There's A Glaring Inequality Between Health Insurance Benefits Given To Men And Women

By NEWSCOP | INNLIVE

For the age group of 70 and above, for every claim paid to a woman, more than 11 were paid to men.

In the last five years, when there were major concerns over the country’s economic growth, the Indian health insurance industry was doing surprisingly well. In fact, it had been growing at more than double the rate of the overall economy, according to data from Insurance Regulatory and Development Authority.

Litmus Test For Chhattisgarh’s Public Health Care

Chhattisgarh is all set to allow private diagnostic centres at public health facilities within three months. Critics are appalled by the idea of business space for private players in public health facilities while supporters feel it will improve the pallid health care infrastructure in the State. 

The architect of the new model, J.P. Mishra, chief of the State Health Resource Centre — the State Health Department’s technical assistance body overseeing the project — is a strong proponent of public-private partnership. He spoke in an exclusive interview to INN defending private enterprise in public health.

Now that the bids are closed for private diagnostic centres vying to set up shop in Chhattisgarh’s government hospitals, can you give us a road map of how and when these centres are going to start operation?
A committee will be formed and bids will be opened by the committee in front of the bidders. By the end of the month we should be able to identify the laboratories [companies]. Then there will be an agreement between the companies and the government. The lab officials will visit the places [hospital and health facilities] and identify the spaces to be allotted to them. In terms and conditions, we have said that within a month of execution of agreement they should set up the labs. So by April-May first lot of labs should be operational, if everything goes right.

Why do you think this model of privatisation of public health infrastructure will improve health care?
This is public-private partnership [PPP], not privatisation of health care. Privatisation is selling of ownership. I am rather buying in, contracting in services. I am inviting the private sector to set up shop on my [premises].

Will this provide better health care?
Why not? Let me give you the example of Compfed, the Bihar milk cooperative. Throughout the 1990s they were making profit, unlike other PSUs of Bihar, because they perfected the art of outsourcing. They started giving incentive for good work and penalising [bad work]. Compfed gave incentives to truck operators for timely delivery of milk and penalised them for sloppy performance — the ‘bonus and penalty’ model. I tried that in health care

You have to understand the importance of outsourcing. If I can get something done cheaper, why should I be doing it myself? That is why the automobile industry outsources 70-80 per cent of production.

The automobile companies are driven by a motive of profit…
Profit is not the only motive, improving upon efficiency is. Yes, I would say my unit cost of providing the same services should become less. Today I have to employ a person or put up a machine regardless of how many people avail the services. Therefore, between a salaried person’s earnings and the work the person does, there is no built-in incentive for the person to be efficient.

Hence a ‘bonus and penalty’ model?
Let us take the example of PPP in diagnostics. The turnaround time [delivery of reports] has to be less than 24 hours for at least 95 per cent of the cases referred to the diagnostic centres by the hospitals.

If the labs manage to do that for a full year then they get an extension of one year. That is, now we are giving the diagnostic labs permission to operate for 10 years, it will be extended for one more year.

If they fail, the tenure will reduce to nine years or even less. That is a ‘bonus and penalty’ model.

How will you monitor this?
I had considered the idea of getting the NGOs involved.

One reason why PPP is getting questioned is because we have seen how the Bihar model of health care privatisation collapsed.

The Bihar model did not work because the qualifying criteria were very soft. Then they started with big players. The big players left because the government did not maintain its side of agreement. Payment was not regular. Even the existing players are thinking of going out. In Chhattisgarh, the payments for the patients referred by the hospitals are to be made by an autonomous body called Jeevandeep Samiti, located in the hospitals. One side of my job is to ensure that the laboratories work and on the other side I have to make sure that the payments are done on time.

In remote areas of Chhattisgarh you do not have adequate staff or equipment. So if the government could not manage to take health care to remote areas, why do you think the private parties will be able to do it?
I do not have a direct answer to that. All I can say [is] you will know after we open the bids, whether they are interested in setting shops in Bastar, Sarguja etc. I agree with you that for remote areas there is no alternative to government services. If you look at the focus, the vast majority [of labs] are to be set in difficult areas. [What] we are trying to do is to organise service delivery in such areas where there is no services. For that we can provide incentives to those who are willing to go to remote areas. And I might start only from Bastar and Sarguja. I am not here to make a profit for itself.

What about the diagnostic facilities already existing in the district hospitals? Are you going to shut those down?
It is not a question of shutting those down. It is not like everything is available everywhere and nothing is available in some places. Look at the package — X-Ray is excluded from [proposed private labs in] district hospitals and health facilities as it is available there.

