India Scenario: Basic Healthcare

• India spends 4.6% of its GDP on healthcare i.e. US$ 23 per capita (INR 1,021), 2010 (world average is 10% and per capita world average is US$ 964)
• Public Expenditure: 22.6% (World average is 58.5%)
• Number of hospitals
• Public Hospitals: 31,500 (PHC & CHC: 95%, Tertiary care: 1%)
• Private Hospitals: 15,000 (Nursing homes: 86%, Tertiary care: 3%)
• Hospital beds: 816,200
• Hospital beds per ‘000 population: 0.7 (world average 2.6)
• Inpatient admissions, 2005-06: 130,700 (2005-06)
• Inpatient admissions per ‘000 population, 2005-06: 115.7 (World average 67.0)
• Number of surgical procedures: ~ 22,000,000
• Physicians: 700,000
• Physicians per ‘000 population, 2009: 0.6 (World average: 1.6)
• Dentists: 72,500
• Dentists per ‘000 population, 2006: 0.1 (world average: 0.3)
• Nurses: 1,509,195
• Nurses per ‘000 population, 2007: 1.3 (World average: 2.8) 
• Pharmacists: 578,200
• Pharmacists per ‘000 population, 2006: 0.5 (world average: 0.4)       
The above infrastructure clearly indicates there is lack of even the basic infrastructure needed for healthcare in India. In almost all, India has to travel a long journey to match with the world average. 
Later on we shall discuss on the topic for the other infrastructures related to healthcare!

India Scenario: General

• Population: 1,180 Million
• Population Growth: 1.6%
• Births per ‘000 population: 23.5 (2006)
• Death per ‘000 population: 7.5 (2006)
• Live births: 25,740,700 (2006)
• Infant mortality/ ‘000 live births: 57 (2006)
• Life expectancy at birth, Male: 65.8 (2006)
• Life expectancy at birth, Female: 68.1 (2006) 

• Income statistics (Source: TIG, ADB 2010)
• Rich (> INR 10,354 per person per month): 1 million
• Upper middle class ( INR 5,177 – 10,354): 5 million
• Middle Class (INR 2,070 – 5,177): 45 million
• Lower middle class (INR 1,035 – 2,070): 224 million
• Poor (< INR 1,035 per person per month): 825 million
• Income statistics 2009-10 (by households – Source: NCEAR)
• Total Indian Households/families: 228.4 million (2009-10)
• High income households (Earning per annum: > INR 1.80 lakhs per annum, at 2001-02 prices): 46.7 million (20.4%)
• Middle Income households (Earnings per annum: INR 45,000 to 1.80 Lakhs, at 2001-02 prices): 140.7 million (61.6%)
• Low income households (Earning per annum: < INR 40,000 per annum, at 2001-02 prices): 41 million (18%) 

• GDP: US$ 1.235 trillion (Nominal, 2009)
• GDP growth: 8.8% (2010)
• GDP per capita, 2009: US$ 962
• India spends 4.6% of its GDP on healthcare i.e. US$ 23 per capita (INR 1,021), 2010 (world average is 10% and per capita world average is US$ 964)

Indian APIs flying high in global market

Thursday, July 08, 2010 08:00 IST 

Bibhuti Bhusan Kar

Active Pharma Ingredient (API), the main ingredient in a pharmaceutical product is responsible for the potency and efficacy of a drug and at the same time for the major portion of overall costs of a drug. Therefore, companies need to look for high quality and cost-effective APIs. Qualitative API will produce drugs with superior quality enabling the company to pass through the Food and Drug Administration (FDA) approval process with relative ease, while reducing the cost of manufacturing and increasing margins.

The API market is largely dependent on the pharmaceutical formulation market and vice versa. However, the growth of the API market in terms of value is dependent on several other factors, which will be covered in this article. Presently, close to 90 per cent of the domestic API requirements are being fulfilled by domestic API manufacturers. Indian API manufacturers also supply APIs for the global pharma market apart from fulfilling domestic demand.Thus, the global pharma industry acts as a growth driver for Indian API manufacturers.

India is characterized by its low cost manufacturing and hence low priced APIs with international quality. Over the years Indian companies have manufactured more and more complex APIs with high quality and lower costs, thus earning them high repute in the highly regulated international markets 

The API market

The FDA scrutinizes the source of API very strictly since it is the main ingredient of any pharmaceutical product. Price has been the most important criteria for selecting the source of API for pharmaceutical companies. However, with the increased focus of the FDA on the quality of API, pharma companies have also shifted focus to several other parameters to identify a sourcing partner for API.

A preferable API manufacturer should have:

■ Chemistry and manufacturing expertise

■ Meet regulatory requirements during manufacture, storage and other processes

■ Predictable lead time and timely delivery assurance

■ Intellectual property security

■ Quality compliance of the API as per the required regulatory framework

China, India and Italy are top three countries, respectively, in terms of supplying APIs to the global pharma market. China produces close to 70 per cent of world’s generic APIs followed by India with about 19 per cent and Italy close to 9 percent. Globally, 41 per cent of the API market consists of demand from the merchant market and the remaining 59 per cent is captive. Out of the 41 per cent merchant market demand, generics is 46 per cent , branded drugs 54 per cent.

