The healthcare market continues to expand

I got the above great image from here.

It was a pleasant and interesting time for a day at Mysore, this week. As usual, the Pharma market was the epicentre of discussions with my friends and relatives, at a social function. The healthcare market continues to expand due to a host of trends like PCD trend, knowledge empowerment, pandemic diseases, and CLIMATE CHANGE (global warming)...

PCD market operators

Earlier it was not very common to see PCD (propaganda cum distribution) operators in markets. But even a conservative market like Mysore sees at least 15 ex MRs operating propaganda cum distribution operations. Just imagine what would be the status in the aggressive Pharma markets of India viz., Maharashtra (including Mumbai) and Madhya Pradesh + Chhatisgarh (which are the largest Pharma markets in India; it is said that companies that succeed in the markets of these two states, will get good national Pharma marketshare). Equally very aggressive markets are Uttar Pradesh (and Uttaranchal) and Bihar + Chhatisgarh. The point of curiosity was where were the goods getting absorbed? Because, all major and small companies are very aggressive and continue to do good business. Still each PCD is also doing about 2 to 3 lakhs business and making about Rs. 25,000 to Rs. 30,000 profits. This means PCD operators were making it tough for companies, but not cannabalizing the sales significantly. So how are the goods getting absorbed as all established companies too were doing well? Is the market expanding as the number of market operators increase?

More scope for market penetration and prescription potential of products

As such, it appears there is greater scope for market penetration and the prescribing potential of products is not tapped.

Let us consider albendazole as an example. Nelson's textbook of pediatrics recommends regular deworming every 6 months. But in reality this is not happening. Perhaps the pressure to prescribe albendazole due to a large number of market operators is increasing the consumption (and this has medical textbook sanction too).

People do business with people

Thus, if a MR (PCD or company) comes regularly to a doctor with promotional inputs and other strategies to expand the doctor's patient base and help the doctor service his patients better, it is inevitable that consumption increases. It is the pressure of increasing no. of market operators and their strategies that is increasing consumption and thus every market operator makes his money. Moreover, there is very high potential for market penetration and consumption as prescription generation is itself perhaps not in line with the product potential. As explained above albendazole has more theoretical potential of consumption, if one takes in to cognizance that regular deworming needs to be done every six months (for adults and children).

However, PCD operators are finding it tougher to make profits these days due to increased and intense competition.

Similarly let us take the case of the hepatoprotective market.

First some physiological aspects of the liver:

The liver is a strategic organ. The liver, the largest internal organ of the body and a chemical factory, has a major influence on glucose concentration in blood. All absorbed nutrients and chemicals first go to the liver through the mesenteric capillaries and the portal vein. Glucose is converted rapidly to glycogen (storable form of glucose in liver) and then to fats (for storage under the skin as subcutaneous fat ie. adipose tissue) in the liver, and ensuring that systemic concentration of glucose is in the normal range. Similarly, in times of starvation, the liver has the chemical ability to generate glucose from amino acids, fats, and glycogen to ensure normoconcentration of glucose in blood. These chemical reactions are called intermediary metabolism.

Amino acids are used by the liver to manufacture enzymes and other important proteins for eg., angiotensinogen. However, amino acids cannot be stored like glucose. And glucose cannot be converted to amino acids. So amino acids (particularly essential amino acids) are required on a daily basis.

Another very important attribute of the liver is its ability to detoxify. The liver converts xenobiotics (or non nutrient foreign substances) to an easily excretable form. Fat soluble toxins are converted to water soluble substances through the Phase 1 and Phase 2 detoxification reactions. It is for this reason that hydrophilic (water soluble) substances have longer half life (stay in the body for a longer time) and require reduced frequency of dosing (hence, atenolol is a once-a-day therapy); hydrophilic substances undergo less first metabolism however, they cannot cross the blood brain barrier to have effects on the brain (lipophilic substances cross the blood brain barrier easily). Thus, the liver is responsible for detoxifying the blood (removal of toxins, and microbial fragments from the body).