What will happen to the laboratory staff in health facilities?
In some cases we have to redeploy the staff.

You cannot run a parallel lab if you have given it to a private player. So the lab technician has to be redeployed to a place where services are not given through PPP.

There are 500-odd PHCs where we do not have technicians.

That is, from district hospitals a person will go to remote areas?
I have not done that detailed an analysis. There could be a choice of a private player taking the person on deputation.

So in a way, these district hospitals are going to get affected?
To some extent. It has to be seen facility by facility. You cannot generalise.

What about the cost to public?
We will follow Central Government Health Services (CGHS) rates. And give a 10 per cent discount on that. CGHS rate are less than market rates and thus it compels the private players to reduce their rates. It has happened in Tamil Nadu. The money will come from Rashtriya Swasthya Bima Yojana (RSBY) and Mukhyamantri Swasthya Bima Yojana (MSBY) for in-patients. For outpatients, a part of it will come from Jeevandeep Samiti, paid for by the State government. And we have asked for a small amount from State budget for PPP services because we are asking the Jeevandeeps to pay for outpatient cases and they do not have a fund for that.

Three Overlooked Serious Reasons: Why India’s Healthcare Indicators Remain Abysmal?

The Union government wants to subsidise healthcare and at the same time cut health spending. Still, money is just part of the problem.

The Bharatiya Janata Party-led Central government announced in July that it would roll out a National Health Assurance Mission, whose aim would be to provide some free medical services to reduce “out of pocket spending on healthcare by the common man”.

Medical Industry Diagnosis: Triage for Health Care and New Vision for Life Sciences

By M H Ahssan

If inefficiency is the path to opportunity, the future for India's health care sector may be bright. Just how close that future is varies by market segment. In the case of life sciences, its arrival could coincide with industry participants' greater willingness to accept risk, while health insurance could seize its day amid rising treatment costs. As for health care delivery's chance to shine, that could be more in the distant future, stymied by a lack of infrastructure investment and trained professionals.

On the one hand, medical tourism is on the rise. On the other, tuberculosis seems unstoppable in certain states. "Paradox is one characterization," said Bhaven Sampat, professor of health care management at Columbia University. "But challenge is another. Like every rapidly developing country, India is faced with the challenge of how to manage growth with distribution, how to balance equity with efficiency, and how to ensure that as parts of the Indian health care sector enter the worldwide elite, the masses are not left behind."

An assessment of Indian health care reveals poor performance on the key dimensions of coverage, purchasing and delivery. "Despite India being the largest exporter of generics, most people have never seen a tablet," said Rajiv Gulati, director of India-China strategy at Eli Lilly. "Patients from the U.S. and the UK come to India for treatment, but approximately 70% of Indian patients have never seen a doctor."

'A Good and Sustainable Growth Rate'
But everything starts somewhere, and "despite the woefully inadequate infrastructure, the health care sector is growing at a compound annual growth rate of 15%, which is a good and sustainable growth rate due to the ever-widening gap between demand and supply," said Suneeta Reddy, finance director at Apollo Hospital Enterprises, a network of 41 hospitals with a combined 8,000 beds.

India has only 1.5 beds per thousand people, while China, Brazil, Thailand and Korea have an average of four beds per thousand people. Investments of $20 billion may be needed over the next five years to increase the availability of doctors and hospital beds. In the meantime, changing demographics and disease profiles, as well as rising treatment costs, may cause spending on health care delivery to double over the next 10 years. Reddy noted that one driver of this growth is "the move from chronic to lifestyle diseases. India is becoming the diabetic capital of the world and Indians have a predisposition to heart disease." Other drivers include a demand for tertiary care that had not existed before, medical tourism representing a $2.5 billion dollar opportunity, and the growth of preventive health care, she said.

In addition, consumers have become far more knowledgeable about what is available in the market and more demanding about quality and service. The typical Indian is looking at clinical outcomes, with a focus on success rates and infection control similar to those of their U.S. counterparts, Reddy said. Two-thirds of India's spending on health care is out-of-pocket, due in large part to an inefficient and inequitable coverage and prepayment system. Despite this, Reddy hopes that rapid growth in the insurance sector will "necessitate a credible provider network to grow simultaneously."