India has world’s second largest API manufacturing industry after China. India’s drug industry produces more than 400 different APIs and is among the world’s top five API producers accounting for approximately nine percent of the world’s API production. According to Assocham, the leading APIs are for anti-infectives, gastrointestinals, cardiovascular and respiratory drugs. In terms of volume, the gastrointestinal and cardiac segments saw the highest rates of growth and accounted for the largest number of new drug launches in 2009.

Key facts about Indian API industry

■ Indian bulk drug market is fragmented with top 10 companies contributing 44 per cent of the market and about 1,325 companies accounting for the balance 56 percent

■ The Indian API industry is self-sufficient in terms of meeting the need of all the 300 essential drugs for the domestic Pharma industry. It caters to around 10,000 formulations and thus close to 90 percent of the total API requirement for the domestic industry

■ 15 to 20 percent of Indian Pharmaceutical Industry is contributed by APIs

■ Besides the highest number of USFDA approved plants for manufacturing drugs outside the US, India has 19 facilities recognized by TGA (Therapeutic Goods Administration), Australia; 45 plants by MCC (Medicines Control Council), South Africa and 3 certified by EDQM (European Directorate for the Quality of Medicines and Healthcare). At present, India has more than 175 USFDA approved plants

■ Major companies operating in this segment are Aurobindo Pharma, Dr Reddy’s, Orchid Chemicals and Pharmaceuticals, Divi’s Lab, Hetero Drugs, Shasun Chemicals and Drugs, Jubilant, Ranbaxy, Dishman and others

Drivers of API industry

The four main components of the global outsourcing market are intermediates, APIs, custom synthesis and formulations/dosage forms. It is estimated that approximately 38 percent of outsourcing demand is for manufacturing of APIs.

■ Between FY 2008-09 and FY 2010-11 molecules worth US$ 29 billion went or are going off patent, opening opportunities for API manufacturers

           ■ 2008-09: Value of off-patented drugs was US$ 8 billion. Major molecules: Lamotrigine, Venlafexaine, Mycophenolate, Tacrolimus and Desloratidine

            ■ 2009-10: Value of off patented drugs was US$ 10 billion. Major molecules: Valacyclovir, Lansoprazole, Escitalopram, Peridopril, Gatifloxacin and Sirolimus

            ■ 2010-11: Value of off patented drugs are US$ 11 billion. Major molecules: Levofloxacin, Olanzapine and Pantoprazole

■ Biotech API is an area of high growth within the Asia Pacific region with a Compound Annual Growth Rate (CAGR) of 27 percent from 2005 through 2010; major demand in Asia is within India and China

■ New drug development pipelines in different therapy areas open new opportunity areas for API manufacturers

■ Increasing US Drug Master File (DMF) filings by Indian companies, as shown below: (Source: www.fda.gov)

          ■ 2003: Indian companies filed 122 US DMF out of total of 426 by all other countries across the world (29 per cent of total filing)

          ■ 2004: Indian companies filed 194 US DMF out of total of 541 by all other countries across the world (36 percent of total filing)

          ■ 2005: Indian companies filed 269 US DMF out of total of 688 by all other countries across the world (39 percent of total filing)

          ■ 2006: Indian companies filed 319 US DMF out of total of 689 by all other countries across the world (46 per cent of total filing)

■ Increasing generic penetration in developed markets will open new doors of opportunity for API manufacturers

■ Big western companies are taking advantage of the cost and skilled manpower in India, with producers such as Roche, Bayer, Chiron and Aventis already having made India a regional hub for APIs and bulk pharma supplies in Asia

■ According to a report on APIs, demand for Chiral chemicals from the pharma industry, which amounts for the majority of the market, is set to grow at an annual rate of 8-10 percent; worldwide revenues were estimated at US$15 billion in 2008. The increasing complexity of the chemistry required to make Chiral APIs provides a potential differentiating factor for manufacturers to separate themselves from their competitors in a fragmented market

Strengths of Indian API industry

■ Indian API manufacturers are highly preferred and accepted by big pharmaceutical companies, as they are the sourcing partners for their APIs. The key success factors of the Indian API manufacturers are as follows:

■ Low labour cost: Average wage index for India is 10 per cent of a typical Western API company. Even the higher productivity (turnover/employee) of a Western company (due to the higher average automation level of the manufacturing processes) can not nullify the labor cost difference

■ Highest number of USFDA approved plants outside US. India currently has more than 175 USFDA approved plants, the highest in the world in a country outside US 

■ Strong process / chemistry skills

■ Ability to synthesize complex synthetic APIs, whereas China manufactures large volume APIs only

■ Capital efficiency

■ Availability of skilled workforce

■ Strict adherence to global regulatory compliances

■ Enforcement of product patent increases the confidence of global pharma companies

■ Large domestic market helps to achieve economies of scale to penetrate global markets

■ Desire and readiness of the Indian API manufacturers to operate at lower margins than their western counterparts

■ Growing experience with GMP compliance

■ Strategic alliances with the MNCs to supply APIs to them. A few examples are given below:

Challenges for Indian API industry

The following are the key issues and challenges the Indian API industry is facing:

■ Increasing competitive intensity within India and from other countries

■ Price erosion for products because of increasing number of filings for each product

■ Increasing costs and procedures for regulatory management such as regulatory filing costs, regulatory inspections / audits, legal costs, difficult labor laws