Furthermore, the liver is responsible for electrolyte balance in the blood, fat digestion and assimilation (through bile juice secretion), storage of vital micronutrients, body temperature regulation ...

Today, xenobiotic insults to the liver are higher than ever, and entry of hepatotoxic pollutants in to the body (like alcohol) have a great impact on the liver causing sluggish liver functions that manifest gastrointestinal complaints like anorexia (loss of hunger), nausea, vomiting, dyspepsia (indigestion) and epigastric distress.

And these complaints are ever increasing and consequently increasing the demand for hepatoprotective products. The hepatoprotective need appears to be underserviced given the strategic importance of the liver.

AND ADDED TO THIS IS THE GROWING PURCHASING POWER IN INDIA, which ensure prescription encashment.

Feeling healthy is as important as absence of health

The positive concept of health is not just the absence of disease and infirmity, it is the feeling of being in good. This explains the ever increasing potential of products like the electrolyte energy drinks. The creation of a brand new category of electrolyte energy drinks perhaps indicates an emerging trend of prescription based lifestyle healthcare goods.

What does a prescription represent?

A prescription is a recommendation to purchase and consume particular products. But importantly a prescription is a covenant of trust. It is a trustworthy written advice on what to consume given by a legally sanctioned expert (an important opinion builder) to his or her patient. The prescription represents trust - the most basic emotion between humans. If a doctor generates a very high level of prescriptions it is because of a proportionately very high level of trust and confidence enjoyed by him in his target market of patients.

People consume products and services because of trust

What a marketer does is build trust on the marketed products. People consume the products and services due to this trust. So a doctor's prescription is a part of this 'TRUST CYCLE'. Products for a healthy lifestyle when recommended by way of prescriptions build enormous trust. Prescriptions deliver superior value to the brand. Hence, the success of the new category prescription based healthy lifestyle products like electrolyte energy drinks (info@jagdale.com).

Prescription and non-prescription based healthcare markets are expanding constantly

While increasing purchasing power creates the opportunity for marketers, the actual reason for consumption is patient empowerment through knowledge. It is the knowledge that it is possible to look young that is driving the consumption of skin care products. Similarly, the knowledge that it is possible to overcome lassitude and a low down feeling (sadness and depression) that is driving the consumption of electrolyte energy drinks and neuropsychiatric products. Knowledge to the patients and society in general about healthcare products drives hope and consumption. Marketers actually sell hope, ideas, and images. And marketing has the dimension of knowledge empowerment. Hence, it now time to consider a change of laws in India, to allow advertising of prescription based products in mass media (with a statutory advice that the product will be sold against prescriptions only).

New disease and healthcare trends drive healthcare markets constantly

While knowledge (as we observe above) is empowering and helps expand healthcare markets, the next factor increasing consumption of healthcare products, are new trends (disease and healthcare). For eg., pandemic diseases now are expanding markets for specific products, like antibiotics. The bird flu disease is a pandemic disease.

Social trends like parents wanting their children to do well scholastically is increasing the consumption of milk mix beverages like Horlicks, Amaze, Boost, Complan etc.

IMPORTANT ASPECT REVEALED: BEWARE - CLIMATE CHANGE (global warming) AND POLLUTION ARE HAVING AN IMPACT ON MALE INFERTILITY

Global warming is not about climate change, flash floods, receding water tables, rising sea levels, but there is something more at stake ... THE FERTILITY OF MALES. There is a distinct possibility of global warming and cocktail pollutants disrupting endocrine (hormonal) balance leading to male infertility. It is already established that climate change will increase the incidence of infections. As climate change is expected to increase infections, these too will indirectly contribute to male infertility. Global warming & raised ozone levels related male infertility is certainly a point to be considered.

So this itself is an opportunity area for healthcare marketers: products and services to offset possible male infertility related to global warming, ozone levels, pollution etc.