For now, though, the health care paradox is entrenched. In a nation of 250 million cell phone users, there are no statistics on immunization control, noted Prakash Khubchandani, founder and managing director of KrimsonHealth, a developer of healthcare infrastructure based in Mumbai. He linked this to the nation's acute shortage of medical professionals and stated that "if we can increase education levels to what we are gearing up for over the next decade, India can be the next health care superpower." However, education is not the only hindrance. Primary health care and immunization programs fall on the government, whose infrastructure is inadequate. Forty percent of primary health centers are understaffed. Asked whether this was a technical issue or a matter of priorities, Khubchandani pointed to a "lack of private-public partnerships, policy regulations and proper regulatory authorities."

Reversal of the Brain Drain
Yet whereas the lack of opportunity often takes people overseas to find their careers, "the brain drain process is being reversed at a very rapid pace," Khubchandani said. "In the past, India lacked the education and paying capacity and people often went abroad to make the right kind of money." He noted the experience of a 750-bed hospital being built in Mumbai. Owing to the shortage of domestic professionals, foreign doctors are eligible to apply. To make the move to India more attractive, foreign doctors are offered amenities, including apartments, and are guaranteed five-year contracts.

"The lack of professionals directly correlates to the number of colleges, which are extremely few and difficult to set up," Reddy said. "Health is a state subject and therefore government permission is required for the setup of any medical or nursing facilities. This is a dichotomy that needs to be addressed in order to meet India's health care aspirations." That said, India offers an attractive value proposition for doctors based abroad. Its private-sector infrastructure and clinical outcomes match those of developed nations. Patient volumes are large, living standards are comparable and, most important, doctors don't need to set aside large amounts of their salary for legal insurance.

To stimulate a more universal growth and radically improve the quality of health care, the panelists added, the government needs to encourage private investment, define and enforce minimum standards for health care facilities, facilitate the supply of quality manpower, support the growth of insurance, and reform the government's role as payor and provider.

For many years, health insurers were reluctant to enter the business because of a one billion rupee capital requirement and unattractive market conditions. However, recognizing that the government would be unable to cover a population of 1.2 billion people, a bill was passed encouraging investment in the private health insurance sector and relaxing capital requirements. "But it's a complex industry that is fraught with issues," Reddy noted. "In the U.S., providers deal with corporate hospitals such as HCA and Tenet, while in India they have to deal with nursing homes that don't follow any standardized reporting procedures." This is changing as new hospitals that enter the sector look to protect their brand.

An Untapped Population
Tapping a population that has never been insured before in a market with a 35% compound annual growth rate opens the door for opportunity, Reddy said. "With this growth, there has to be a credible risk management framework. Institutions are publishing clinical protocols and insurance companies are looking at this data. Earlier, there was no actuarial data for people to price their products, but with the data now available, private insurance will offer many more products and we will see a growth in this sector."

Khubchandani was not as optimistic. He focused his argument on the inefficient coverage of the middle class and those in rural India. Over the last few years, the government has introduced several programs to subsidize villagers but "this will only increase the problem because the trickle down to the grassroots level of money is so bureaucratically dodged that the end consumer doesn't receive much," he said. "That is going to be the tremendous challenge; I don't see how foreign insurance companies are going to deal with this level of corruption."

Additionally, many Indians have shied away from medical insurance policies because of lengthy and costly claims processing. Reddy, however, believes that, in the future, "patients will not have access to hospital care without insurance claims as treatment costs continue to rise." Health insurance, she added, "was subsidized for a long time and the loss ratio was 200%. Currently the loss ratio on corporate health care is 100% while retail is only 60%. People are realizing that they need to be honest and hospitals are recognizing that they need to be transparent if they wish to get their money back to make this system work."

On the provider side, panelists said, more efficient delivery can be achieved by giving greater autonomy to government hospitals, forming public-private partnerships and focusing government effort on public health and rural primary care. There has been a distinct shift from public to private health care over the last decade; patients turn to private providers for most of their needs because doctors and medicines are more easily available and the quality of care is better.

Khubchandani said his group has been exploring partnerships with public hospitals, which often are mismanaged and lack adequate infrastructure, manpower or equipment to sustain patient volumes. "The red tape is so colossal that it is incredibly difficult to do these kinds of partnerships without government policies in place. There has to be an effective way to get around this roadblock." Reddy said the private sector will spur the necessary changes. "There are clear inefficiencies in the public sector, such as technology absorption, lack of adequate reward for doctors, lower quality of clinical outcomes, and absence of right to second opinion," she noted. "The private sector addresses these issues. You can't blame patients for wanting to access better levels of care."