■ Shortage of legal talent for the pharma domain, which is a costly affair in the other parts of world

■ No product differentiation and only price differentiation approach by Indian players is rapidly commoditizing a once highly profitable market. Thus, a rapid price erosion pulls the market downward in terms of value

■ Capabilities of API manufacturers, which are not differentiated from each other results in competition on the cost front only

■ Overcapacity in manufacturing and large number of Drug Master File (DMF) filings forces API manufacturers to sell even at lower prices

■ Low cost of development and manufacturing but high logistics cost

■ Increasing difficulty in finding novel processes in APIs

■ Depreciating US dollar puts pressure on realization

■ Competition and threat from China

■ Lack of government support for the indigenous API industry

Prospects bright

Though the API market was led only by price competitiveness, due to lack of product differentiation, rapidly growing business areas like oncology, rheumatoid arthritis, biopharma and others may be considered as a potential business avenue to invest in emerging high-potency APIs. Since Indian companies have a high record of DMF filings and many approved APIs, Indian companies are competitively strong to be the preferred API sourcing partner by the big pharmaceutical companies in the highly regulated markets. Also, because of the cost pressure on the big pharmaceutical companies, the amount of outsourcing is increasing, which will add certain fresh opportunities for API manufacturers. Besides, a strategic tie up with big pharmaceutical companies to be an exclusive supplier for certain products can make Indian manufacturers think beyond the cost differentiation. 

The author is Program Manager, Healthcare – Pharmaceuticals and Biotechnology, South Asia and Middle East, Frost & Sullivan 

- Source: Chronicle Pharma Biz, July 2010

- Link: http://www.pharmabiz.com/article/detnews.asp?articleid=56312&sectionid=50

The Rheumatoid Arthritis Scenario in India

Introduction

Rheumatoid Arthritis (RA) is a systemic disease—an autoimmune disorder in which the body's defense system attacks the joints through the thin layer of cells called the synovium that lines and lubricates the joints. The most visible symptoms of RA are swollen joints and crippling stiffness, particularly of the hands and feet. It can cause fatigue, fever, loss of appetite, and also impedes mobility and quality of life.

RA is a common autoimmune disease, which affects about 20 million persons worldwide. The disease commonly develops between the ages of 25 and 50 and given its progressive nature, patients often live for 30 years or more with the disease.

Incidence and Prevalence

In India there are about 11 million people with RA, of whom about 75.0 percent are women. While India would require about 70,000 specialists to treat them all, it has only between 100 and 150 rheumatologists at present, putting pressure on them in terms of patient load and the time they are able to spend with each patient.

Prevalence of RA was about 0.75 percent in 2004, and has risen to 1.0 percent in 2007. The number of diagnosed patients is likely to increase due to the increasing awareness of the disease. As for treatment, DMARDs are the treatment of choice and for moderate to severe cases, biologics may be added. Unlike other countries, Remicade was the first biologic to be available in the market, although Enbrel captured a larger market share after it was introduced.

Diagnostic Tests

The diagnosis of RA is based on clinical examination of symptoms, patient history, as well as blood tests. There is no absolute test that can confirm or exclude RA. Some of the common tests include erythrocyte sedimentation rate (ESR), C-reactive protein (CRP), rheumatoid factor (RF), and X-ray.

Rheumatologists use a suite of parameters in confirming an RA diagnosis and monitoring disease progression.

The vital parameters in confirming diagnosis and determining disease progression are:

• Number of swollen joints

• Presence of morning stiffness

• Number of tender joints

• Functional status

Key Treaters and Patient Flow

GPs treat patients for joint-ache with steroids and NSAIDs, and refer RA patients to orthopedic surgeons and rheumatologists for further treatment. Orthopedic surgeons, also, are often the first point of contact. They would diagnose and prescribe DMARDs. Patients with severe RA or those who require treatment beyond DMARDs are directed to a rheumatologist. Rheumatologists are the key treaters of RA.

The main treatment goals include:

• Reduction in pain, swelling and thus the inflammation

• Reducing joint deformity

• Improving quality of life

Treatment Options

Most of the patients are initially treated with only drugs. Patients on drugs and physiotherapy would be those with concomitant diseases. Patients also practice yoga, exercises that are designed to cure the inflicted joints by slow movements and gentle pressure in conjunction with deep breathing. There are a very small proportion of patients who are not on any treatment because of their refusal to be treated.

Most commonly used drugs for the treatment and management of Rheumatoid arthritis are:

• Steroids / NSAIDs (Non Steroidal Anti Inflammatory Drugs) / Cox-2 inhibitors
• DMARDS (Disease Modifying Anti-Rheumatic Drugs) in monotherapy or combination therapy
• Biologics

Though Biologics are the most effective treatment options available till date for the RA treatment, high cost of therapy acts as a barrier for its frequent usage. Available biologics in India are Enbrel (Etanercept), Remicade (Infliximab), Orencia (Abatacept), Rituxan/Mabthera (Rituximab) and Actemra (Tocilizumab).

Treatment Filter

-- Total RA patients: 100%

-- Patients diagnosed: 3.37%

-- RA patients available for treatment: 2.5%

-- RA patients eligible to be treated with biologics: Less than 1%

-- Patients actually treated with biologics: !!!

