The healthcare industry in the country is poised for a double digit growth in five years from now, according to a recent industry analysis report by Frost & Sullivan, which covers the pharmaceuticals & drugs and medical devices segments too. According to the report, both the segments command a total market size of Rs.4000 crore as on 2001, and it forecasts that India to become a major destination for contract research and manufacturing in the years to come.
The report states that the total production of pharmaceutical and drugs in India constitute about 1.3 per cent of the world market in value terms and eight per cent in volume terms. This is because drug prices in India are about one sixth of the average world prices, the study reveals. It further states that with the signing of WTO agreement, India is expected to increase R&D expenditure. From 2005 onwards, one can expect to witness increased manufacturing of bulk drugs and exports of formulations, according to the report.
The report states that at present only two per cent of the total pharma sales is ploughed into R&D by domestic companies. The pharmaceutical segment suffered a 6.77 per cent decline in its total healthcare market share during the period between 1996-2001, according to the report.
As per the report, India's export of bulk drugs and formulations is expected to grow at a compounded annual growth rates of 20 per cent and 10 per cent respectively between 2002 and 2006. This is because production of bulk drugs is comparably cheaper due to the low cost of labour and other overheads.
Import of bulk drugs and formulations is expected top rise at a compounded annual growth rate of 6 per cent and 22 per cent between 2002 and 2006 respectively, according to the report, which states further that while India will export bulk drugs to pharma MNCs, it will import formulations for many therapeutic segments.
On the other hand, the medical devices segment has shown an uptrend with the market share going up from 36.85 per cent in 1996 to 43.63 per cent in 2001. The devices segment has witnessed a surge in recent years mainly due to the super specialty hospitals in the country, according to the report.
Public spending as percentage of GDP has gone up from 1.02 per cent in 1996 to two per cent in 2001. Even personal healthcare expenditure has shown an increase from 1.72 per cent in 1996 to 2.49 per cent in 2001. The report states that the spending is expected to go up in the next five years with government's dedicated programmes like polio eradication and family planning besides the entry of private players in health insurance.