As reported by the ‘World Health Statistics 2011′, India spends around 4.2 percent of its Gross Domestic Product (GDP) on health, which is quite comparable with other BRIC countries like, China and Russia.This has been possible mainly due to increasing participation of the private players in the healthcare sector.

The following table will highlight this point:

Health Expenditure:

Type	Brazil	Russia	India	China
Exp. on Health (% of GDP)	8.4	4.8	4.2	4.3
Govt. Exp. on Health  (% of Total Exp. on Health)	44	64.3	32.4	47.3
Pvt. Exp. on Health      (% of Total Exp. on Health)	56	35.7	67.6	52.7
Govt. Exp. on Health    (% of Total Govt. Exp.)	6	9.2	4.4	10.3
Social Security Exp. on Health (% of General Govt. Exp. on Health)	-	38.7	17.2	66.3

However, the following healthcare indicators suggest quite clearly that the total expenditure on healthcare by a country is not always directly proportional to its health outcome. This holds good for many countries across the world, including the USA, as the overall healthcare system  and more importantly its cost effective delivery mechanism are the key determinants of success:

Health Indicators:

Type	Brazil	Russia	India	China
Life Expectancy at birth	73	68	65	74
Neonatal Mortality Rate  (Per 1000)	12	06	34	11
Infant  Mortality Rate MDG 4  (Per 1000)	17	11	50	17
Maternal   Mortality Rate MDG 5(Per 1000,000 birth)	58	39	230	38

Source: World Health Statistics 2011

Fueled by the increasing participation of private players, coupled with a hefty hike in public expenditure on health to 2.5 percent of GDP during the 12^th Five Year Plan Period, the Indian healthcare sector, currently at US$ 65 billion, is expected to reach US$ 100 billion by 2015 (Source: Fitch), increasing the total spend of the country on health to around 6.8 percent of GDP during this period.

The expenditure towards healthcare infrastructure is expected to grow by 50 percent from its 2006 number to reach US$ 14.2 billion in 2013, as reported by KPMG.

Growth Drivers:

The key growth drivers are expected to be as follows:

• A hefty hike in Government expenditure as a percentage to GDP for health
• 1% of the growing population coming above the poverty line every year
• Growing middle class population
• Increasing incidence of non-infectious chronic illnesses and other life style diseases
• Reasonable  treatment costs due to intense competition and government intervention on health related issues
• Large public healthcare projects like, National Rural Health Mission (NRHM), National Urban Health Mission (NUHM), ‘Universal Health Coverage’, distribution of free medicines through Government hospitals
• Expansion of Rashtriya Swasthya Bima Yojana (RSBY)
• Increasing penetration of private health insurance
• Increasing direct procurement of medicines both by the Central and also the State Governments
• A boom in medical tourism

The basic Challenge:

Following areas will throw a tough challenge for a sustainable growth in healthcare:

• To reach a doctor population ratio of 1 doctor and 2.3 nurses per 1000 population by 2025 from the current 0.06 doctors and 1.3 nurses.
• To reach a ratio of 2 beds per 1000 population by 2025 from the current 1 bed, which means India would require creating additional 1.75 million beds by that time.
• An investment of US$ 86 billion will be needed to achieve 1 doctor, 2 beds and 2.3 nurses per 1000 population by 2025
• Although the health insurance had a penetration to a meager 2.3 percent of the population in 2007, the sector is expected to cover just around 20 percent of the population by 2015 (Source: ICRA).

Key Developments:

• As per the Rural Health Survey Report 2009 of the Ministry of Health, the rural healthcare sector in the country is registering an appreciable growth with the addition of the following during the last five years:

-     15,000 health sub-centers

-     20, 107 primary health centers

-     28,000 nurses and midwives

• According to a report by research firm RNCOS, the health insurance premium is expected to grow at a CAGR of over 25 per cent from 2009-10 to 2013-14.
• India will curve out a share of 3 percent of the global medical tourism industry (Source:RNCOS)
• Medical technology industry of India is expected to reach US$ 14 billion by 2020 from US$ 2.7 billion in 2008, according to a report by PwC.
• E-healthcare in rural areas is gaining popularity with the involvement of both public and private players like, ISRO, Mazumdar Shaw Cancer Center and Narayana Hrudayalaya. Some telecom companies like, Nokia and BlackBerry are also contemplating to extend the use of mobile phones for remote disease monitoring as well as diagnostic and treatment support. Introduction of 3G and in the near future 4G telecom services will further enhance opportunities of e-healthcare through mobile phones.
• Expansion of major healthcare players in tier-II and tier-III cities of India like, Apollo, Narayana Hrudayalaya, Max Hospitals, Aravind Eye Hospitals and Fortis will help improving access to affordable healthcare in the smaller places, significantly.

