Inside the mind and heart of Venkatesh Sridhar

Here is a report done by my friend

Sumit Mukerji on

How India and the Indian Corporate can tap the emerging global healthcare market.

Please do post your comments here or click on Sumit Mukerji’s name send him a
mail.

How India and the Indian
Corporate can tap the emerging global healthcare market.

The Indian
pharmaceutical sector has come a long way, being almost non-existent before 1970
to a prominent provider of healthcare products, meeting almost 95% of the
country’s pharmaceuticals needs.
The face of global
healthcare is changing and presenting new challenges for governments,
corporations and industry professionals. Increasing longevity in
the developed world places additional strain on healthcare budgets.
Pharmaceutical companies are facing challenges not previously encountered as
governments invoke emergency laws to override patents and consumer sentiment
encourages companies to introduce new pricing initiatives. Medical professionals
around the world are seeking to provide integrated medical and social solutions
to their patients and communities.

India is well
positioned to tap the top end of the $3 trillion global healthcare industry
because of the facilities and services it offers by leveraging the brand equity
of Indian healthcare professionals across the globe.

The domestic
pharmaceutical sales have increased from Rs.4 billion in 1970-71 to over Rs.200
billion in 2002, at a CAGR of 13.7% per annum. The total Indian production
constitutes about 1.3% of the world market in value terms and, 8% in volume
terms. The per capita consumption of drugs in India, stands at US$3, is amongst
the lowest in the world, as compared to Japan- US$412, Germany- US$222 and USA-
US$191. India spends 5.2 percent of its GDP on healthcare, which is comparable
with most other developing countries, which spend between five and seven percent
of their GDP on healthcare. These numbers indicate the enormous scope of the
healthcare industry open to India only to be tapped primarily because of the
skill set and talent of Indian professionals.

Indian pharmaceutical
industry is mounting up the value chain. From being a pure reverse engineering
industry focused on the domestic market, the industry is moving towards basic
research driven, export oriented global presence, providing wide range of value
added quality products and services. Government policies will play an important
role in defining the future of the pharmaceutical industry. The product patent
regime coming into effect from January 2005 will lead to long-term growth for
the future.

In the present
scenario, the growth of a domestic pharmaceutical company is critically
dependent on its therapeutic presence. The old and mature categories like anti-infectives,
vitamins, analgesics are de-growing while, new lifestyle categories like
Cardiovascular, Central Nervous System (CNS), and Anti Diabetic are expanding at
double-digit growth rates. Increased generic penetration, intense competition,
fragmentation of the industry has negatively impacted the overall value growth
of the domestic pharmaceutical market. In this scenario, to grow in the domestic
market, pharmaceutical companies have to constantly eye for innovation,
introduction of new value added products, product life cycle management and
enlarging their market reach. Indian companies are getting their act together to
tap the generic drugs markets in the regulated high margin markets of the
developed countries. The US market will remain the most lucrative market for the
Indian companies led by its market size and the intensity of blockbuster drugs
going off patent. An estimated US$45bn of drugs expected to go off patent by
2007 in US alone. Outsourcing in the fields of R&D and manufacturing is the next
best event in the pharmaceutical industry. Spiraling cost, expiring patents, low
R&D cost and market dynamics are driving the MNCs to outsource both
manufacturing and research activities. India with its apt chemistry skills and
low cost advantages, both in research and manufacturing coupled with skilled
manpower will attract a lot of business in the days to come.

The healthcare
industry employs over four million people, which makes it one of the largest
service sectors in the economy of our country. As medical costs skyrocket in the
developed world, countries like India have immense potential for what is called
“Medical Tourism”. India, with outstanding human resource talent and the setting
up of world class medical facilities, is now poised to take leadership in the
fast emerging arena of healthcare management which is witnessing the first signs
of globalization.

The healthcare
outsourcing market can be primarily divided into four major blocks of providers
(hospitals and physician groups), payers (healthcare insurance companies, third
party administration, etc), drug manufacturers (clinical research and bulk drug
outsourcing) and pharmacy chains.

