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India: The pulse of healthcare in emerging economies


India was among the first countries in which Abbott expanded outside the US, way back in 1910. Today, more than 85 per cent of Abbott’s pharma products (by value) on offer in India are manufactured locally. In his keynote address at OPPI’s recently held golden jubilee AGM, Mike Warmuth, Executive Vice President, Established Pharmaceuticals Division, Abbott touches on his company’s India strategy, and the need for enablers, like stable, predictable policies that can maximise the promise and potential of India. Excerpts from his speech

Mike Warmuth

OPPI recently celebrated its golden jubilee. These 50 years also run parallel to an era of significant advances in scientific and medical development in the global pharma industry. Approaches to drug discovery and early-stage testing changed, and major innovations were made in cardiovascular drugs, anti-inflammatory drugs, oral contraceptives and cancer therapies. These innovations enabled patients to manage their health better, and made safer treatment options available. Conditions such as asthma, HIV and Parkinson’s could be managed effectively because of the drug discoveries and development during this era. The industry as a whole has made significant progress, laying the foundation of a global healthcare industry that stands at about $1 trillion today.

Along with an increase in life expectancy and reduction in infant mortality, a notable achievement is that access has particularly improved over the past two decades, with the number of people with access to essential drugs nearly doubling.

Breakthroughs in the drug industry have also benefitted our colleagues in devices and diagnostics – from lab-in-a-hand devices, to stents that dissolve fully in the body, to wearable technology that tracks vitals and also blood sugar levels, innovations are transforming healthcare. These changes are not driven by companies alone – consumers are demanding more – they are seekers of actionable information and medicines to manage health better.  Health helps people to do more, and achieve their fullest potential, so what we do as an industry is truly foundational.

OPPI has successfully navigated a myriad of changes in the Indian environment, contributing to the creation of an industry that is today a pharmacy to the world. Along the way, OPPI has brought us important insights related to innovation, access and the state of healthcare, as it stands in India today.

On emerging markets

The impact of health is strongly linked to economics – projections show that over the next two decades, chronic diseases have the potential to push millions of people (globally) below the poverty line. In economies that have characteristics such as higher out-of-pocket spends, evolving policies, rising middle class with increasing incomes, shifting disease profiles and ageing populations, the effects of healthcare are felt more intensely.

When economies emerge, improving health is among people’s top priorities. Not surprisingly, healthcare spends in emerging economies are being driven by expanding affordability. The growth in population with discretionary spending capacity is almost exclusively projected coming from emerging markets over the next fifteen years. Emerging economies are also witnessing an increase in aging populations – in the last five years, the population of people over the age of 65 in emerging markets has gone up by almost 40 per cent. This is one of the triggers in the shifting of the disease profile towards non communicable diseases.

Companies that have a presence across the healthcare spectrum have had to transform quickly to adopt to changes, especially in emerging economies. I can speak about Abbott – across nutritionals, pharma products, devices and diagnostics, we have had to ensure that our solutions address emerging market needs.

From an industry standpoint, 33 per cent of the pharma industry’s total sales in 2017 are projected to come from emerging markets, up from 23 per cent in 2012. This spike is to an extent aided by increase in access to healthcare. China, for instance, has demonstrated a health insurance penetration of up to 95 per cent.

As one of the fastest-growing pharma markets in the world, India is at the centre of that (emerging markets) focus.

India – It’s clearly the bright spot among emerging economies

Increasing healthcare expenditures, the steadfast GDP growth and other stable macroeconomic factors represent the tide that will lift India, already the fastest-growing BRICS country (with an expected GDP growth rate of 7.8 per cent in 2016-17 compared to 4.6 per cent for the overall BRICS group) towards further acceleration in the coming years. Pharma is one of the fastest growing sectors and is expected to grow at an annual rate of 11.9 per cent over 2015-20, to $ 27 billion at the end of this period.

Even as the spend on healthcare is less than five per cent of the GDP and almost 70 per cent is out-of-pocket, experience shows us that as economic parameters become stronger, healthcare is usually a beneficiary. Health insurance coverage in India was traditionally low but has doubled over the past five years to ~ 26 per cent: technologies such as telemedicine have also helped improve access to quality care.