So that is the point - various trends in society and environment continue to create healthcare needs and wants and these expand the market continuously.

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Great fortunes in the Indian Pharma market

I got the above image from here.

India is a great destination for pharmaceutical and healthcare marketers. I do not recollect any pharma firm (manufacturer, marketer or trader) who has suffered losses - yes some have folded up due to gross mismanagement or lack of interest, but even the loosely managed firms survive and make profits. Such is the nature of this recession proof and growing pharmaceutical and healthcare industry. The reason is that the healthcare needs are vast and growing in India. It is something like the banking sector. Even the largest private bank in India (ICICI) has a savings bank account depositor base of 13 million (1.30 crores) in a population of 1.02 billion (102 crores). (SBI is the largest bank in India, a public sector bank). There is a large population that is 'unbanked'. Similarly, there is a large population that is not served adequately through the pharmaceutical and healthcare players.

The pharmaceutical and healthcare market is really big

India has 604 districts, population of 1.02 billion, and a pool of around 13 lakh odd doctors with some 5.5 lakh pharmacies. So the best company may be covering about 2 lakh doctors. A recent company like Atrimed has a coverage of 20,000 doctors and turns in a healthy financial picture. So the potential is growing and huge. Morever, patients constantly move up the value chain of clinical health offerings, from basic management of acute illnesses (infections, fevers, and transient headaches), to chronic illnesses (cardiovascular disease, respiratory allergies, arthritis, diabetes, and neuropsychiatry disorders) and then on to aesthetic medicine. So, as the purchasing power of the individual grows, there are newer and newer needs that are met by clinical services. The large market for pharmaceuticals and healthcare is hence constantly growing with a growth in the economy of India. It is for this reason that propaganda cum distributors (started by senior MRs or stockists) turn in tidy profits even if their base of doctors is just 50 core doctors per MR.

Let us see the anticancer market for some insights below

Disclaimer: I did this survey two months back and this is based on market buzz. The survey brings the scope of anticancer segment and the challenges in this market segment.

The challenging anticancer market is a roller-coaster ride. The approximate Rs. 500 crore market for anticancer drugs, is controlled by some 1200 medical oncologists (market buzz: at an all India level). So each oncologist can give a business of Rs. 41.6 lakhs per annum of anticancer drugs…

The use of chemotherapy is mainly in a multimodality approach, since most of the cancers are detected at advanced stage, and surgery and radiation therapies are the mainstay. While conversing with a patient’s attender near Bangalore Insititute of Oncology, Bangalore; he shared the information that he was buying Cipla’s tamoxifen tablets for a patient who had undergone lumpectomy (in treatment of breast cancer), for the past 5 years. Along with tamoxifen he was regularly buying Shelcal M tablets. The market for anticancer drugs is high competitive, high value - low volume compared to other Pharma products, and purely prescription driven (hence doctor – company relationships are very important). The roller coaster nature of the market is due to the fact that doctors enter in to annual contracts for prescribing brand(s) in return for some inputs from the company.

Kidwai Inst. Of Oncology, Bangalore does business of about Rs. 80 lakhs to Rs. 100 lakhs per month. While higher molecules are prescribed, routinely moving anticancer drugs are cisplatin, daunorubicin, vinchristine, and vinblastin. Pfizer is a leading company here at Kidwai. A new trend noticed at Bangalore Institute of Oncology, Bangalore is a pharmacy company called HCG that is directly purchasing certain injectable drugs from a manufacturer on their brand name, price and payment terms bypassing MRs and intermediaries. (In fact, this is marketing phenomenon is seen at Apollo Hospitals too, they have some 150 private label brands of analgesics, antipyretics, antiulcerants (including pantoprazole and rabeprazole) and other injectables which are sold to in-patients at Apollo Hospital network). At Bangalore Inst of Oncology, calcium leucovorin, cisplatin, adrinamycin, fluorouracil, oxyplatin, gencitabine, docetaxel, and isophosphamide are fast moving. Filgrastim is making some waves now. While head, neck, oesophageal, and lung cancers are mostly seen, bone and liver cancer too abound.