New role
of diagnostic centres

In the changing scenario, the scope of diagnostic centres is expanding to
include new functions and address the needs of different clientele.

· Outsourcing
of diagnostic services is expanding to services including ambulatory/outpatient
surgery, women’s services, emergency care, rehabilitation therapy, clinical
laboratory services, and industrial medicine.

· Clientele
include hospitals, long-term care facilities, physicians’ offices and clinics.

The impetus for this arose from cost containment pressures in the healthcare
industry. Providers increasingly turned to outsourcing clinical services in
order to reduce overhead costs, ease administrative burdens and to obtain access
to current technology, clinical support, departmental management services and
allied healthcare personnel.

Diagnostic Service centres have the option of being

· Joint
partners with hospitals to operate diagnostic out-patient departments

· Non
hospital based diagnostic centres offering integrated services

· High
profile specialised diagnostic clinics in specific areas such as women’s
diseases, osteoporosis clinics, orthopaedic clinics.

The once much hyped
medical transcription is looking down, but outsourcing in imaging, disease
management and claim processing are the new areas to look out for. Estimates
show that the revenue of medical transcription industry in India is expected to
drop from $38 million in 2002 to $26 million in 2006, a nine per cent loss per
annum. But according to the National Association of Software and Services
Companies, by year 2005, the Indian BPO companies will be able to grab business
worth $800 million from the US healthcare companies alone. Significant
opportunity awaits Indian outsourcing service providers in this field thanks to
growing competitive business environment and technological and legislative
changes that are taking place worldwide

However, the recent customer demand for new
products and services, increase in competition and a real-time business
environment are making BPO an important toll for achieving success for
healthcare majors, a NASSCOM report says.

With the global healthcare industry
increasingly under pressure due to regulations and the need for cutting cost,
there is a huge potential for Indian IT companies to tap this market,
particularly in the more advanced areas of healthcare such as imaging, disease
management and claims processing. India’s inherent strength is the quality of
our human resource pool. We have the analytical thought process that is required
to develop complex applications and manage complex process, which is of utmost
importance for the healthcare BPO particularly. Also, the Indian companies have
an edge as they can offer a large number of value added services like diagnostic
analysis by highly qualified medical professionals at a much cheaper cost.

Several Indian
companies are presently providing solutions such as customer management systems,
maintenance of electronic medical record services, etc. to healthcare service
providers, health insurance companies and life sciences and medical equipment
firms.

On the opportunity for Indian BPO companies
in the healthcare sector most Indian companies have not yet evolved in terms of
developing a global outlook. Customers are today looking for service providers
who can give them multiple options like a multi-shore model to deliver to any
need from applications to consulting and from processes to managing the
infrastructure. Unless we have the ability to service these multiple needs, a
BPO provider would not be viewed as adding value and Indian BPO companies would
come of age only when they build these capabilities.

Other areas which the Indian companies can
tap relate to clinical research organisations that conduct various pathology
test on patients of new drug development. Companies are also getting their
facilities accredited by the College of American Pathology, the global standard
for pathological governance.

A model which is being well
recognized by the world healthcare market is of lot of significance to India.

The new ‘hub
and spoke’ model is a means of continuing efficient and high quality provision
of specialist services in selected locations, while at the same time improving
access to general service support functions over a wide region including smaller
towns. Under this model, highly specialised service will be maintained in few
select locations known as ‘hubs’ and high volume lower complexity services will
be provided through a network of several widespread locations called ‘spokes’

Hubs

‘Hubs’ are tertiary healthcare providers that deliver specialised health care
services including same-day surgery, endoscopy, dialysis, chemotherapy,
pulmonary functions, ultrasound, radiology, mammography, CT scan, specialist
consulting suites, diagnostic service, pre-admission and post-discharge
services. These services require high technology and specialist doctors. The
objective of setting up hubs rather than specialist hospitals is to reduce the
average number of days of inpatient stay, thereby reducing number of beds
required and maximising patient turnover for specialist services.