Government and Non-government Initiatives

Mission Arthritis India (MAI) is a voluntary support group for patients of arthritis and rheumatism, established in 2000. It was formed by a group of people who are suffering from chronic arthritis and wish to help the community fight these ailments. The main goal of MAI is to provide proper and scientific information and guidance about all aspects of arthritis and related problems. MAI publishes quarterly newsletters containing health-related articles and organizes public awareness meetings during the week 12 - 20 October every year, in which the annual health magazine is inaugurated. Various health talks by well-known doctors from the field of orthopedics, rheumatology and other specialties are also arranged in this program.

Bone and Joint Decade India : National Action Networks (BJD – India: NAN), under the umbrella of the WHO-endorsed Bone and Joint Decade 2000 – 2010, is engaged in disseminating general awareness about rheumatic musculoskeletal disorders both for the medical community and the Indian public. It has established corporate partnerships with some Indian pharmaceutical companies that are interested in building awareness. The organization has also set up multiple studies to collect population-based prevalence data.

Market Challenges

• High cost of treatment with biologics
• Lack of awareness among the patients
• Low Rheumatologists to patient ratio
• Low reimbursement scenario
• Patients drop out because of low compliance results
• Around 30% of patients are non-compliant with treatment with DMARDs either due to side effects, Patients’ attitude that the treatment is not working or inclination to use alternative therapies.

• More than 90% of patients do not continue treatment with biologics till one year either due to high cost of biologics or side effects. In many cases where patient pay out of pocket for biologics, it is given to relieve the patient from painful symptoms and then treatment is continued with DMARDs.

Future Outlook

Though there are biologics available for treating RA, specialists in India will continue to use DMARDs as their first line therapy, because of high cost of treatment and fear of side effects associated with long term usage with biologics. However, improving reimbursement scenario, increasing disposal income, increasing awareness among the Indian population about RA and continuous effort by the companies for increasing usage of biologics are few of the factors which will drive the growth of RA market.

Author Information:
- Bibhuti Bhusan Kar, Program Manager - Pharmaceuticals and Biotechnology, Frost & Sullivan, India.

- Source: Pharma Bio World, April 2010

-Link: http://www.pharmabioworld.com/archives.html

The perishables business injects profits for carriers

With growing globalisation the perishables business has taken off, but the highly sensitive cargo — be it flowers, fruit, meat or pharmaceuticals — requires greater investment in specialised ULDs and expertise. Manfred Singh reports.

It is likely that not many of us have seen the new 10x10 cm handling label that has been developed for the transportation of temperaturecontrolled, time-sensitive goods. Affixed by the shipper, the labels are intended to signal to handlers the need to maintain such packages at between 15°C and 25°Cambient temperature.

Though the use of the label has not yet become mandatory, airlines and freight forwarders are becoming increasingly aware that transporting such goods is treading a thin line and constitutes a whole gamut of risk management. If there is one cargo that is solely dependent on ULDs, it is the perishable trade and obviously the fast-moving — read pharma — variety. As a perishable expert puts it, the difference between a perishable-loaded ULD arriving on time, or arriving late could mean life or death for the products within. Getting it right means a business segment with huge growth potential. Ram Menen, Emirates’ divisional senior VP, Cargo, points out that perishables handling has grown “by leaps and bounds in the last five years”.

Pharma is big business 

In short, perishables are important for the air cargo business. Forecasts by IMS Health Incorporated, a provider of market intelligence to the pharmaceutical and healthcare industries covering more than 100 countries, pointed out that the global market value of pharma products could exceed US$975 billion by 2013. The importance, therefore, of the ‘perishable’ goods industry to air cargo was more than evident at the recent 20th Annual IATA Cargo Network Services at Miami in the US. A session titled, ‘Time & Temperature Logistics for Healthcare Products’ outlined how the product has grown and the kind of work that the IATA’s Time & Temperature Task Force (TTTF), a body in its Live Animals and Perishables Board (LAPB), was undertaking.

According to a study by Frost & Sullivan’s programme manager, Pharmaceuticals and Biotechnology, South Asia & Middle East, Bibhuti Bhusan Kar, the global pharmaceutical logistics market recorded revenues of about $90.3 billion in 2008. That included services such as freight, warehousing, and express logistics. Freight forwarders estimate that logistics comprises 45-55 per cent of the costs in the pharmaceutical value chain.

From the air cargo point of view, a single perishable pharmaceutical unit could cost anywhere between $5,000 to $7,000 and a full ULD would contain more than $30 million of goods. A close look at how critical the business is, according to LifeConEx – the only industry-specific Lead Logistics Provider (LLP) of end-to-end temperature controlled transportation solutions for the life sciences industry worldwide – indicates that 20 per cent of the world’s best selling pharmaceuticals are temperature sensitive; $130 billion of the total pharmaceutical market is represented by temperature sensitive products; and nearly 100 per cent of all vaccines and 68 per cent of all products sold by biotech companies have to be stored and transported between +2ºC and +8ºC.

The transportation of healthcare and life-saving goods is governed by IATA’s Time and Temperature Task Force (TTTF). Mandated to develop and maintain standards for the procedures, documentation, cargo handling, packaging and acceptance of goods from the health care sector in order to facilitate, improve or maintain the logistics, the TTTF acts as the liaison with all stakeholders from the health care industry or their intermediaries. TTTF members include pharmaceutical industry companies, forwarders, airlines and temperature-controlled container manufacturers.