Examples of expansion in smaller places:

According E&Y report of November 2010, following key players are expanding their presence in tier II and tier III cities, besides metro and tier I cities:

Source: E&Y, November 2010

Healthcare sector is attracting FDI:According to the Department of Industrial Policy & Promotion (DIPP), the healthcare sector is undergoing significant transformation and attracting investments not only from within the country but also from overseas.The Cumulative FDI inflow in the healthcare sector from April 2000 to November 2011, as per DIPP publications, is as follows: Sector FDI inflow (US$ million) Hospital and diagnostic centers 1100 Medical and surgical appliances 472.6 Drugs and pharmaceuticals 5,033 (Source: Fact Sheet on FDI (April 2000 to November 2011), DIPP) Government Policy: Government has also started focusing on increasing investments towards creation of a sustainable medical infrastructure, especially in the rural areas. The following policy initiatives could help facilitating this process: 100 per cent FDI for health and medical services. Allocation of US$ 10.15 billion to the National Rural Health Mission (NHRM) for upgradation and capacity building of rural healthcare facilities. Allocation of US$ 1.23 billion to create six AIIMS type medical institutes and upgradation of 13 existing Government Medical Colleges. Overseas players started participating: BCG Group will open shortly a multidisciplinary health mall that would provide a one-stop solution for all healthcare needs starting from doctors, hospitals, ayurvedic centers, pharmacies including insurance referral units at Palarivattom in Kochi, Kerala. BCG’s long-term plan, as reported in the media, is to set up a health village spanning across an area of a 750,000 sq. ft. with an estimated cost of US$ 88.91 million. Along the same line, to set up more facilities for diagnostic services in India, GE Healthcare reportedly has planned to invest US$ 50 million for this purpose. Examples of initiatives by State Governments: In southern India, the Government of Andhra Pradesh has implemented a Health Management Project funded by the Department for International Development (DFID) of the UK costing US$ 59.68 million. It has been reported that many other State Governments of India are planning to go for similar Health Management models in their respective States.

Improving access to modern medicines in India:

Ten year CAGR in terms of volume of the domestic pharmaceutical industry has been around 15 percent, which clearly signals significant increase in the consumption of medicines, leading to their improving access to the general population of both rural and urban India.

Extension of focus of the Indian pharmaceutical Industry, in general, to the fast growing rural markets further vindicates this point.

The rate of increase in access to medicines may not be directly commensurate to the volume growth of the industry during this period, but a major part of the industry growth could certainly be attributed towards increasing access to medicines in India, which should cover over 60% of the population of the country, by now.

Unfortunately, even the Government of India does not seem to be aware of this gradually improving trend of access to medicines in the country. Official communications of the government still quote the outdated statistics of 1998 (published in 2004), which states that 65% of the population of India does not have ‘Access to Modern Medicines’ even today. No wonder, why many of us still prefer to live on to our past.

Conclusion:

Be that as it may, around 40% of the population still does not seem to have adequate ‘Access to Medicines’ in India. This issue though attracted attention of the policy makers, has still remained mostly unresolved and needs to be addressed following a holistic approach with the newer plans.

A robust model of healthcare financing for all socioeconomic strata of the society with plans  like, ‘Universal Health Coverage’ and continuous improvement of healthcare infrastructure and   delivery systems, as are now being planned by the astute brain trusts of India, are expected to bring significant reform in the healthcare space of India.

Let us also note at the same time that all these are happening, despite shrill voices of naysayer vested interests, continuously projecting to many of us a stagnant, dismal and never improving healthcare scenario of the country, more often than not.

Very fortunately, from an unenviable labyrinth, healthcare industry of India, at last, seems to be on the threshold of being catapulted to a higher growth trajectory riding on a decent number of both public and private initiatives, never than ever before.

Unless it is so, why will the healthcare players from across the world keep on increasing their operational focus, in every way, on India and China?

By: Tapan J Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.