A Need to Embrace Risk in Life Sciences
If the future of health care delivery in India remains a still-distant promise, little more than a change of mind-set stands in the way of the life sciences sector. Cost and competitive pressures on Big Pharma and India's strengths as a low-cost location combine to present huge opportunities, according to panelists at the Harvard Business School India Conference. They advised India's life sciences entrepreneurs to shed their "service" mind-set and embrace risk, while tapping into the emerging "innovation ecosystem."

Rashmi Barbhaiya, CEO of Advinus Therapeutics, a research-based pharmaceutical company in Bangalore and Pune, noted that Indian life sciences entrepreneurs "generally like to follow rather than do something different and take risks." While Indian pharmaceutical companies have demonstrated their success with generic drugs, he said, they have to make the transition from being a service provider to being an innovator. He added that he's often asked about the challenges Indian companies face from their Chinese counterparts. "When India makes the transition from service to innovation, U.S., Japanese or European companies will come to India, and [India] will not have to worry about China."

Shiladitya Sengupta, a professor at Harvard Medical School, said he doesn't like seeing "90% of research dollars go to 10% of the population." From his point of view, technology is the key to providing affordable health care to the five billion people "at the bottom of the pyramid." Sengupta encountered skeptics when he helped found Tempo Pharmaceuticals, which uses proprietary nanocell technology to create medicines at a fraction of the price of branded products. Tempo, which licenses its nanocell technology from the labs of cofounder Ram Sasisekharan, a Massachusetts Institute of Technology professor, has an asthma drug that will go into trials next year, and the company has raised $22 million in venture capital.

Tempo's asthma drug uses off-patent ingredients to lower production costs to about a tenth of that for Advair, a $4 billion GlaxoSmithKline brand that is the market leader, Sengupta said. Tempo is currently developing nanobiology-based drugs for oncology, rheumatoid arthritis, atherosclerosis, inflammatory bowel disease and other diseases.

From Bench to Bedside to Market
Health care solutions for underserved markets like those in India should not just be affordable and accessible, but also "translatable and scalable from bench to bedside and to market," Sengupta noted. In another venture, he is working on developing low-cost diagnostic kits for markets such as India. "A glucose meter costs about $350 in the U.S.; a hemoglobin injection kit costs $50 to $100. You have to actually price it at 20 cents. Those are business opportunities."

A survey of India's research and academic infrastructure conducted by Sengupta to support the development of new drugs and medical devices yielded a list of 300 universities and "a similar number of national institutes of excellence," but without any connectivity. Subsequently, he brought together heads of universities and government officials to create a strategy for collaboration and new institutions.

Within two years of launching this effort, Sengupta won Indian government approval to set up two organizations -- the Translational Institute for Health Science and Technology and the UNESCO University of Biotechnology, which received funding from the United Nations agency. Among the institutions in the pipeline over the next five years are a stem cell institute, four national institutes of pharmaceutical sciences, a national institute of medical genetics, an animal biotechnology institute, a marine biotechnology institute, three molecular medicine centers and an agri-food biotechnology center, he said.

According to Sengupta, India currently needs 5,000 PhDs annually but produces only 1,500, "most of whom are of questionable quality." He said he and his colleagues have identified areas of need in teaching, R&D, testing and validation, manufacturing, regulation and marketing. The talent needs include biologists, medicinal chemists, molecular biologists and organic chemists, he noted.

From Generics and Low Costs to Development
Rakesh Bamzai, president of marketing at Biocon, a biotechnology company in Bangalore, said new doors opened for the Indian life sciences industry three years ago after the Trade Related Intellectual Property Rights agreement brought India's patent laws closer to those of the United States and Europe. "Over the years, India has focused a lot on generics, big volumes and low-cost manufacturing," he said. "But after 2005, people are looking at more and more development. Research is still a big dream for companies in India, but development is a reality."

Bamzai said India is also emerging as a big market for clinical development. Biotech and pharmaceutical companies, he added, are extending product life cycles by looking at the development of other indications of existing products.

Already, India has emerged as a dominant player in many pharmaceutical segments. According to Bamzai, Biocon is the world's fourth-largest producer of human insulin; Biocon and Wockhardt, another Indian pharmaceutical company, make India the third-largest producer of human insulin. India is also the "leading maker of anti-diabetes drugs; we have a 20% market share in anti-retrovirals and a 40% share in hypercholesterol drugs," he added.

India's R&D labs are also cranking up 30% of the abbreviated new drug application filings in the United States, he said. And they file half the "drug master files" -- submissions to the U.S. Food and Drug Administration with information about facilities, processes or articles used in the manufacture and storage of drugs.