A growing focus by carriers

On their part, air carriers, forwarders and container manufacturers are keen to develop a wide variety of new products and services that would facilitate transportation. Said Emirates’ Menen: “Our perishable business has been quite steady even during the recessionary period and post recession is on the growth path. We carried good loads of fruit and vegetables and pharma throughout 2009.”

Emirates, for example, offers special cool chain solutions that are designed for the movement of temperature-sensitive goods. The airline also offers speciallydesigned temperature-controlled air cargo containers that maintain stable interior temperatures throughout the journey. These feature active temperature control systems that range from -20C to +20C. In addition, Emirates SkyCargo joined hands with a US research institute to develop a low-cost, light weight, breathable and reusable protective ‘White Cover’ designed to shield temperaturesensitive shipments from heat during airport-to-airport transportation.

Similarly, American Airlines has teamed up with Envirotainer to develop an active temperature-controlled air transportation solutions including the RKN e1 unit, which is the latest. The RKN e1 has been designed in collaboration with ThermoKing for requirements of the life sciences industry capable of maintaining temperatures in the +2 to 8 °C range, as well as in room temperature.

FedEx Custom Critical also uses the Envirotainer technologies. Continental Airlines also has an agreement with CSafe, a maker of active cooling units that recently received the licenses from the FAA for its technology. CSafe’s compressor-based units have both cooling and heating capabilities and can sustain consistent interior temperatures in ambient extremes from –30 to +50 degrees Celsius.

On the other side of the spectrum are other perishable items like flowers, fruits fish and meat products and vegetables. All require the same “cool’ treatment and are big business. Carriers like Emirates go through an intricate process that boosts the life of perishable commodities by ‘preserving the cool chain’ throughout the journey. Even so, most carriers maintained that respective governments could help by facilitating the necessary infrastructure at airports in the form of temperature-controlled facilities required to clear and store such cargo. To top it all, custom authorities could also assist in facilitating movement of such ULDs into and out of the bonded facility so that cool chain integrity could be maintained during the entire supply chain.

- Source: PayloadAsia.com, June 2010

- Link: http://www.payloadasia.com/article-5332-theperishablesbusinessinjectsprofitsforcarriers-PayloadAsia.html#

Cancer Therapy: Stasis no More

With the Rs-10 billion Indian oncology market expected to grow at a rate of 21 per cent for the coming five years, a slew of standalone and dedicated oncology setups within hospitals are in the pipeline to cater for 2.5 million cancer patients, says Sonal Shukla

It was once the most dreaded disease. However, rising awareness and revolution in treatment has made cancer, which claims 5,50,000 Indian lives and afflicts 8,00,000 new cases every year, a treatable disease.

The growing number of patients seeking treatment for cancer has made hospitals realise that cancer treatment is an important area for growth. "Today there is more awareness about cancer and people are willing to go to recognised centres for cancer treatment. People, particularly in urban India are recognising the fact that cancer patients can lead a normal life, just like with any other chronic disease. Hence more and more people are willing to undergo therapy, which is a positive trend," opines Dr BS Ajai Kumar, Chairman, HealthCare Global Enterprises (HCG), South Asia's largest cancer care network.

Cashing in on this growth trend, multispecialty hospitals are investing in cancer care and even standalone cancer care hospitals are being set up. The Indian oncology treatment market is thus estimated to be in excess of Rs 10 billion and is expected to grow at a rate of 21 per cent for the coming five years.

Interesting Openings

"The future is going to be in tier II and III cities for viability, and they would be the preferred place of treatment" - Dr BS Ajai Kumar Chairman HealthCare Global Enterprises (HCG)

"In the past, Indian hospitals hesitated in making large investments because of a long gestation period" - Pradeep Jaisingh CEO International Oncology Services

Ever-increasing unmet demand coupled with constantly rising cancer cases has incited many healthcare and pharmaceutical companies to make oncology their prime focus area. Despite increased awareness about the disease in the masses in general, delay in approaching doctors for treatment has not reduced yet. "More than 70 per cent of the cases reporting for diagnostic and treatment services are in the advanced stages of the disease, which has led to high mortality rates amongst patients in India," shares Pradip Kanakia, Executive Director, KPMG.

As a majority of the cases being treated in India are advanced cancer cases, there is still a significant market potential in the preventive and early detection space. On the other hand, lack of promising treatment in chemotherapy has opened up opportunities in radiotherapy and surgical therapy, which require a well-established hospital infrastructure. Being very capital-intensive prevents the entry of smaller players to the market and thus makes it a safer investment option for the large hospital players.

Dr Rajesh Mistry, Kokilaben Dhirubhai Ambani Hospital, Mumbai, opines, "Traditionally surgery and radiation have been the cornerstones of cancer treatment. However, now almost all patients (solid and haematolymphoid cancers) will at some point require chemotherapy - in addition to conventional surgery and radiation. All the three modalities will contribute to growth of the cancer treatment market in the Indian healthcare industry."

