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CONSULTING PVT LTD
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" 'Idea to IPO' MSME scaling experts"
Healthcare
Background
India's healthcare industry has been growing at a Compound Annual Growth Rate of around 22% since 2016. At this rate, it is expected to reach USD 372 Billion in 2022. Healthcare has become one of the largest sectors of the Indian economy, in terms of both revenue and employment.
The Healthcare industry in India comprises of hospitals, medical devices, clinical trials, outsourcing, telemedicine, pharmaceuticals, medical tourism, health insurance, and medical equipment. The industry is growing at a tremendous pace owing to its strengthening coverage, services and increasing expenditure by public as well as private players.
India is a land full of opportunities for players in the medical industry. Healthcare has become one of India’s largest sectors - both in terms of revenue and employment. Healthcare in India is the second largest consumer-spending sector, at a size of about US$ 65 billion, of which the hospital supplies and health care equipment segment is believed to be only around US$ 4.5-5 million. Health care delivery, which includes hospitals, nursing homes and diagnostics centers, and pharmaceuticals, constitutes 65 per cent of the overall market, growing at a rate of over 14 per cent per year in the past decade and this growth is likely to be sustained in the coming years . The country has also become one of the leading destinations for high-end diagnostic services with tremendous capital investment for advanced diagnostic facilities, thus catering to a greater proportion of population. Besides, Indian medical service consumers have become more conscious towards their healthcare upkeep. There are vast opportunities for investment in healthcare infrastructure in both urban and rural India.
India has traditionally had an affinity for traditional brick and mortar “medical shops” that also doubled up as general stores. However, with the onset of digitisation and the Indian customer becoming better versed with international products, organised pharmacy chains have established a significant presence in urban and semi-urban areas.
The advent of pharmacy retail pharmacy chains is expected to organise the currently unorganised Indian retail pharmacy sector that continues to have haphazard and inconsistent development.
Modern retail pharmacy chains have the advantage of being digitised, organised and tech-enabled. This helps them to track medicine inventories and sell 100% reliable goods. They have neat and appealing displays that attract customers to browse at ease and inquire about a range of healthcare and wellness products. Additionally, retail pharmacy chains provide value-added services for consumers who have medical claims or insurance filing to be done, and can always be requested to refurbish previous bills or memos. Hence, these pharmacy chains function based on hyperlocal or Omni channel business models that perpetuate a more transparent and convenient source of selling goods.
Currently, such organised retail pharmacy chains only occupy 8 to 10 per cent of the market and most of them are concentrated in urban areas. There is still a wide gap between demand and supply of pharma products, especially in tier II cities and rural areas. Thus, there is a huge opportunity for pharmacy retailers to expand their distribution channels across the length and breadth of the country.
In addition to being outlets that offer a range of reliable and quality products, retail pharmacy chains are also witnessing the growth of private labels. Most of these private labels operate in the health, wellness and beauty category. Private labels offer significant margins for retail pharmacies that can go as high as 40% to 50%, vis à vis the 9% to 20% offered by branded products.
For retailers, private labels work out 20% to 25% cheaper in comparison to branded products, and it is a win-win situation for pharmacies and consumers because trust and quality are maintained. Furthermore, any feedback or grievance about the product is immediately addressed by the resident pharmacists; the consumer connect factor is thus kept in mind while developing such products.
Hence, the focus has now shifted from curative to preventive healthcare and people are beginning to understand the importance of maintaining good health through diet, exercise, adhering to doctor’s advice about medication and usage of wellness products. India’s pharmacies have aided in this transition of perception and are becoming steadfast and loyal health and wellness partners for customers across India.
The Problem
After Independence there has been a significant improvement, in the health status of people. But the situation is not much better as per study of WHO. It has placed India in 112th position among 191 countries of the world.
The following are the major problems of health services:
1. Neglect of Rural Population:
A serious drawback of India’s health service is the neglect of rural masses.
2. Emphasis on Culture Method:
The health system of India depends almost on imported western models. It has no roots in the culture and tradition of the people. It is mostly service based on urban hospitals. This has been at the cost of providing comprehensive primary health care to all. Otherwise speaking, it has completely neglected preventive, pro-motive, rehabilitative and public health measures.
3. Inadequate Outlay for Health:
According to the National Health Policy 2020, the Govt. contribution to health sector constitutes only 1.5 percent of the GDP. This is quite insufficient. In India, public expenditure on health is 17.3% of the total health expenditure while in China, the same is 24.9% and in Sri Lanka and USA, the same is 45.4 and 44.1 respectively. This is the main cause of low health standards in the country.
4. Social Inequality:
The growth of health facilities has been highly imbalanced in India. Rural, hilly and remote areas of the country are under served while in urban areas and cities, health facility is well developed. The SC/ST and the poor people are far away from modern health service.
5. Shortage of Medical Personnel:
In India shortage of medical personnel like doctors, a nurse etc. is a basic problem in the health sector. While there were only 5.5 doctors per 10,000 population in India, the same is 25 in the USA and 20 in China. Similarly, the number of hospitals and dispensaries is insufficient in comparison to our vast population.
6. Expensive Health Service:
In India, health services especially allopathic are quite expensive. It hits hard the common man. Prices of various essential drugs have gone up. Therefore more emphasis should be given to the alternative systems of medicine. Ayurveda, Unani and Homeopathy systems are less costly and will serve the common man in better way. Concluding the health system has many problems. These problems can be overcome by effective planning and allocating more funds.
Our Solutions
Cooperatives and alliances of small individual pharmacies of English medicines, Homeo medicines, Ayurveda, and other alternative medicines, etc,
Cooperatives and alliances of small individual diagnostic centers, wellness centers, family clinics, etc.
The cooperatives or alliances of these healthcare branches help to increase efficiency, reach, brand image, and acceptance of small and individual
The organized retail pharmacy space in India has been steadily growing in the past decade. According to the business data platform, Statista, the organized pharmacy and wellness space across India is estimated to penetrate 13 percent of the retail market this year, indicating growth from 11 percent in 2018. Retail pharmacies are essentially stores that provide branded and generic drugs along with a host of other pharmaceutical products all under one roof.