How Government impetus to health care sector is giving a leg-up to the industry

The captains of the healthcare industry are happy and delighted with the increased budget for the health care sector. This move will provide more access to medical care for all in the country, fuel job opportunities and finally boost the momentum of the economic growth especially in the pharma and health care sector which did not draw much attention earlier. The pandemic has really alerted the entire world and the importance of health has taken a front seat both for the government and the people of India.

The Finance Minister Nirmala Sitharaman has proposed Rs. 2,23,846 crore budget outlay for health and well-being for 2021-22 as compared to Rs. 94,452 crore which was earmarked for the current fiscal year, registering and increase of over 130 %.

Covid impact opened a new window for Pharma brands:

The pandemic alerted all pharma companies to proactively help every strata of the population. In an unprecedented move, all major companies came together to help one another with knowledge and sharing of resources. The industry was facing new challenges both during the lockdown as well when the lockdown was lifted. There were several behavioural changes both at the doctor level and the patient level. Brands had to embrace technology in a big way and digital played vital role in this changing situation. The impact also boosted the online pharmacy as supply chain was disrupted and every pharma company ensured that no patient had to struggle to get their medicine. E-commerce and Tele medicine played a major role to ease out the tension of the patients.

Huge Growth Potential for Healthcare Sector:

The budget has appended the possibility for India to capture the China +1 opportunity.India is the largest drug manufacturer of generic drugs and Indian pharma has established trust by supplying over 50% of global demand of vaccines and 40% of the generic drugs in US and 25% of all medicines in UK. The US is the largest consumer market for Pharma and healthcare spending. Global healthcare market is pegged at US$ 10 Trillion by 2022

The big leap of India will be in diagnostic, preventive healthcare, wellness and anti-ageing as Indians are becoming more health conscious. Another area of growth will be anti- obesity as India is the Diabetes capital of the world. Non-Communicable Diseases accounted for 71% of the 56 MN deaths in 2016 and it’s pegged to reach 80% of all death globally.

India's biotechnology industry comprising biopharmaceuticals, bio-services, bio-agriculture, bio-industry, and bioinformatics is expected grow at an average growth rate of around 30% a y-o-y to reach US$ 100 billion by 2025 and medical device market is pegged to be US$ 25 Bn by 2025.

The current pandemic and the budgetary allocations will further activate Moore’s law in the pharma sector enabling to shorten the cycle of innovations and drug discovery. India is also pegged to further go deep in the learning of  AI/ ML.

Being Self Reliant and Progressive:

Key factors that the budget will aid in achieving traction through various schemes like Ayushman Bharat, Swastha Bharat Yojana & Mission Poshan. Details of the delivery model to accentuate healthcare sector in India.

  • Creating financial sustainability in an uncertain health economy – by setting up health blocks and integrated public health labs
  • Compliance and regulatory environment are fairly good
  • Adapting to the changing needs of the consumer need, demands and expectations through ongoing R&D.- setting One Health Institute as per WHO guidelines
  • Investing in Digital innovation and transformation – India has shown readiness with the integrated health information portal across 15 states and union territories.
  • Using new care delivery model to improve access and affordability
  • Recruiting, developing and retaining talent – India has a large pool.

Adgully spoke to some of the experts in the healthcare sector on how the hike in the healthcare budgets will help the healthcare industry. Stating her views Susan Josi, Managing Partner, Havas Life Sorento said that with 2020 being the Covid year, it has been the greatest inflection point in the history of India to take healthcare seriously. Hence, no other sector came into sharper focus than healthcare in this year’s budget.

Highlighted across media was the fact that this year witnessed a massive 137% boost in healthcare spends, up from INR94,452 crore last year to INR2,23,846 crore. But one needs to do some deep analysis of how Water, Sanitation and Ayush ministries are also part of this budget along with  a substantial sum allocated to the new Pradhan Mantri Atmanirbhar Swasth Bharat Yojana, which will be spent over a six-year period. Experts have concluded that the actual healthcare expenditure has been cut by 10% to INR74,602 crore from the revised estimates of INR82,445 crore last year. So is it a case of glossing over the actual underlying facts?

Particularly, from the pharmaceutical industry’s point of view, they were hoping that the government would give some special relief for R&D, and also, rationality of import duty was expected. Similarly, if the government had waived off some taxes on the input material, it would have not only given relief to the pharma industry but also to the consumers because medicines would have become more affordable for the common man.

Bringing in his point of view on this Harshit Jain, MD, Founder and CEO, Doceree elaborated that the focus this time in the Budget was on healthcare, a sector which has long been awaiting a financial boost. The pandemic was a wake-up call towards particularly investing in Research and Development. The allocation of Rs 124.42 crores on various initiatives for development of pharmaceutical industry shows the government has recognised the importance to invest in pharmaceutical sector. In my opinion, it is at least a good start as the investment required is much more than what has been allocated to contain dependence on China for active pharmaceutical ingredients (APIs) and key starting materials (KSMs. The boost will also provide pharma an impetus to invest in new and innovative media, especially in the digital space that has emerged as a powerful medium with huge potential for pharma brands. 

Remarking on the on the support extended by the government for the Health sector Praful Akali, Founder & MD, Medulla Communications said that this budget will help the Indian pharmaceutical sector bolster its image as the ‘pharmacy of the world’ and simultaneously help ensure that we could be an “AtmaNirbharSwasth Bharat”. While it is widely known that India is a key exporter of formulations, what is not as well-known is India’s (and the world’s) dependence on China for the APIS (active pharmaceutical ingredients) that are used in pharmaceutical formulations – Indian drug-makers import around 70% of their total bulk drug requirements from China. In fact, last February, India found itself on the verge of a shortfall of essential medicines as China went into lockdown over Covid-19.


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