The sin economy and healthcare biz

I GOT THE ABOVE INTERESTING IMAGE FROM HERE.

Businessworld has been one of my favorite mags. The articles are superbly researched and always different. A breakthrough article has been published recently on the SIN ECONOMY (CLICK HERE). Briefly put, it refers to the at least Rs. 3 lakh crore (about 1/10^th of Indian GDP) business involving marketing of products and services relating to intoxication (alcohol and tobaccoism), gambling, and sleaze. In India, the sin economy is about 1/10^th of the GDP, while in USA it is just 1% of the 13.8 trillion dollar GDP.

Tobacco smoking and consumption is worth about Rs. 1,50,000 crores with 32% growth; ITC (makers of Gold Flake brand of cigarettes), sell 7 out of the 10 cigarettes in India, and ITC has shown 20% to 21% growth in sales and profits.

Alcohol (both country liquor and brands) consumption has an annual turnover of Rs. 11,401 crores. This biz is growing fast, beer shows 15% to 16% growth. DINK (double income and no kids) couples are driving the consumption. Alcohol czars are laughing all the way to the bank. United Breweries (of Bangalore, owning the Kingfisher brand – the beverage and airline brand) has trebled its profits in 2007 -2008.

Gambling is huge biz, satta (or matka) is popular during cricket matches. Online gambling businesses like Playwin has annual turnover of Rs. 2400 crores (this business arm dwarfs the other businesses of the group like Zee TV and packaging)

Sleaze refers to the illicit sex business, estimated to be Rs. 2000 crores per annum in turnover. There are estimated 30 lakh sex workers (40% being children), and the sleaze industry is estimated to show 40% to 45% growth.

So the conclusion is that the sin economy is a major trend and has wide implications for the healthcare businesses.

Smoking tobacco - a major health hazard. Smoking or consumption of tobacco orally as gutka or with paan is addictive. Consuming tobacco plays with the level of the neurotransmitters or chemicals of the nervous system (including the brain). Gives a sense of pleasure and the result is both physiological and psychological craving for the nicotine kick. The WHO has estimated that one third of the world smokes cigarettes. So that 's a CHAMPION market for you! (pun intended!!).

The trouble with alcohol is that first you take the drink, then the drink takes the drink, and finally the drink takes you (based on a Japanese proverb). Alcohol consumption with moderation are said to have benefits for the cardiovascular system. However, its addiction potential makes it a curse rather than manna. Alcoholism causes social problems (and remember, health is defined as a sense of physical, mental, and social well-being by WHO), and physically, alcoholism causes sluggish liver to fatty liver, then hepatitis (inflammation of the liver) and finally fibrosis of the liver or cirrhosis. Being the chief organ of detoxification, the LIVER is the first organ to bear the brunt of alcohol ill effects. Once the liver is affected, life force itself is affected. It is not without reason that the bard of Avon (William Shakespeare) referred to the liver as the seat of emotions. In fact, in Elizabethan times, it was said that the person who could not love had a weak liver.

Increased consumption of alcohol causes problems to the heart and blood vessels, and brain functions.

Both alcohol and cigarette smoking are anti-reproductive system. It is as if, nature does not want people to abuse these toxins. These repro-toxins cause low sperm count, reduce sperm motility, and cause erectile dysfunction. In females too the effects are devastating. Alcohol and tobaccoism are well known to cause cancer.

Thus, sin economy is boosting the healthcare businesses in India. The vast no. of healthcare problems due to intoxication (booze and tobacco), gambling (with its neuropsychiatry implications), and sleaze (causative of infections, and weakened immunity) are feeding the healthcare biz.

The SIN ECONOMY points to the vast potential for neuropsychiatry related pharma products and supplements

The iron grip of sin economy in Indian society points to the amazingly huge potential for neuropsychiatry products (both drugs and supplements). The sin economy is actually feeding on sadness, stress, anxiety, depression, and schizophrenia that are under-diagnosed and under-treated in India. In fact, the growth of the Indian sin economy can be stunted by market building marketing initiatives for neuropsychiatry products. (it won't be an exaggeration to say that the abuse of Corex is due to neuropsychiatric problems.) The sinonimics or the economics of sin product consumption can be replaced by consumption of herbal support products like ashwagandha and brahmi for management of mental stresses. Alcohol or smoking is not the answer for the mundane and extraordinary problems of life.

SIN ECONOMY VERSUS SPIRITUAL ECONOMY

The use of yoga and other spiritual techniques to tackle the challenges of life is a part of spiritual economy. What Sri Sri Ravishankar and Swami Ramdev are doing, - are tackling the challenges to health and well-being through spiritual techniques. However, the adoption of spiritual techniques for management of life's challenges requires an evolved mindset. Popping health supplements or drugs will always have more adoption. So spiritual economy will have its place in the scheme of things but will not cannibalize the consumption of healthcare goods and services significantly.

Boom-Boom is the growth of healthcare economy

Estimates are that the Indian herbal healthcare market will reach Rs. 14500 crores in India by 2012, and the herbal exports will reach Rs. 9000 crores. Hence the herbal segment and wellness market is seeing a lot of action - Yash Birla is interested in the wellness market, Himalaya has launched its fourth SBU (Zera), to address the rural market (basically towns and villages below 5 lakhs population are under penetrated; rural refers to places equal or below 10,000 population), and the TATAs are in league with FRLHT and Dept. of Science and Technology to strengthen the herbal-yoga-Ayurveda healthcare stream. As per ORG IMS, till Dec 2007, the Indian pharma industry has grown to Rs. 31038 crores, Dec 2007 MAT, and the CAGR for four years works to 13%.

WHY THIS AMAZING INTEREST IN HEALTHCARE INDUSTRY?

Simple, look at the balance sheets - RANBAXY has for year ending Dec. 2007, reported net income of Rs. 4778.30 crores with a profit before tax of Rs. 774 crores and profit after tax of Rs. 617.72 crores; BIOCON for the year ending March 2008 (FY 2007 - 2008) reported net sales Rs. 1090.20 crores, with profit of Rs. 463.91 crores!

Now look at the balance sheet of a very respected automobile parts company SUNDARAM FASTENERS (this company is a part of the highly disciplined and high profile TVS group), it has net sales of Rs. 1207.70 crores and profit before tax of Rs. 102 crores and profit after tax of Rs. 69.50 crores.

SO IT IS CLEAR THAT IT IS ALL ABOUT MONEY, HONEY!! The healthcare biz provides a comparatively very good profitable business opportunity!! AND WITH THE SIN ECONOMY TREND BEING POWERFUL IN INDIA, THE BEST DAYS FOR HEALTHCARE BUSINESS OPERATORS ARE YET TO COME!!!

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