Indian companies also have 40 to 50 new chemical entities under development, said panelist Anuradha Acharya,CEO of Ocimum Biosolutions, which has offices in Indianapolis and Hyderabad. She described her firm as a "global genomics outsourcing partner for discovery, development and diagnostics" for pharmaceutical companies. She said more than three-fourths of the top 50 pharmaceutical companies are doing clinical development in India.

Besides supplying the developed world, Indian pharmaceutical companies are successfully tapping markets in Syria, Iraq, Iran, Azerbaijan and Algeria, Bamzai said. "If you see the [profit-and-loss statements] of companies that are doing well in India, it is because they are doing better in these countries. The values are higher and entry barriers are low in these markets."

Spotting Opportunities in Big Pharma's Challenges
Acharya, who returned to India from the United States to found Ocimum in 2000, has already made three international acquisitions --Gene Logic Genomics in the United States, Isogen Life Science in the Netherlands and the genomic diagnosis business of MWG Biotech in Germany. Previously financed by the International Finance Corp., the World Bank's private equity arm, Ocimum recently raised $17 million in venture capital.

"It's the big firms that are feeling the pressure and that pressure is becoming opportunity for companies like us," Acharya said, adding that the Indian cost arbitrage opportunity "is still a big attraction." Preclinical trial costs in India are about a tenth of what they are in developed countries, while clinical trials could be done for half the cost, she noted, citing research by Rabo Finance of the Dutch Rabobank Group.

According to Acharya, the top drivers for Indian life sciences companies are drugs going off patent, workforce reductions at Big Pharma companies, and the advance of "personalized," genomics-based medicine. Also creating opportunities are such trends as a shift in focus from "treating sickness to preventing sickness," pharmaceutical companies' preference for being "virtually integrated" rather than fully integrated, and a change in mind-set from being "U.S. centric to global centric."

As for seizing such opportunities, Barbhaiya of Advinus Therapeutics said that rather than adopting a "Just Do It" philosophy, it would be better to be able to say, "Just Done It." He reminded the students in the audience that, "If a non-MBA like me can do it, I am sure you all can do it as well."

Medical Industry Diagnosis: Triage for Health Care and New Vision for Life Sciences

By M H Ahssan

If inefficiency is the path to opportunity, the future for India's health care sector may be bright. Just how close that future is varies by market segment. In the case of life sciences, its arrival could coincide with industry participants' greater willingness to accept risk, while health insurance could seize its day amid rising treatment costs. As for health care delivery's chance to shine, that could be more in the distant future, stymied by a lack of infrastructure investment and trained professionals.

On the one hand, medical tourism is on the rise. On the other, tuberculosis seems unstoppable in certain states. "Paradox is one characterization," said Bhaven Sampat, professor of health care management at Columbia University and panel moderator. "But challenge is another. Like every rapidly developing country, India is faced with the challenge of how to manage growth with distribution, how to balance equity with efficiency, and how to ensure that as parts of the Indian health care sector enter the worldwide elite, the masses are not left behind."

An assessment of Indian health care reveals poor performance on the key dimensions of coverage, purchasing and delivery. "Despite India being the largest exporter of generics, most people have never seen a tablet," said Rajiv Gulati, director of India-China strategy at Eli Lilly. "Patients from the U.S. and the UK come to India for treatment, but approximately 70% of Indian patients have never seen a doctor."

'A Good and Sustainable Growth Rate'
But everything starts somewhere, and "despite the woefully inadequate infrastructure, the health care sector is growing at a compound annual growth rate of 15%, which is a good and sustainable growth rate due to the ever-widening gap between demand and supply," said Suneeta Reddy, finance director at Apollo Hospital Enterprises, a network of 41 hospitals with a combined 8,000 beds.

India has only 1.5 beds per thousand people, while China, Brazil, Thailand and Korea have an average of four beds per thousand people. Investments of $20 billion may be needed over the next five years to increase the availability of doctors and hospital beds. In the meantime, changing demographics and disease profiles, as well as rising treatment costs, may cause spending on health care delivery to double over the next 10 years. Reddy noted that one driver of this growth is "the move from chronic to lifestyle diseases. India is becoming the diabetic capital of the world and Indians have a predisposition to heart disease." Other drivers include a demand for tertiary care that had not existed before, medical tourism representing a $2.5 billion dollar opportunity, and the growth of preventive health care, she said.