On the pharma front, lack of any significantly promising molecule in the pipeline for chemotherapy is also believed to be driving regimens such as radiotherapy and surgical therapy for cancer treatment. The technological revolution in cancer treatment and delivery too has given a major thrust to this segment in India. Dr HKV Narayan, Medical Superintendent, Tata Memorial Hospital, Mumbai, explains, "Today technology like CyberKnife and Novalis Tx offer non-invasive radiosurgery. PET-CT scan and other diagnostics have increased the speed and accuracy of diagnosis and improved identification of recurrence." The latest radiation therapy machines are capable of delivering precise radiation therapy (IMRT/IGRT) while sparing surrounding normal tissues so as to minimise the immediate and long term side-effects without compromising disease control. "We should be able to offer treatment with lesser debilitating side -effects with good chance of long term control or cure. Newer technological advancement in radiation oncology gives clinicians major treatment edge in terms of reducing treatment related morbidity and increasing cure rates," shares Dr A K Anand, Chief - Radiation Oncology, Max Cancer Centre. Similarly surgical techniques have also improved over the years with better results. Many leading hospitals catering to cancer care are installing these high-end technologies.

Radiation Oncology on Radar

The highest growth is expected in the radiation oncology space due to undersupply and a significant opportunity for reduction in the cost of treatment. However, establishing a radiation oncology unit in the hospital has been an expensive option, as it involves huge capital investments as well as recruitment of specialised physicians. "Oncology is a capital-intensive sector particularly while setting up a radiation centre. Most of the cancer centres are radiation oncology centric. The only way to overcome this is to create models where there is effective capacity utilisation. Centralisation of high-end equipment will be another feature," opines Dr Ajai Kumar. A robust analysis of the patient demographics, planning of appropriate equipment based on the market and clinical teams, quantum of investment available, systems to manage the throughput and opportunities to maximise capacity utilisation are key determinants in planning a radiation oncology unit, believe experts. While the Government gives grants for Government or trust hospitals for development of a radiation oncology department, private hospitals have to depend on debt for financing the high-end equipment. Reducing upfront capital investment via collaborative models with medical equipment manufacturers has been seen as a large opportunity area to address the investment constraint. Partnering with global players in the form of joint ventures could be another approach to deal with this challenge, one expert suggests.

The Players

"The Government should ensure cancer hospitals are given tax or duty benefits" - Dr MK Khanduja Chairman and Managing Director BSR Healthcare Group

"The fight against cancer cannot be won by a single healthcare provider or even a group" - Preetha Reddy Managing Director Apollo Hospitals Group

The estimated growth of the oncology market at 30 per cent per annum indicates that the healthcare players have largely been able to leverage available market opportunities. The industry has been witnessing the increasing involvement of private players putting up cancer centres and prevalence of standalone cancer hospitals.

It is estimated that presently around 160 Government hospitals and more than 350 private hospitals in India are providing specialised oncology treatment. A very small percentage amongst these hospitals provides all three areas of oncology namely surgical, medical and radiation oncology.

Close to 25 regional cancer centres (RCC) have been established in the country for the ongoing care and early detection of the disease. More than 35 major players are operating in the Indian cancer treatment market and close to 15 MNCs are already present and more are planning to enter the market. Still, there are very few exclusive hospitals dedicated to cancer care. "Apart from the regional cancer centres, which are owned by the Government of India, the number of players in the private sector is small," opines Bibhuti Bhusan Kar, Programme Manager, South Asia and Middle East, Healthcare, Pharmaceuticals and Biotechnology Practice, Frost & Sullivan, Mumbai.

There are numerous private clinics operated by oncologists for chemotherapy, which is a very fragmented sector due to the size of the country and the preference for localised treatment because of cost considerations.

One of the major players in the Indian market, Fortis Healthcare, has entered into a partnership with International Oncology Services Pvt Ltd (IOSPL), a US-based company. IOSPL is also looking to set up independent hospitals in India, particularly at tourist destinations such as Jaipur and Delhi, to attract foreign visitors. Funded by a group of individual investors, IOSPL has planned an investment of around $15 million (about Rs 70 crore) for its immediate expansion projects, with eight new centres coming up by 2012. "Overall, we would be investing about Rs 200 crore in the next three years," discloses Pradeep Jaisingh, CEO, IOSPL. With Fortis Healthcare Group, the company is starting work on its centres at Fortis, Mohali and Fortis, Amritsar, and these centres will be operational in a years' time.

Mumbai-based Tata Memorial Hospital and PD Hinduja Hospital, All India Institute of Medical Sciences, Delhi and Indo American Cancer Center in Hyderabad are the other major players in this space. A few private players have opened dedicated hospitals or have set up a dedicated cancer unit in existing hospitals to tap the opportunity. These include Netaji Subhash Chandra Bose Cancer Research Institute, Thakurpukur Cancer Research Centre, Bangalore Institute of Oncology, MS Ramaiah Memorial Hospital, Apollo Hospital, Jaslok Hospital, and SL Raheja Hospital. New players Narayana Hrudayalaya have entered this space through a facility in Bengaluru, which is expected to treat patients at a much lower cost and thereby achieve growth through volumes.

Delhi-based Max Healthcare is expanding its oncology footprint in North India. "The group's first two hospitals in PPP with the Government of Punjab, opening in September 2011, shall have cancer as a superspecialty at Max Super Speciality Hospitals in Bathinda and Mohali," says Umesh Kandpal, Head, Business Development, Max Healthcare. There is a huge incidence of cancer in the Malwa belt due to indiscriminate use of pesticides and resultant groundwater contamination over the years. Setting up cancer services in these hospitals will help reduce the cancer burden in North India.

