 million in the year 2025. The health care industry trends also indicate that the expenses for preventive measures is negligible as compared to the amount spent on treating chronic diseases which accounts for 70% of the fund used for health care. Trends suggest that there are very less Americans (around 23%) who make an effort to prevent any lifestyle diseases by consuming the optimum level of vegetable and fruits.

Health care industry trends suggests changes in the following spheres:
• • • The companies manufacturing medicines provide health care plans More stress is to be laid on prevention than treatments Sufficient supply of the essential health care products should be made available to the consumers to meet the demand of the health care industry. Health care industry trends manifest an upward growth but several areas need to be attended for enhancing health care services for the common man.

With the invention of latest technological developments, the world health care industry is catching up with the other leading industries of the world. World health care industry is one of the largest industries catering to the medical needs of innumerable people around the globe. Statistics show that in the year 2004, employment provided by the health care industry accounted for 13.5 million job opportunities. Out of the 13.5 million jobs, some of the people opted for self employment while others remained salaried workers related to the health care. It has been predicted that between 2004 through 2014, increase in the health care jobs would be by approximately 19% or as many as 3.6 million job opening would be produced The statistics provided above reflect the health care scenario in the USA. Generally, the world health care industry comprises of the following segments: • • • • • • • Hospitals Nursing Physicians Dentists Health care services at home. Medical practitioners Outpatient departments

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Ambulant health care facilities Diagnostic laboratories and medical services World health care industry includes any medical institution which includes either a single medical assistant to the medical practitioner or medical practitioners attached to different hospitals and other medical establishments. $$$$$$$$$$$$$$$$$$$ The rate of growth of the health care industry in India is moving ahead neck to neck with the pharmaceutical industry and the software industry of the country. Much has been said and done in the health care sector for bringing about improvement. Till date, approximately 12% of the scope offered by the health care industry in India has been tapped. The health care industry in India is reckoned to be the engine of the economy in the years to come. Health care industry in India is worth $17 billion and is anticipated to grow by 13% every year. The health care sector encompasses health care instruments, health care in the retail market, hospitals enrolled to the hospital networks etc.

Health care industry in India and the GDP or gross domestic product:
Expenses incurred by the Indian Government on health care is the highest amongst developing countries. India's expenses on health care sector comprises 5.25% of the GDP. Chances are that the health care market could experience a hike and attain a figure ranging between $53 to $73 billion five years from now. This in turn will reflect an increase in the gross domestic product to 6.2% GDP. The health care industry in India earns revenues accounting for 5.2% of gross domestic product. Employment opportunities are provided to as many as 4 million people in the health care segment or other related sectors catering to the health care industry in India in some way or the other. Owing to the vast differences in medical expenses in western countries and that of India, India has become one of the Top favorites for health care treatments. Due to the progressive nature of the health care sector in India, several foreign companies are intending For to m invest in the country. 5 8

Indian Pharma Industry: SWOT analysis


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It is often said that the pharma sector has no cyclical factor attached to it. Irrespective of whether the economy is in a downturn or in an upturn, the general belief is that demand for drugs is likely to grow

steadily over the long-term. True in some sense. But are there risks? This article gives a perspective of the Indian pharma industry by carrying out a SWOT analysis (Strength, Weakness, Opportunity, Threat). Before we start the analysis lets look a little back in the industry’s last six years performance. The Industry is a largely fragmented and highly competitive with a large number of players having interest in it. The following chart shows the breakup of the growth (YoY) of Indian pharmaceutical industry in last six years.

*Volume growth of existing products

The SWOT analysis of the industry reveals the position of the Indian pharma industry in respect to its internal and external environment. Strengths: 1. Indian with a population of over a billion is a largely untapped market. In fact the penetration of modern medicine is less than 30% in India. To put things in perspective, per capita expenditure on health care in India is US$ 93 while the same for countries like Brazil is US$ 453 and Malaysia US$189. 2. The growth of middle class in the country has resulted in fast changing lifestyles in urban and to some extent rural centers. This opens a huge market for lifestyle drugs, which has a very low contribution in the Indian markets. 3. Indian manufacturers are one of the lowest cost producers of drugs in the world. With a scalable labor force, Indian manufactures can produce drugs at 40% to 50% of the cost to the rest of the world. In some cases, this cost is as low as 90%.

4. Indian pharmaceutical industry posses excellent chemistry and process reengineering skills. This
adds to the competitive advantage of the Indian companies. The strength in chemistry skill help Indian companies to develop processes, which are cost effective. Weakness:

1. The Indian pharma companies are marred by the price regulation. Over a period of time, this
regulation has reduced the pricing ability of companies. The NPPA (National Pharma Pricing Authority), which is the authority to decide the various pricing parameters, sets prices of different drugs, which leads to lower profitability for the companies. The companies, which are lowest cost producers, are at advantage while those who cannot produce have either to stop production or bear losses.