Auxiliary drugs that move fast include: antiallergics (particularly cetirizine), budesonide nasay spray, calcium tablets, blood products, analgesics, antidepressants, and antibiotics.

Big daddies of this fiercely competitive market are Pfizer, Roche, Nicholas, Alkem, DRL, Claris, Sun, Fulford…some 45 companies are said to control 70 to 80% of the market.

Herbapharmaceutical, OTC (over-the-counter nutritional supplements and healthcare products), wellness, and the alternative healthcare markets are uncluttered and growing

In fact, homeopathy has some 24% of the alternative healthcare market share. The wellness market is seeing some action with Yash Birla group showing interest in entering this segment. The ayurvedic - herbal market, for instance, is dominated by only 3 or 4 companies.

Cipla's growth hunger

Cipla is the number #1 Pharma company in India's retail market. This position is thanks to the aggressive spirit and intellectual hunger in the company. It is said that very few in the Pharma industry in India can even imagine the kind of approaches that Cipla undertakes. The market buzz is that Cipla is overhauling its marketing approaches, something on the following lines:

a) Use of electronic devices in Pharma marketing - through laptops or tablet PCs. This is done to ensure very persuasive marketing communication efforts.

b) closed loop marketing communication: this is related to the use of laptops or tablet PCs in pharma marketing. Essentially here the MR customizes the messaging with the laptop during in-clinic communication based on the conversations with the doctor. In essence, the MR will create a kind of electronic visual aid with his laptop and the MR is able to access relevant clinical reports as he is talking to the doctor and can show the same to the doctor on the screen. This makes better impact and ensures that the doctor gets convinced faster. Read more about closed loop marketing HERE.

c) Key account management: as such, in today's healthcare scenario, there are more than one opinion builders who affect a pharma brand's establishment and consumption. Hence, it is imperative for the MR to understand the full range of people/professionals, who influence the brand's consumption and strategize on how to manage the relationships and marketing communication efforts, for full impact, this concept is called key account management. This is being put slowly in to action by Cipla's marketing dept. You can read more about key account management in Pharma HERE.

Sun Pharma: the quiet conqueror

Sun Pharma is the one of the most profitable Pharma companies in India. In fact, its CMD, Mr. Dilip Shangvi, the billionaire, who shies away from the limelight is one of the richest persons in India. This company is a quiet conqueror but very aggressive and hungry for more - more topline and more bottom line. A company that makes quiet waves.

Piramal Healthcare: success because there was no baggage

The husband - wife team of Piramal Healthcare, entered the Pharma industry through acquisition of Nicholas Laboratories. Rest as they say is history. From a few crores of business the company is now having a turnover of Rs. 3000 crores. The main reason was that Mr. Piramal being new to the Pharma industry, carried no baggage, had a fresh and open mind, brought in management concepts and took the Piramal's pharma business to new heights.

Innovation wins through creation of product categories

Competing interest: the author of this blogpost is employed by Juggat Pharma.

Certain companies like Juggat Pharma have created history by creating product categories - the category created by Juggat Pharma is the tetra pak based product range electrolyte energy drinks for prescription promotion. (www.jagdale.com) This goes to show that innovative and courageous thinking can create records.

The fact that there are great fortunes in the Indian Pharma market is reflected in the Economic Times report dated 17.4.2008, where the reporter, Kiran Kabtta, says domestic growth story boosts Q4 pharma margins.

The above report also states Average estimates point to a 25% annual increase in revenues for domestic pharma companies, though there will be some exceptions to the growth picture. An IMS-ORG MAT report in February valued the home market at Rs 31,900 crore, growing at nearly 15%.

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The healthcare sector in India - is rocking!