Spokes

‘Spokes’ form the primary / secondary level of healthcare where a diagnosis is
made of patients’ illnesses and the patient is referred to ‘hubs’ for
specialised treatment of critical illnesses. Other general procedures are
performed at the ‘spokes’. These procedures require low technology, less
sophisticated equipment and general physicians’ services. ‘Spokes’ provide
services such as primary care, physician consulting services, orthopaedics, ENT,
general surgery and referral specialists. ‘Spokes’ provide improved access to
patients in all geographic locations.

Opportunity for India

There is an opportunity for hub and spoke centers to enter India in the near
future. This is due to the following:-

· The
‘spokes’ will improve accessibility to standard healthcare to the small town
populace in India who currently have inadequate health services. These will
serve as reference centers for ‘hubs’ located in highly populated metros.

· At the
‘hubs’, patients receive immediate sophisticated healthcare for critical
illnesses and do not unnecessarily pay for bed usage where same day discharge is
an option. Providers benefit due to better utilisation of high technology
equipment and lower investment on beds.

· Players
wishing to be tertiary providers offering specialized services will prefer to
set up a ‘hub and spoke’ network rather than a specialty hospital. They will
have to invest only in ‘hubs’ and can form relationships with existing players
who will act as ‘spokes’. In addition, they will be able to target a larger
customer base, thus making it easier for providers to break-even.

Diagnostic Centres

Currently, there are only few stand-alone diagnostic centres in India; most
exist as a part of a hospital. Traditional Diagnostic centres will emerge in
India in the medium to long term.

· The need
for diagnostic centres will arise when hospitals face cost containment pressures
and seek to outsource certain services.

· Diagnostic
centres may be set up in conjunction with ‘hub and spoke’ networks. A ‘spoke’
may choose to refer patients to a diagnostic centre instead of providing the
service itself.

Retail pharmacies

Currently there is only one large chain of pharmacy retail outlets in India. RPG
has entered into a joint venture with Hong Kong based retailing major ‘Dairy
Farm International’ to set up a chain of healthcare product retail stores
‘Health & Glow’ similar to drug store chains in Hong Kong, Malaysia and Taiwan.
RPG plans to set up about 75 stores in major cities in the next 5 yrs.

Large pharmacy retail outlets and chains will be prevalent in India in the near
future, since: · Pharmaceutical retail will come to be regarded as part of
healthcare service by patients following the trend in developed countries, S.E.
Asian countries. Healthcare providers will give them more importance.

· The quality
of products, nature of service, health education offered by pharmaceutical
outlets will become important. Brand value will be associated with retail
pharmaceutical outlets and chains.

· Pharmaceutical manufacturers will prefer large pharmaceutical outlets since it
will make distribution easier for them. Pharmaceutical chains will be set up for
better distribution and networking.

As the NASSCOM report puts it; while the
India was quick to plunge into ITES solutions for the healthcare industry in the
form of medical transcription, now Indian vendors have to work on improving
their know how and domain knowledge to tap into the high potential offered by
the global healthcare industry.

What timing! A committee actually comes up with the findings of the
probe in time for the assembly elections in Bihar. The Bannerjee
Committee came out with a report saying that there was no provocation
on the part of one particular community and puts the blame squarely on
the previous government. Co-incidence or Tremedouns timing?
The Railway Minister Laloo Prasad Yadav goes on air with glee and
waves copies of the report in front of cameras, in front on the
election rally crowds and is kicking the BJP’s butt. He is out to
politicise a report on one of India’s most horrendous communal riots
ever. What does the BJP do? It complains to the EC which is one
organisation that people actually think would do something but it is as
spineless as a amoeba. Nitish Kumar, the former Railway Minister and
the Railway Minister during the time when the riots happened
complained to the EC that the whole thing was done to suit the
political interests of the RJD . In face of it, it does look like
that.

