Healthcare is a serious life or death subject, but let's start with a joke. A husband and a wife are discussing what bill to pay—the electricity bill or the doctor's? The wife urges her husband to pay the electricity bill because the doctor can't stop his blood.
If everybody thought thus, the healthcare sector may die, but the reality is that the Indian healthcare sector is a sunshine industry. "People during good times enjoy good life and end up paying a price on their health and in bad times they are under stress and again end up paying a price on health. Either ways, they need healthcare to heal them and nurse them back to health," says Rajesh Batra, CIO of Kokilaben Dhirubhai Ambani Hospital. Batra says that at best cosmetic surgery is put on hold in bad times. The serious stuff—cardiac operations or an appendicitis or something life threatening—well, you can't postpone it. If you don't get it operated, your blood may stop flowing all by itself.
But will the dream growth materialize? Krishnakumar Pandey, General Manager -IT, Corporate IT, Piramal Enterprises Limited says that, while healthcare will see better growth in 2016 as opposed to 2015, the growth will be in the area of 5 percent. "The obstacle for growth will be road blocks on reforms by the current government," he says.But in India, much of the focus on medicine—and this includes hospitals and the pharmacy companies that make medicines—is on urban India. India has around 1.37 million hospital beds (see chart) but around 70 percent of the private beds and 60 percent of the government beds are present in the top 20 cities of the country. This means that there is a huge opportunity in the rest of the country. In fact, according to Corporate Catalyst, the Indian healthcare industry will have an estimated market value of $280 billion by 2020. The private sector's share is expected to rise from 66 percent in 2005 to 81 percent in 2015. According to ibef.org, India requires 6-7 lakh additional beds over the next five to six years, indicative of an investment opportunity of $ 25-30 billion.
But not everybody is so pessimistic. Sudeep Dey, GM - IT, Fortis, says, "We at Fortis are doing surgery with robots. We have integrated the robotic arm with our applications. I think we should be able to perform our first robotics surgery in the month of January." Another person who finds the situation cheerful is Vijay Kumar, Chief Manager for Information Technology at The Himalaya Drug Company. He says, "Pharma industry is doing very well. It a Rs 65,000 crore industry in India. The only challenge is getting the raw herbs. Lot of people are using herbal products. For example, getting neem for our operations is difficult. From Rs 8 a kilo, it has gone up to Rs 38."
In a report titled "Healthcare and Life Sciences Predictions 2020," Deloitte says that the average life expectancy in OECD countries in 2012 was 80 years, an increase of five years since 1990. But the sad fact is that, while Japan has the highest (84 years), India has the lowest (66 years). Many countries—UK (81 years), USA (79 years) and China (75 years) have far greater life expectancy than India.
One way India could perhaps improve the situation could be by looking at the smaller cities and in rural India, where preventable deaths happen simply because of lack of healthcare. Says Batra, "Around 30 percent in rural India don’t visit hospitals because they are afraid of the expenses." He says that the healthcare needs of 47 percent of rural India and 31 percent of urban India are financed by loans or sale of assets. And while the government has around 5.4 lakh beds, private beds total 8.35 lakh—woefully inadequate for a country of India's size.
Will things improve? Batra paints a gloomy picture and says that, at best, this industry will see a "lipstick" effect. Explaining this, he says, "During good times, a lady uses Maybelline and during slightly difficult times, she will use Lakme and when recession hits, she will use Avon—but she will never give up the use of the lipstick." In the context of healthcare, he says that a person may go to a bigger private hospital during normal times and go to a smaller hospital during difficult times—but he cannot avoid healthcare.
The industry may get some relief because the Ministry of Health is targeting development of 50 technologies in FY16 for the treatment of disease like Cancer and TB.
And because of this, this is an industry that is essentially recession-proof—during good times, people suffer from ill health because of bad habits or because of a luxurious lifestyle, and during bad times, the tensions they face take their toll and hurt their health. Batra compares healthcare to the supermarkets of the world and says that, during good times, people may buy expensive organic items and during a recession they may buy non-organic items. But eat something, they must.
Thanks to this, the industry has a bright future. According to the India Brand Equity Foundation, Indian healthcare sector is growing at a 15 per cent CAGR to reach $ 158.2 billion by 2017.
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But what happens to any industry is primarily dependent on what the government does, directly or indirectly—this can happen either from the hospitals it sets up, or from the policies that it formulates. And here, the sad news is that the economy has seen no growth in the last six quarters and we are looking at a possible policy paralysis, says Batra. "The next three years are going to be difficult if the government is not able to drive market factors to get more growth and investment into India," he feels.
But the industry may get some relief because the Ministry of Health is targeting development of 50 technologies in FY16 for the treatment of disease like Cancer and TB.
Even without the government stepping in, private companies are doing what they can to make healthcare affordable, leading to what we can call the "Maggie effect"—the ability to sell noodles at Rs 5 for a small packet and still make a profit based upon the sheer number of units sold.
Deloitte says that some hospitals are doing exceptional work when it comes to healthcare. As examples, it cites Aravind Hospital, which provides 60 percent of the UK's volume of cataract operations at 1 percent of the cost, and the Narayana Hrudayalaya, which provides surgeries at 1,116 pounds as compared to the UK's NHS (each of the four countries of the United Kingdom has a publicly funded health care referred to as the National Health Service), which charges at least 8,226 pounds. So, even if India has a lot of problems with healthcare, it is much cheaper than in many modern and developed countries.
Deloitte says that the average life expectancy in OECD countries in 2012 was 80 years, an increase of five years since 1990. But the sad fact is that, while Japan has the highest (84 years), India has the lowest (66 years).
And this has naturally led to medical tourism. Many Westerners are coming to India to get treated. A decade ago, in 2005, 1.5 lakh medical tourists came to India according to the CII. This figure climbed to 2 lakh in 2008. ASSOCHAM says that this figure jumped to 8.5 lakh in 2011, and is expected to touch 32 lakh by 2015.
But while this is an opportunity for the industry, the Indian load also keeps growing. Batra says that an ageing population is the biggest driver and adding to this is the mix is pollution and use of chemicals in our vegetables. "Adding to the growth is the advancement of medical technology, which is allowing people to be diagnosed of health risks. This also enables them to get treatment for diseases which were unknown in the past."
IT can play a big role in making healthcare easily accessible to the masses. Batra says, "The health systems (public, private, NGO) are working in silos, with minimal coordination." One way in which India is making an impact is in the field of telemedicine. This is a field in which CIOs can play a key role because of the high usage of IT. Highlighting the role for CIOs, Girish Kulkarni, Chief Medical Informatics Officer, Cytecare says, "There's going to be a lot of consolidation in terms of the applications and services. Cloud and mobility will be more relevant and more adaptive."
But we must hurry, because otherwise we may lose ground—Deloitte says that, while the BRIC (Brazil, Russia, India and China) countries are challenging traditional pharmaceutical markets in the US, Japan and Western Europe, they are in turn being challenged by emerging markets in Latin America, Vietnam, Indonesia and Africa. If India wants to find her place in the sun, she must follow the sun and not take her eyes off the ball.