The Indian healthcare sector, is the VC's darling, although the sector, as such, has miles to go. As per Mint campaign supplement, dated 7.4.2008, on occasion of World Health Day (7.4.2008), the healthcare sector in India, is relatively recession free, and may grow by four times in 10 years. In 2007, the sector attracted USD 100 million of VC investment, (around Rs. 400 crores), while in 2006, it was USD 41 million. ICICI is bullish about the growth of its new venture, Iven Medicare. While climate change and its impact on health is holding the center stage of various programs, Mumbai is interestingly celebrating this day as a no honking day!

The picture

India has 604 districts and a population about 1.02 billion, As per The Hindu, dated 19.3.2008, p.no. 16, the no. of registered allopaths with MCI is 6,83,582, the population to doctor ratio is 1:1634; there are also more than 6 lakh RMPs and with other qualifications like BAMS, BUMS, etc. There are 271 medical colleges (138 Govt., and 133 private sector). The MBBS intake capacity is 31,172 and PG seats available are 11,005. The hospital bed to population ratio is 1:3500, while it is 5:1000 in developed economies. So pharma marketers are possibly addressing a market of about 13 odd lakhs doctors who influence the consumption of prescription products.

The disease patterns

Cancer: In 1975 - 76, the National Cancer Program was started in India. Every year 8 lakh cases of cancer are detected, and 3 lakh deaths occur due to cancer. By 2026, the no. of cancer cases is expected to go to about 1.4 million.

TB: in the world and India: It is estimated that one third of the world's population is infected by TB. The WHO estimate is that 9.2 million were infected by TB in 2006, but only 5.1 million were diagnosed. So for every 5 cases of TB detected, 4 went undetected. India, China, Indonesia, South Africa, and Nigeria had most of the cases. 7 lakh HIV positive people were diagnosed with TB.

Infections: If one glances, at the top 50 brands (as per ORG IMS, Feb 2008), one will see that Corex (as usual) holds the top 1 position followed by Voveran. And what strikes the pharma marketer is the large no. of antibiotics particularly cephalosporins that are the topper brands. This indicates that a large component of the market is still anti-infectives. With India becoming warmer, the climate change is expected to encourage the spread of infections.

Nutritional deficits: India's economy, plagued with rising inflation (which is now a global phenomenon), will further deepen the problems of nutritional deficits particularly in semi urban and rural India. Already anemia is a major health problem in India.

Lifestyle diseases: While the developed economies are grappling mainly with the battle of plenty (obesity is a major health problem in the advanced West), India is grappling with different lifestyle diseases due to problems like smoking. The other very striking thing about the top pharma brands in Indian market are that they belong to the lifestyle segment. In fact, the third largest brand is a human insulin brand, and new off-the-block company in the branded formulations market - Biocon - is growing at dizzying rates (over 50%). Atorvastatin brands are also doing very well in India, and are among the topper Indian pharma brands. Women's diseases including menopause are seeing a lot of growth opportunity. Click here for a nice review on the lifestyle segment of the Indian pharma market (diseases like diabesity in urban India).

The rural market beckons!!

The Union Budget 2008 - 2009 has given a thrust to the healthcare sector, particularly the rural healthcare segment. And current estimates are that the rural sector will be the engine of growth for the healthcare sector.

The CRAMS sector is going places

With the acquisition of Draxis by Delhi based, Jupiter Biosciences the spotlight is on the CRAMS sector (contract research and manufacturing services) of the healthcare industry.

25% of the Indian pharma market is gastrointestinal-hepatic...

While approximately 25% of the total value of the Indian pharma market is anti-infectives, the next 25% is gastrointestinal - hepatic related, including electrolytes. Management of acid-peptic diseases including heartburn continues to be big business. Liv 52 is the fourth largest Indian pharma brand (ORG Feb 2008).

India: The world's generic basket

Undoubtedly, having an estimated 100 US FDA approved manufacturing plants, and offering value-for-money generic products, India is the world's generic basket (the chance for replicating this success in the biogeneric segment is also bright). The successes in generic product production and marketing, and CRAMS is only because of Indian entrepreneurship and availability of talented people. However, this is leading to a very competitive and...

commoditized pharma marketplace in India.