Why is that politicians have to resort to stuff like this when they
have to win an election? Why is there no committee reports that come
on time before the elections is announced? The answer lies in the kind
of support they get from citizens like you and me in terms of votes.
Godhra was the most shameful incident in the history of India and they
do bring back bad memories, so what we do - we think the same could
happen here if the same party comes to power. If this was the case
then the Congress which was responsible for the Anti - Sikh riots in
Delhi in 1984 is no better than the BJP which is the ruling party in
Gujarat- then and now. It maybe that people like you and me who have
access to education and media, thereby enabling us to think. But what
about those poor people in Bihar whose access to education has been
taken away by the very same person who claims to be their saviour.
Yes, I am talking about Laloo Prasad Yadav. What has he or his wife
done for Bihar and its people that he claims to be the messiah of
Biharis? Nothing.
We see that but no the people in Bihar dont see that. Why? Because
they have not been provided access to education. He does not want
Biharis to become educated. Already, there is a brain drain in Bihar
wherein a majority of well educated Biharis come out for Bihar. They
dont want to go back and they dont go back. They do not want to see
hell again. NEVER EVER AGAIN.
The educated strata of Bihar cannot do much as they are a miniscule
minority. When would Bihar improve? WHEN?? That is the question that
cannot be answered by anyone but God. Is God listening??

Prince Harry, the youngest son of Prince Charles was spotted at his
friend’s party wearing a Nazi uniform with a swastika arm band. The
whole of Britain and Europe was shocked when they awoke that morning
to see the youngest son of the Heir to the British crown wearing a
uniform - which has been hated throughout Europe. There were even
calls to ban all kinds of Nazi symbols throughout Europe like it has
been done in Germany.

This is the perfect case of over -reaction by the people of Europe. I
mean just because he wore a uniform of a certain radical party does
not mean he identifies with their cause and he is a supporter of that
party. It was an “evil/bad” theme party. Which person is considered
more evil than Adolf Hitler himself? The Nazis are considered to be
the most the evil party. Does this justify the call of the EU asking
them to ban the Nazi symbols?

There is a perceptible generation gap in the opinion of the people in
Europe. In a poll taken of the general public a majority was shocked
and angered by this behaviour of Prince Harry. Whereas in the age
group of 18-24, a majority found it completely acceptable. Prince
Harry had been to a private party. He did not appear in the public
like that. It was a clear case of the paparazzist attitude of one of
the revellers at the party who sold it to a newspaper for £10,000. The
newspaper published it because it knew it’s papers would sell like hot
cakes and this was the primary consideration for publishing it on the
front pages of its edition.

He has already tendered an apology. Yet, it was not enough for the
British media who are still going to town with damning reports about
Prince Harry. Phew! Sometimes it is difficult being a royalty. Thank
God , I am not in that position else I would have gone crazy by now.
Amazing what price celebrities have to pay for their fame.

