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  • 1. Healthcare in IndiaEmerging market report 2007

2. DisclaimerPricewaterhouseCoopers has exercised professional care and diligencein the collection and processing of the information in this report. However,the data used in the preparation of this report (and on which the reportis based) was provided by third-party sources. This report is intended tobe of general interest only and does not constitute professional advice.PricewaterhouseCoopers makes no representations or warrantieswith respect to the accuracy of this report. PricewaterhouseCoopersshall not be liable to any user of this report or to any other person orentity for any inaccuracy of information contained in this report or forany errors or omissions in its content, regardless of the cause of suchinaccuracy, error or omission. Furthermore, to the extent permitted bylaw, PricewaterhouseCoopers, its members, employees and agentsaccept no liability and disclaim all responsibility for the consequencesof you or anyone else acting, or refraining from acting, in relying uponthe information contained in this report or for any decision based on it,or for any consequential, special, incidental or punitive damages to anyperson or entity for any matter relating to this report even if advised of thepossibility of such damages.The member firms of the PricewaterhouseCoopers network (www.pwc.com) provide industry-focused assurance, tax and advisory services tobuild public trust and enhance value for its clients and their stakeholders.More than 140,000 people in 149 countries share their thinking,experience and solutions to develop fresh perspectives and practicaladvice. 3. A growing healthcare sectorHealthcare is one of Indias largest sectors, in terms of revenue andemployment, and the sector is expanding rapidly. During the 1990s, Indianhealthcare grew at a compound annual rate of 16%. Today the total valueof the sector is more than $34 billion. This translates to $34 per capita,or roughly 6% of GDP. By 2012, Indias healthcare sector is projected togrow to nearly $40 billion.The private sector accounts for more than 80% of total healthcarespending in India. Unless there is a decline in the combined federal andstate government deficit, which currently stands at roughly 9%, theopportunity for significantly higher public health spending will be limited.Growing population and economyOne driver of growth in the healthcare sector is Indias boomingpopulation, currently 1.1 billion and increasing at a 2% annual rate. By2030, India is expected to surpass China as the worlds most populousnation. By 2050, the population is projected to reach 1.6 billion. Figure 1: India is forecast to grow by at least 5% a year for the next 45 years 8%Brazil China India Russia 7% 6% 5% 4% 3% 2% 1% 0% 2000- 2005- 2010- 2015- 2020- 2025- 2030- 2035- 2040- 2045- 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Source: Goldman SachsEmerging Market Report: Health in India 2007PricewaterhouseCoopers 4. This population increase is due in part to a decline in infant mortality,the result of better healthcare facilities and the governments emphasison eradicating diseases such as hepatitis and polio among infants. Inaddition, life expectancy is rapidly approaching the levels of the westernworld. By 2025, an estimated 189 million Indians will be at least 60 yearsof agetriple the number in 2004, thanks to greater affluence and betterhygiene. The growing elderly population will place an enormous burden onIndias healthcare infrastructure.The Indian economy, estimated at roughly $1 trillion, is growing in tandemwith the population. Goldman Sachs predicts that the Indian economy willexpand by at least 5% annually for the next 45 years (see chart), and that itwill be the only emerging economy to maintain such a robust pace of growth.Expanding middle classIndia traditionally has been a rural, agrarian economy. Nearly three-quarters of the population still lives in rural areas, and as of 2004, anestimated 27.5% of Indians were living below the national poverty line.Some 300 million people in India live on less than a dollar a day, and morethan 50% of all children are malnourished. % of entireMiddle class population19989944.9220010250.53200910 (estimate) 62.95Source: CRIS Infac, 2005Emerging Market Report: Health in India 2007PricewaterhouseCoopers 5. However, Indias thriving economy is driving urbanization and creatingan expanding middle class, with more disposable income to spend onhealthcare. While per capita income was $620 in 2005, over 150 millionIndians have annual incomes of more than $1,000, and many who work inthe business services sector earn as much as $20,000 a year. While thisis a fraction of the income that their US peers earn, it is the equivalent ofmore than $100,000 per year when adjusted for purchasing power parity.More women are entering the workforce as well, further boosting thepurchasing power of Indian households. Between 1991 and 2001, thepercentage of women increased