The large no. of manufacturers and marketers is leading to a high degree of commoditization in the Indian pharma marketplace. There are newer and newer players coming in to the Indian pharma industry, for eg., Atlas the bicycle manufacturer has expanded to the pharma sector, by setting up a world class manufacturing unit. Further, it is becoming a trend for many MRs to start their own propaganda cum distribution model of pharma business.

I got the above image from HERE, this Govt. website also gives further details about the Indian healthcare sector. Kindly scroll down to read other articles (including by clicking on older posts).

Inflation, food shortages, and pharma business

The food crisis and inflation scenario

The world is never the same ... the world is constantly in change ... uncertainties and new forces create new challenges to society. The Financial Express, dated 1.4.2008, p.no.1, highlights the challenges facing Indians. The wholesale price inflation index is now 6.68%, ahead of the RBI's target of 5%, for the week ending 15.3.2008. The Govt., is admittedly very concerned as elections are due ... hence, import duties may drop to zero for food products, staple items (wheat and rice), and edible oil. This is done to try and improve the supply position, and there by ease the pressure on inflation. Globally, the food crisis is deepening and food prices are soaring, due to drought, declining dollar, shift of investment money to commodities trading, and using farm land to grow fuel crops. By 2050, the world population is estimated to be 9 billion, and extra 2.5 billion will live in developing countries. Asia's increasing wealthiness and increasing demand for meat particularly from China has added to the food supply pressure. The world over, in fact, inflation is a concern, the People's Bank of China (PBOC) has commited to reigning in inflation through policy changes. The Japanese market is the second largest economy in the world, after USA, and its industrial production index is closely watched globally. The March 2008 figures are lower than the Feb 2008 figures, and it indicates a bleak economic outlook globally.

Food deficits and impact on health

One of the best ways of studying the impact of food deficits on health and disease patterns is to look at case studies. An example is the US embargo to Cuba. It has been well documented that the embargo has dramatically impacted the health of the average Cuban: please CLICK HERE. However, the Cuban crisis was severe as the embargo covered medicines too.

One of the most important impacts of food deficit induced malnutrition - is the rise in infectious diseases. In fact, in India, 25% of pharma market is the antibiotic market, while another 25% of the market is the gastrointestinal diseases market. Malnutrition is likely to grow these markets further.

Will the market for nutritional support therapies grow?

It is well documented that the healthcare industry in India is booming, this refers to the markets of pharmaceuticals, nutritionals, biotech products, and healthcare services. Let food by thy medicine and thy medicine your food is a popular saying of Hippocrates (the father of medicine). A number of nutritionals are promoted to doctors for prescriptions, and other nutritionals are promoted using the OTX route (where products are promoted to doctors and subliminally to end consumers directly). As the role of food deficits and diseases gets more highlighted, the nutritional market can be expected to boom in the prescription arena - particularly value added low priced nutritionals and nutraceuticals will see increased consumption.

Food deficits :impact on maternal and child health

Among patient categories, the pediatric and women care markets are very attractive given the high rates of patient compliance particularly in the pediatric market. In India, hidden hunger is a long standing problem that exacerbates disease processes and increases susceptibility to infections. The lowered consumption of high nutrition foods is bound to impact on the health of pediatric cases, and women (particularly pregnant and lactating women, where there could be a rise in low birth weight babies). Hence, vitamin supplements, protein preparations, iron supplements, calcium formulations, and other nutraceuticals/nutritionals will possibly see a better market.

Opportunity for corporate social responsibility and business

The food crisis (which cannot be solved overnight) and higher inflation, are bound to have an impact on the health, disease patterns, and stress levels in society. This scenario is an opportunity for healthcare organizations (commercial and non-profit) to offer innovative products and services, and help build a healthier and happier society.

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