Overall, this should strengthen healthcare infrastructure, and improve some of the basic parameters such as low density of doctors and trained healthcare workers (where India lags substantially). Some companies have collaborated with the government and educational universities to create specific life sciences modules for talent interested in enhancing healthcare skillsets.

The industry has also committed resources to improve efficiency to make medicines more affordable. Policy initiatives such as Make in India are enabling localisation at pace. At Abbott, more than 85 per cent of the pharma products we offer in India are manufactured locally (by value).

Multinational companies are also customising the manufacturing blueprint to local needs, introducing state-of-the-art technologies that are more energy efficient through greenfield plants.

Creating an environment that is oriented towards research and innovation is a necessary first step in the journey towards sustainable healthcare. The recent changes in regulations around conduct of clinical trials are encouraging. Clear guidelines and consistent application of IP framework will provide better visibility to innovators, as they explore ways to make new drugs and innovations available in India.

Innovating for the consumer

India also distinguishes itself as a powerhouse for innovation, with its scientific talent and flair for frugal innovation. An exciting new chapter is unfolding in India, where global healthcare companies are betting on Indian start-ups to provide a fresh direction – incubation labs and tech-oriented entrepreneurship are injecting a new vigour into areas such as cancer research and diagnostics.

Innovation extends beyond new molecules to breakthroughs such as better delivery and better compliance to therapy. For instance, Abbott’s Innovation and Development Centre in Mumbai has
developed some interesting solutions that demonstrate a consumer-centric mindset that addresses the needs of our youngest  consumers, helping create child-friendly formulations for conditions such as epilepsy.

Services ‘beyond the pill’ are often the critical differentiator in an out-of-pocket market. Basic patient education, improving diagnosis and enabling consumers with tools for better management of chronic conditions are demonstrative of how the India healthcare industry has tried to bridge systemic gaps.

The other exciting area for the healthcare industry in India is how digital technology is shaping engagement with doctors and end-users. A few years ago, no one would have imagined that technologies such as augmented reality, irtual reality or healthcare mobile apps could find place in a doctor’s chamber. This digitisation is changing the dynamic of how field teams engage with doctors – moving from a more product-focused to a science-led detail, which is a cornerstone of the proposed uniform code of pharmaceutical marketing practices.

The manufacturing capability that India possesses is truly stand-out, with its wealth of scientific and managerial talent and low cost of production. The manufacturing – IT synergy, especially in increasing efficiencies and scaling research, could be the next big innovation in Indian healthcare, and also show the way for other countries.

Enablers that can maximise the promise and potential of India

Even with the transformation we are witnessing, there are a few areas that can enable delivery of healthcare to every individual.

Externally, stable, predictable policies are foundational: As the Indian regulatory framework for healthcare continues to evolve, a question that one often gets asked is – how does one succeed, with such a fluid environment. These issues are also seen in other emerging markets where policies continue to evolve, healthcare systems undergo modernisation or political structures undergo change.

The government’s intent of improving ease of doing business is definitely the right idea and all stakeholders – government, regulators and the industry – should work from a common understanding of how ease of doing business can be operationalised.

By 2020, India is likely to be among the top three pharma markets by incremental growth and sixth largest market globally in absolute size, so it is the responsibility of all concerned to work towards
a policy environment that is predictable, consistent and stable.

What MNCs can do is to empower the local organisation, in letter and spirit: Recruit talent that understands the country, its nuances and culture. Ensure that the country head is a part of global executive committees, that there is an investment budget and the autonomy to the India-based leaders to recruit the best-suited talent and pursue locally relevant strategies. Top management commitment, in terms of time and resources is vital.

In closing

India is among the first countries in which Abbott expanded outside the US, way back in 1910. Not many know why India was the chosen one, as the other two countries that we expanded to outside the US – the UK and Canada – were culturally very similar.

But over the years, what has become clear is that the possibility of enabling healthcare access at a monumental scale and to make a difference to people’s health, enabling them to live healthier lives, is a privilege that history accords to a chosen few.

I firmly believe that Indian healthcare is at an inflection point and will lead the way, not only for emerging markets but across the world, in how healthcare is delivered, at scale. We are fortunate to be at a point in time where, in big ways and small, we are a part of this amazing healthcare revolution.

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