from 22% to 26% of the workforce,according to the latest Indian government census. Many of these womenare highly educated: the ratio of women to men who have a collegedegree or higher level of education is 40:60.Thanks to rising income, today at least 50 million Indians can afford to buyWestern medicinesa market only 20% smaller than that of the UK. If theeconomy continues to grow faster than the economies of the developedworld, and the literacy rate keeps rising, much of western and southernIndia will be middle class by 2020.Rise of diseaseAnother factor driving the growth of Indias healthcare sector is a rise inboth infectious and chronic degenerative diseases. While ailments suchas poliomyelitis, leprosy, and neonatal tetanus will soon be eliminated,some communicable diseases once thought to be under control, suchas dengue fever, viral hepatitis, tuberculosis, malaria, and pneumonia,have returned in force or have developed a stubborn resistance to drugs.This troubling trend can be attributed in part to substandard housing,inadequate water, sewage and waste management systems, a crumblingpublic health infrastructure, and increased air travel.11http://www.cdc.gov/ncidod/dvbid/dengue/Emerging Market Report: Health in India 2007PricewaterhouseCoopers 6. In addition to battling infectious diseases, India is grappling with the The Indian Diabetes Epidemicemergence of diseases such as AIDS as well as food- and water-borneillnesses. And as Indians live more affluent lives and adopt unhealthy Diabetes is a life-long, incurable disease marked by high blood sugar levels. It iswestern diets that are high in fat and sugar, the country is experiencing aestimated that almost 41 million Indiansrise in lifestyle diseases such as hypertension, cancer, and diabetes, which are diabetic, and that figure is expectedis reaching epidemic proportions (see sidebar, The Indian Diabetes Epidemic).to reach 73.5 million by 2025. The total annual cost to treat Indias diabeticOver the next 5-10 years, lifestyle diseases are expected to grow at a patients (including direct and indirectfaster rate than infectious diseases in India, and to result in an increase in expenses) is estimated at $420 percost per treatment. Wellness programs targeted at the workplace, where capita. If that per capita expenditure were to remain constant, the total estimatedmany sedentary jobs are contributing to an erosion of employees health, cost of treating the disease would reachcould help to reduce the rising incidence of lifestyle diseases. $30 billion by 2025. However, its likely that treatment costs will be even greater by then, due to growing affluence in IndiaPharmaceuticalsand improvements in standards of care.Paralleling the rise of disease is the emergence of a robust pharmaceutical The incidence of diabetes is much higherindustry in India. The Indian pharmaceutical market is one of the fastestin affluent urban areas of India than ingrowing markets in the world; sales increased by 17.5% to $7.3 billion inrural villages, and the rates are increasing:2006, according to IMS Health. Many factors, including a strong economyIn the 1970s, only 2.1% of Indians livingand the countrys growing healthcare needs have contributed to the in urban areas had diabetes. Today thataccelerated growth, which is especially strong in the over-the-counter figure is 12.1% for adults over the age of(OTC) market.20. The incidence is higher in the south than in the north, particularly in cities such as Chennai and Hyderabad, whereOverall, the domestic pharmaceutical industry is highly fragmented; more about 16% of the population is diabetic.than 10,000 firms collectively control about 70% of the market. Only threeforeign multinationals rank in the top 10 companies, as measured byIndians seem more vulnerable to Type 2sales, and collectively they have only 11.9% of the market between them. diabetes. This form of the disease can beBut many of the local players are generics producers specializing in anti- caused by genetics but also obesity, andinfectives, and as the illnesses of affluence and age increase, the demand it can lead to amputations, heart failure and blindness.for innovative new pharmaceuticals will rise. In addition to lifestyle changes that areThe federal government uses price controls to ensure that vital drugs arecausing diabetesthe dietary excess,affordable to the Indian population. Under the proposed pharmaceutical reduced physical activity and increasedpolicy 2006, the government revealed its intention to raise the number ofstress associated with more affluenceessential drugs under price controls from 79 to nearly 354, which wouldIndians have a strong genetic vulnerability to the disease. As a result, Indians often contract diabetes a decade earlier than their counterparts in the developed worlda trend that is likely to have an enormous impact on Indias working age population in the future.Emerging Market Report: Health in India 2007Pricewaterhou


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