2. Indian pharma sector has been marred by lack of product patent, which prevents global pharma
companies to introduce new drugs in the country and discourages innovation and drug discovery. But this has provided an upper hand to the Indian pharma companies.

3. Indian pharma market is one of the least penetrated in the world. However, growth has been slow
to come by. As a result, Indian majors are relying on exports for growth. To put things in to perspective, India accounts for almost 16% of the world population while the total size of industry is just 1% of the global pharma industry.

4. Due to very low barriers to entry, Indian pharma industry is highly fragmented with about 300
large manufacturing units and about 18,000 small units spread across the country. This makes Indian pharma market increasingly competitive. The industry witnesses price competition, which reduces the growth of the industry in value term. To put things in perspective, in the year 2003, the industry actually grew by 10.4% but due to price competition, the growth in value terms was 8.2% (prices actually declined by 2.2%) Opportunities

1. The migration into a product patent based regime is likely to transform industry fortunes in the
long term. The new patent product regime will bring with it new innovative drugs. This will increase the profitability of MNC pharma companies and will force domestic pharma companies to focus more on R&D. This migration could result in consolidation as well. Very small players may not be able to cope up with the challenging environment and may succumb to giants.

2. Large number of drugs going off-patent in Europe and in the US between 2005 to 2009 offers a
big opportunity for the Indian companies to capture this market. Since generic drugs are commodities by nature, Indian producers have the competitive advantage, as they are the lowest cost producers of drugs in the world.

3. Opening up of health insurance sector and the expected growth in per capita income are key
growth drivers from a long-term perspective. This leads to the expansion of healthcare industry of which pharma industry is an integral part.

4. Being the lowest cost producer combined with FDA approved plants, Indian companies can
become a global outsourcing hub for pharmaceutical products. Threats: 1. There are certain concerns over the patent regime regarding its current structure. It might be possible that the new government may change certain provisions of the patent act formulated by the preceding government.

2. Threats from other low cost countries like China and Israel exist. However, on the quality front, India is better placed relative to China. So, differentiation in the contract manufacturing side may wane.

3. The short-term threat for the pharma industry is the uncertainty regarding the implementation of
VAT. Though this is likely to have a negative impact in the short-term, the implications over the long-term are positive for the industry.

Strengths 1. Low cost of production. 2. Large pool of installed capacities 3. Efficient technologies for large number of Generics. 4. Large pool of skilled technical manpower. 5. Increasing liberalization of government policies.

Opportunities 1. Aging of the world population. 2. Growing incomes. 3. Growing attention for health. 4. New diagnoses and new social diseases. 5. Spreading prophylactic approaches. 6. Saturation point of market is far away. 7. New therapy approaches. 8. New delivery systems. 9. Spreading attitude for soft medication (OTC drugs). 10. Spreading use of Generic Drugs. 11. Globalization 12. Easier international trading. 13. New markets are opening.

Weakness 1. Fragmentation of installed capacities. 2. Low technology level of Capital Goods of this section. 3. Non-availability of major intermediaries for bulk drugs. 4. Lack of experience to exploit efficiently the new patent regime. 5. Very low key R&D. 6. Low share of India in World Pharmaceutical Production (1.2% of world production but having 16.1% of world''s population).

7. Very low level of Biotechnology in India and also for New Drug Discovery Systems. 8. Lack of experience in International Trade. 9. Low level of strategic planning for future and also for technology forecasting.

Threats 1. Containment of rising health-care cost. 2. High Cost of discovering new products and fewer discoveries. 3. Stricter registration procedures. 4. High entry cost in newer markets. 5. High cost of sales and marketing. 6. Competition, particularly from generic products. 7. More potential new drugs and more efficient therapies. 8. Switching over form process patent to product patent.

Genesis HealthCare: SWOT Analysis
SWOT analysis of organizations to provide recommendations on their performance and growth potential. It is a powerful tool for analyzing both complex qualitative and quantitative facets of an investment decision.

The results of this analysis have been fed into marketing and organizational strategic plans and have been highly successful in strategy formulation.

Through our SWOT analysis, our clients have been able to take advantage of niche markets and focus on product innovation which allows them to capture greater margins.

Our SWOT analysis identifies strengths and weaknesses and relates them with forward looking opportunities and threats. This helps to identify company and industry specific critical drivers and catalysts.

SWOT Analysis identifies your company’s:

Strengths - to build on

Weaknesses - to cover

Opportunities - to capture

Threats - to defend against

Target Audience

Investment Managers

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