Oncology now has the attention of PE /VC players as well, and hence a few Indian companies are setting up chains of cancer hospitals. Likewise a few international chains are also expanding in India. HCG recently announced that it has raised Rs 500 million in equity from IDFC Private Equity Fund II, a fund managed by IDFC Private Equity. Milestone Religare Investment Advisors invested $10 million in HCG.

A number of private hospitals are investing in dedicated cancer care units in existing hospitals, instead of setting up separate hospitals for cancer treatment. Apollo Hospital already exists in Delhi and Hyderabad. In addition, they have recently started a dedicated unit in Delhi, Kolkata and Hyderabad for cancer treatment, providing all the modern healthcare facilities for cancer.

However, no information is available on the amount of investment being planned in these cases. The bulk of the investment is expected to be in the areas of radiodiagnosis, radiotherapy, surgical treatment and stem cell transplant, which are largely capital-intensive and thus provide less competition.

On High Alert

Cancer has taken India in its tight grip over the years. Though the cancer incidence rate in India is lower than in Western countries, the numbers of cases are higher in India due to its large population. Moreover, recent times have witnessed an increase in the incidence of cancer, possibly due to urbanisation, industrialisation, lifestyle changes, population growth and increased lifespan (in turn leading to an increase in the elderly population). It is estimated that the life expectancy of the Indian population will increase to 70 years by 2021-25. This has caused a paradigm shift in the disease pattern from communicable diseases to non-communicable diseases such as cancer, diabetes and hypertension. "Studies indicate that cancer prevalence in India is around 2.5 million, with over 8,00,000 new cases and 5,50,000 deaths occurring each year due to this disease," shares Preetha Reddy, Managing Director, Apollo Hospitals Group. According to a WHO forecast, Asia will be visited by degenerative disorders in the next decade, and this includes cancer as a disorder. The common sites for cancer in India are oral cavity, lungs, oesophagus and stomach in males and the cervix, breast and oral cavity in females. "With an estimated incidence rate of eight lakh new cases every year and prevalence of 2.4 million cases, the cancer treatment market needs attention from India Inc," warns Bibhuti Bhusan Kar, Programme Manager, South Asia and Middle East, Healthcare, Pharmaceuticals and Biotechnology Practice, Frost & Sullivan, Mumbai.

Choosing the Right Regimen

HealthCare Global

Tata Memorial Hospital

Multiple business models exist worldwide for delivering cancer care-ranging from quaternary care cancer hospitals, a hub-and-spoke model and even standalone centres that house high-end equipment. There are newer business models emerging in the oncology treatment space in India too; for example, dedicated day care chemotherapy centres where the patient undergoes chemotherapy sessions and gets discharged the same day. Since upfront capital investments are a big barrier for providing oncology services, there are new business models evolving in which large equipment manufacturers install and operate the equipment in the hospital, whereby the hospital gains by providing comprehensive oncology treatment and the equipment manufacturers gain access to new and scalable business opportunities.

Outsourcing is 'In': Outsourcing of the services to another is increasingly seen, as the costs need to be contained. The two parties can share the cost of the setup. One partner may look after the infrastructure and the other supply the equipment. "To put my money where my mouth is, we have tied up with IOSPL to set up the therapeutic end of the cancer centre, whereas we will set up the infrastructure. This also includes a state-of-the-art bone marrow transplant unit. Such models will work and many more will be seen in healthcare in the future," predicts Dr Sujit Chatterjee, CEO, LH Hiranandani Hospital, Mumbai. LH Hiranandani Hospital tied up with IOSPL in 2009. Its cancer centre at Hiranandani Hospital, which is currently under construction, will be operational by the end of this year.

All in One: According to Kanakia, Indian healthcare players specialising in oncology can emulate successful new models from countries such as the US. He gives the example of Goshen Health System in Indiana, which has been providing consolidated oncology services in a single centre focusing on cancer care. The most attractive feature of this 30,000 sq ft facility, opened in 1998, is a total patient-centric approach whereby patients can come to one site to complete all their physician appointments, review their treatment plan and have their lab and diagnostic tests in one place, something really difficult to do in multiple settings. "This cancer centre has become a regional cancer treatment facility, a destination hospital that has grown by 17-22 per cent annually since opening, in a relatively mature market like the US," reveals Kanakia.

Going Hub and Spoke: The hub-and-spoke model has also been well received on Indian ground lately. Shares Jaisingh, "India needs hub-and-spoke models of cancer care where each hub has state-of-the-art equipment which is gradually phased out to the satellite centres." Such centres keep providing patient inflow from the peripheries and at the same time prevent the technology from becoming obsolete. One of the major players in the cancer space, HCG has been following this model extensively to expand its reach within the interiors of India. The spokes utilise services from the hub, thereby reducing travel for patients. "We take centres to their hometown. In coming years we plan to have several centres in tier II and III cities. We would also like to be ahead in technology and bring in true backward integration through R&D. We plan to expand our reach through investment; of course we have funding from private equity and in future we are looking to go public," shares Dr Ajai Kumar. With the funds raised from the public, the group intends to expand to different areas of the country, as well as in Africa.