So many news reel and news print and tube time has covered the Kanchi
Sankaracharya case and I have been hearing all kinds of wierd stuff
about the case. The political opponents of the TN govt. have gone on
record with glee to explain that the Supreme Court granted bail to the
Kanchi seer, very conveniently forgetting that only a CONDITIONAL bail
has been granted.
So you may ask what is the difference between a bail and a conditional
bail. A bail is awarded in circumstances wherein the court beleives
that the custody either judicial or police is unwarranted and that no
purpose would be served by keeping the accused behind bars. A
conditonal bail is given when custody either judicial or police is
unwarranted and that no purpose would be served by keeping the accused
behind bars BUT THERE IS A CHANCE OF TINKERING WITH EVIDENCE OR
FLEEING BY THE ACCUSED.( this is my understanding of the term if it is
legally incorrect - then let me know, would be glad to correct it )
Don’t ask why is there is such a chance is bail provided, because I do
not have any answers to that. What are the conditions that has been
imposed by the SC on the Kanchi Seer? Well , he has to surrender his
passport, not visit the Kanchi mutt, etc.
On the same day came the sensational twist to this already sensational
drama - the junior pontiff was arrested by the TN police barely six
hours after the SC granted bail. This added fuel to the speculation
that the TN police was on a withchunt under the aegis of the TN CM
Jayalalitha. This is the most amazing turnaround, because knowing
Jayalalitha; the press went on air and on print actually believing
this was possible.
I am NOT a supporter of Jayalalitha or her politics, but I know for
sure that she is not dumb enough to take on a religious head who is
very influential politically. She has more to lose than gain by
arresting the seer and ordering a witch hunt. The Assembly elections
are just an year away and she would not risk her political career to
settle scores with seer and that too in the broad glare of the media
and the public. The media has always remained very critical of
Jayalalitha for her autocratic style of functioning. The Hindu’s
editor N. Ram and Jayalalitha are old foes and they have been at it
with allegations and counter-allegations.
This whole drama is being watched by the DMK Chief Karunanidhi with
lot of interest. He knows this would be the turnaround he is looking
for. The widespread anger of the brahmins against Jayalalitha for
having arrested the seer would benefit DMK or its allies. The Tamil
Brahmins are not widespread supporters of the DMK, so he would not
derive much benefit and mayber the Congress would be benefactor, that
will be seen only when the results of the elections come out.
I am not writing Jayalalitha off right now, as I know she can come
back anytime and anyhow. We all have to wait for 2006 to come and show
what bearing this case on TN politics.

Recently, while travelling with my grandpa he told me of how a
construction company which was started by a very popular actress was
pulled up by the municipal authorities in Chennai. They wanted to
demolish the illegal addition to the building made by the company
without prior approval from the municipal authorities. The builders as
usual went to the court and was granted a stay.

You may ask what’s new or unusual about that. Well, I am not going to
discuss the merits or demerits of granting the stay. My intention is
not at all that. What befuddles me is that when there is proof that
the builder had built an addition to the original structure without
getting prior approval from the authorities as laid down by law. I
agree that it would not have been correct for the court to have
allowed the municipal authorities to go ahead with the demolition as
it would have affected a number of people who had invested their hard
earned money in buying the flats ( no one had occupied in that
extended portion of the building )

What I think would have been prudent is that the court should have
arrested the builder for violation of the law or atleast punished in
monetary terms .. neither of which happened. The people who had
invested their money have now approached the same court with an
request to get their money back from the builder, which I beleive is
the right thing to do. The courts should have ordered the builder to
either pay back the money to the flat owners or shut down their
business. I think this threat should have been more than enough for
the builder to cough up the money.

I am not blaming the actress. She had no role to play in the day to
day administration or the design of the building. It seems she also
came to know about this via the media which has been covering this
with earnest due to the glamour as well the sympathy factor.
This is not just one example. I will give you another example.
We all remember the Kareena-Shahid Scandal ( you can call it that - as
it was on tv all day long ). The Supreme court took notice of that and
said that the coverage by the media was in bad taste. I felt that was
another case where the court had no right to tell the media that the
“moment” was in the private domain. My question to the Supreme court
is, Rain is a public place where many people come and go. The star
couple obviously knew where they were and they knew what they were
doing. We all saw them do what they claim they did not do and Kareena
came up with the most hypocritical answer, ” I am a girl from a very
respectable family, I would never do such a thing in public.” as if
she is the sati savitri of Bollywood. She has smooched on screen, how
does doing it in front of camera seen by millions is respectable,
whereas a moment with your loved one in which you actually kiss that
person with affection and love be not respectable?

The Supreme court claims it was a private moment. How can the moment
be private when it is in a public place. The star couple are adults
and they should have been aware of the consequences of their actions (
not just the pleasurable consequences ) If the Supreme court thinks
that when a couple is making out in a public place is a private
moment, why are not the by-standers in Bandstand who stand near rocks
to watch couples make out and stuff be arrested? A case of
misinterpretation of the law might we say?