The Covid-19 pandemic and the nationwide lockdowns have triggered financial depression all over the world. The healthcare and pharmaceuticals sector are the epicentre of unprecedented global challenge. But along with the same, it has drawn out opportunities for pharma and healthcare sector to grow and has also highlighted the issues presiding these sectors.
The pharma industry of India has a significant standing in fulfilling global demands for generic drugs to developed economies like United States of America, Europe and Japan. But India itself has import dependence of around 70% in value on China for cost friendly Active Pharmaceutical Ingredients (API) which resulted in low domestic manufacturing capacity for key APIs. The supply chains were hindered due to Covid-19 lockdowns, stoppage in operation of factories and lessened imports from China led to shortages of critical APIs for high burden diseases like cardiovascular related, diabetes and TB. Also, the imports include medical disposables and capital equipment like ortho implants, syringes, gloves, bandages, medical devices from Chinese factories. The ‘Make in India’ initiative for pharma sector was quite impromptu affecting profits of Indian companies and incapability to manufacture finished products due to absence of components or raw materials.
The healthcare sector witnessed loss of business due to diversion towards corona infected patients and investment in medical manpower, devices, equipment and safety measures which ultimately impacted Out patient footfalls, elective surgeries etc. One major sub-sector adversely affected under the healthcare and pharma industry is medical tourism. People travelling to different countries for some medical, dental or surgical support and simultaneously planning for visits to places of attraction in that country for vacation or travel purposes, such travel layout is labelled as ‘medical tourism’ for the country. Due to ancient roots attached with Ayurveda, Yoga and affordable medical services, India is a preferred medical destination which makes it a hub treating international patients. However, the Covid-19 havoc has forced the Indian medical travel industry to go through a prolonged pausation period. The industry has estimated a fiscal damage of about 2.5 billion dollars in contrast to expected growth in value of 9 billion dollars during normal course of action without disruption like coronavirus pandemic.
There was an export boom in generic drug supply by India to United States of America, the major being malarial hydroxychloroquine (which was supplied to around 55 Covid hit countries), projects a positive picture for pharma exports could also be due to US Food and Drug Administration (FDA) relaxing the inspections due to lockdowns. In near future, the US FDA inspections are expected to rise in India to clear the overall backlogs, also keeping in mind the intricate healthcare conditions across the globe, US policies and regulations which will become more stringent in the future.
The overall sum up of the impact on the pharma and healthcare sector, can be categorised as short term and long term. The short-term impact inculcates:
· the medication shortage (Induced Covid-19 treatments, supply shortages like API and other finished medical products etc),
· inclination in research and development towards Covid-19 and
· emergence of tele-medicine for treatment of other diseases by the doctors.
Whereas, the long-term impact on the sector includes:
· Delayed approvals and work-in progress towards non-corona products
· Initiative for shift to self-sufficiency
· Slowdown in all over pharma industry
POST- COVID OPPORTUNITIES FOR INDIA
India had a significant import of APIs and antibiotics from China pushing off the domestic manufacturing companies to shut down due to low cost imports. The India-China border crisis and the pandemic conditions present an opportunity to turn things around through government initiatives and support. Government has formed a technical committee to suggest ways to revive API segment in India as it is a key ingredient giving drug its therapeutic effect. The committee has recommended to establish an Independent Drug Security Authority for purpose of Make in India initiative, achieve self-sufficiency and make India a global pharma leader. Other major recommendations include:
· Parks for API and bulk drugs
· Separate environment norms for pharma industry
· Encouragement to pharma professionals and scientists for innovative products
· Capex and Soft loans for API manufacturing and other products which are imported from foreign countries
· Setting up advanced labs and infrastructure across the country.
According to the Indian Brand Equity Foundation (IBEF), pharmaceutical exports of India from the financial year 2012 to 2019 have steadily grown from $10 billion to $19 billion. As per recent estimates, India accounts for about 10% of world’s pharmaceutical production by volume and 1.5% by value. The industry is the world’s largest supplier of generic drugs and controls around 18% of the global market. It is also a leading producer of vaccines in the world and caters to about 50% of global vaccine demand. Consequently, UNICEF and UNITAID too rely heavily on generic drugs manufactured in India for their aid programs. There is, therefore, a much greater potential for India’s pharmaceutical sector now to increase trade partnerships both regionally and in other parts of the world and ramping up the exports from the country. The government can encourage this by investing in more R&D for drug and pharma research within India.
Promotion of Medical tourism post easing out of pandemic conditions can also prove to be a significant contributor in boosting the financial conditions in healthcare and pharma sector as the tourism is attracted due to affordability in medical services as compared to countries like Singapore, Malaysia, Taiwan etc.
Apart from ramping exports and medical tourism, India needs to work on pursuance of medical diplomacy as it still has a long road ahead to leverage its potential at a global level. India’s own public-healthcare system seems in poor shape as it has one of the lowest doctor-to-population ratios in the world. This leads to denial of uniform access to healthcare to every citizen of the country. Universal Primary Healthcare can be achieved when AI-based primary healthcare can be delivered at a person’s home continuously and comprehensively which will require a robust R&D system to streamline healthcare services in such a manner. Tele-medicine has been an alternative approach in lockdowns and Covid-19 conditions to continue the medical services by the doctors and treatment of patients. Further focus on shifting the healthcare and pharma industry to internet age can prevent the distance gap between a doctor and the patient.
For curbing the backlash which industry faced during the pandemic, the government’s financial initiatives and investments in the sector like :
· Union Budget 2020-2021, where Ministry of Health and Family Welfare was allocated Rs. 65,012 crores wherein, Rs. 34,115 crores were towards national Health Mission. Also, the budget allocated Rs. 35,600 crores for nutrition related programs.
· Public Health expenditure to be increased to 2.5% of the national GDP by 2025.
· Rs. 1 lakh crore funding to boost manufacturing companies for pharmaceutical ingredients domestically by 2023
The financial support would ultimately lead to the achievement of ‘Pharma Vision 2020’ of GOI for making India ‘Global leader’ in drug manufacturing. Indian healthcare sector is much diversified and is full of opportunities in every segment, which includes providers, payers, and medical technology. With the increase in the competition, businesses are looking to explore for the latest dynamics and trends which will have positive impact on their business. The hospital industry in India is forecast to increase to Rs 8.6 trillion by FY22 from Rs 4 trillion in FY17 at a CAGR of 16-17%.
Looking at the other prospects, the Government of India could provide relaxations for the healthcare and pharma sector, providing free or subsidised land to drug manufacturers, free utilities in terms of power or water, relaxation from stringency in policies wherever possible.
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