Dr MK Khanduja, Chairman and Managing Director, BSR Healthcare Group, which runs BSR Cancer Hospital, sees comprehensive cancer care and need-based treatment as the models for the present and future. He points out that palliative care and pain management will also increase, and focus must also be on cancer prevention and early detection. "We plan to set up one more comprehensive cancer treatment hub in Chhattisgarh in the next two to three years," Dr Khanduja reveals.

Cancer Hospitals in India

Major well-known cancer care centres across the country are: In the northern region: Rajiv Gandhi Cancer Institute and Research Center, Dharamshila Cancer Research Institute, Indraprastha Apollo Hospitals, All India Institute of Medical Sciences. In the western region: Tata Memorial Hospital, Jaslok Hospital, Lilavati Hospital, SL Raheja Hospital and Breach Candy Hospital. In the southern region: Kidwai Memorial Institute of Oncology, Karnataka Cancer Therapy and Research Institute, Bangalore Institute of Oncology, Nizam's Institute of Medical Sciences, Sri Ramachandra Medical College, MS Ramaiah Memorial Hospital, MNJ Institute of Oncology, Christian Medical College. In the eastern region: Thakurpukur Cancer Research Institute, Netaji Subhash Chandra Bose Cancer Research Institute, Chittaranjan Cancer Research Institute, Calcutta Medical College, Nehru Cancer Centre for Research & Care. Source: Frost & Sullivan

Barriers to Progress

Rapid Arc

CyberKnife

Capital Intensive Nature: Blame it on the capital-intensive nature of this segment which kept hospitals away for a long time. "In the past, Indian hospitals hesitated in making large investments because of a long gestation period," Jaisingh explains.

Most of the equipment like the linear accelerator, brachytherapy, and high-end onco-surgery setup are pretty expensive and give a relatively low ROI. "The Government should ensure cancer hospitals are given tax or duty benefits which would bring down the capital as well as operating cost," shares Dr Khanduja. Dr Jayaprakash Madhavan, Senior Consultant, Oncology, KIMS Pinnacle Comprehensive Cancer Care, Kerala Institute of Medical Sciences, Trivandrum, concurs, "The Government should come up with special subsidies for import of equipment. Financing should be liberalised."

Accessibility and Affordability Woes: Lack of proper and affordable diagnosis, and of awareness and easy accessibility to treatment in India, has further made the market sluggish. Presently most of the hospitals such as Apollo, Max Healthcare and other private players have come up with specialised and dedicated cancer care units in their hospital setups to cater to this hugely needy therapeutic area. However, these hospitals are located mostly in the metros and tier I cities. Since the segment is capital-intensive, smaller private players are not able to afford to set up such facilities. In cities with less development and in rural areas, the lack of proper diagnostic facilities further limits the treatment to a great extent. Hospitals have only partially been able to utilise the market opportunity, mainly because the paying capacity of the patient is still low in India. Health insurance in India has also not picked up to the desired levels to take care of the affordability factor. The delay in diagnosis resulting in poor survival and high mortality rates prevents some of the patients from coming forward for treatment. Besides, cancer treatment continues for a longer period while the patients and their relative travel to a metro or other city. This leads to inconvenience as well as loss of wages / revenue. Says Dr Avinash Deo, Haematologist & Medical Oncologist at Dr L H Hiranandani Hospital Powai, "Cancer is likely to become more common, more treatable but more expensive to treat. Managing costs without compromising the interest of all stakeholders (patients, doctors, paramedical staff, hospital managers and investors) will be a major challenge for cancer care."

Manpower Crisis: Health manpower is another major challenge that the Indian healthcare industry faces and it does slow down the sector's potential for growth. "There is a shortage of the oncologists treating specific type of cancers. Each physician treats almost all types of cancer and most of the time each oncologist practises in many hospitals," shares Bibhuti Bhusan Kar. Starting academic courses for generating a pool of trained and skilled manpower can address these issues.

Attention R&D: Lack of R&D is another area in cancer treatment in India which requires attention. A combination of financial incentives announced in the recent Union Budget for R&D in the form of weighted deductions coupled with more FDI by global healthcare chains can accelerate the pace of R&D activity in this segment, believes Kanakia.

Prognosis

Despite all the growth seen in this segment, the Indian healthcare industry has still barely touched the tip of the iceberg when it comes to cancer care treatment. "The fight against cancer cannot be won by a single healthcare provider or even a group. The demand for cancer care far outweighs the existing supply," avers Preetha Reddy, Managing Director, Apollo Hospitals Group.

This scenario is set to change very soon. It is believed that more and more hospitals will enter this segment. In tier I cities like Delhi, Mumbai and Bengaluru we may be reaching the saturation point. Now, this segment may not be viable for the multispecialty hospitals particularly. "The future is going to be in tier II and III cities for viability, and they would be the preferred place of treatment," opines Dr Ajai Kumar. The major issue of affordability has seen some hope with the Government setting up various schemes like Arogyasree in the country. Such Government-led initiatives will surely bring in tremendous change with people below the poverty line being able to access high-end care. This will create a great demand, which in turn will force hospitals to get into the market of tier II and III cities as they will see great advantage to sustain their business model there.

sonal.shukla@expressindia.com

- Source: Express Healthcare, June 2010

- Link: http://www.expresshealthcare.in/201006/market01.shtml