Increased healthcare consumption is transforming life sciences in India

23 September 2019 Consultancy.in

A new report from Bain & Company sheds light on how India's life sciences industry is undergoing a comprehensive transformation, driven by changes in the economy, global healthcare, and government initiatives. India is set to become an increasingly central market for the global healthcare industry.

Bain breaks the trends in Indian life sciences down into four components. Firstly, economic growth in India has brought with it higher prosperity levels. India’s expanding middle class is now increasingly willing to spend substantial amounts on healthcare, and Bain anticipates that this segment of people will double healthcare consumption in India over the next decade.

The urban middle-class is not the only segment that will drive growth in consumption, as awareness spreads to semi-rural areas on the importance of proper healthcare. A driving force in this scenario is the Indian government’s Ayushman Bharat scheme, aimed at achieving universal healthcare.

Income pyramid to an income diamond

Under the scheme, 10 crore families in India are now covered for medical costs up to Rs. 5 lakhs. “With a planned coverage of 50 crore beneficiaries, Ayushman Bharat is one of the largest schemes of its kind globally and has the potential to transform Indian healthcare,” states the Bain & Company report.

Life sciences companies in India have a relatively low penetration rate outside of urban centres, which indicates an opportunity for them to expand. A segment that will enjoy the lion’s share of this growth, according to Bain, is the nursing homes sector, given their position as an ‘institutionalised' sales channel.

The second component of India’s life sciences transformation story is the increasing margin pressures brought about by a restrictive regulatory environment. The government is working to control healthcare costs, as a result of which nearly 20% of India’s pharmaceutical market is subject to a price cap.

Consumption expenditure

Global pharmaceutical prices are rising, which means that an increasing share of the Indian market will come under a price cap in the near future. Coupled with the increase in demand, and the consequent increase in production, these price caps are set to put considerable strain on margins. 

An overall change in the composition of India’s life sciences is the third identified component of change. Where India’s pharmaceutical consumption has thus far been restricted to relatively simple drugs, more complex drugs and treatment are rapidly growing in popularity, making India the market of focus for pharmaceutical companies across the globe.

Digitisation

The fourth trend that is affecting India’s life sciences sector is common to every other sector in the country, and across the globe. Healthcare in India is feeling the effects of digital advancements, not only with respect to evolving treatment methods, but also in terms of novel patient attitudes.

Ayushman Bharat scheme

As India’s internet consumption increases, awareness about health issues has increased, allowing for more transparent interactions between doctors and patients across the country. While technology has enabled doctors in many ways to offer more comprehensive and better quality treatments, it has also increased pressure on doctors. 

“Not only are patients today more informed, they are also more demanding. About 86% of doctors surveyed say that patients value convenience more than they did five years ago and 80% report that their patients expect them to answer queries through messages on phone and messaging apps," explains the report.


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