In addition, consumers have become far more knowledgeable about what is available in the market and more demanding about quality and service. The typical Indian is looking at clinical outcomes, with a focus on success rates and infection control similar to those of their U.S. counterparts, Reddy said. Two-thirds of India's spending on health care is out-of-pocket, due in large part to an inefficient and inequitable coverage and prepayment system. Despite this, Reddy hopes that rapid growth in the insurance sector will "necessitate a credible provider network to grow simultaneously."

For now, though, the health care paradox is entrenched. In a nation of 250 million cell phone users, there are no statistics on immunization control, noted Prakash Khubchandani, founder and managing director of KrimsonHealth, a developer of healthcare infrastructure based in Mumbai. He linked this to the nation's acute shortage of medical professionals and stated that "if we can increase education levels to what we are gearing up for over the next decade, India can be the next health care superpower." However, education is not the only hindrance. Primary health care and immunization programs fall on the government, whose infrastructure is inadequate. Forty percent of primary health centers are understaffed. Asked whether this was a technical issue or a matter of priorities, Khubchandani pointed to a "lack of private-public partnerships, policy regulations and proper regulatory authorities."

Reversal of the Brain Drain
Yet whereas the lack of opportunity often takes people overseas to find their careers, "the brain drain process is being reversed at a very rapid pace," Khubchandani said. "In the past, India lacked the education and paying capacity and people often went abroad to make the right kind of money." He noted the experience of a 750-bed hospital being built in Mumbai. Owing to the shortage of domestic professionals, foreign doctors are eligible to apply. To make the move to India more attractive, foreign doctors are offered amenities, including apartments, and are guaranteed five-year contracts.

"The lack of professionals directly correlates to the number of colleges, which are extremely few and difficult to set up," Reddy said. "Health is a state subject and therefore government permission is required for the setup of any medical or nursing facilities. This is a dichotomy that needs to be addressed in order to meet India's health care aspirations." That said, India offers an attractive value proposition for doctors based abroad. Its private-sector infrastructure and clinical outcomes match those of developed nations. Patient volumes are large, living standards are comparable and, most important, doctors don't need to set aside large amounts of their salary for legal insurance.

To stimulate a more universal growth and radically improve the quality of health care, the panelists added, the government needs to encourage private investment, define and enforce minimum standards for health care facilities, facilitate the supply of quality manpower, support the growth of insurance, and reform the government's role as payor and provider.

For many years, health insurers were reluctant to enter the business because of a one billion rupee capital requirement and unattractive market conditions. However, recognizing that the government would be unable to cover a population of 1.2 billion people, a bill was passed encouraging investment in the private health insurance sector and relaxing capital requirements. "But it's a complex industry that is fraught with issues," Reddy noted. "In the U.S., providers deal with corporate hospitals such as HCA and Tenet, while in India they have to deal with nursing homes that don't follow any standardized reporting procedures." This is changing as new hospitals that enter the sector look to protect their brand.

An Untapped Population
Tapping a population that has never been insured before in a market with a 35% compound annual growth rate opens the door for opportunity, Reddy said. "With this growth, there has to be a credible risk management framework. Institutions are publishing clinical protocols and insurance companies are looking at this data. Earlier, there was no actuarial data for people to price their products, but with the data now available, private insurance will offer many more products and we will see a growth in this sector."

Khubchandani was not as optimistic. He focused his argument on the inefficient coverage of the middle class and those in rural India. Over the last few years, the government has introduced several programs to subsidize villagers but "this will only increase the problem because the trickle down to the grassroots level of money is so bureaucratically dodged that the end consumer doesn't receive much," he said. "That is going to be the tremendous challenge; I don't see how foreign insurance companies are going to deal with this level of corruption."

Additionally, many Indians have shied away from medical insurance policies because of lengthy and costly claims processing. Reddy, however, believes that, in the future, "patients will not have access to hospital care without insurance claims as treatment costs continue to rise." Health insurance, she added, "was subsidized for a long time and the loss ratio was 200%. Currently the loss ratio on corporate health care is 100% while retail is only 60%. People are realizing that they need to be honest and hospitals are recognizing that they need to be transparent if they wish to get their money back to make this system work."

On the provider side, panelists said, more efficient delivery can be achieved by giving greater autonomy to government hospitals, forming public-private partnerships and focusing government effort on public health and rural primary care. There has been a distinct shift from public to private health care over the last decade; patients turn to private providers for most of their needs because doctors and medicines are more easily available and the quality of care is better.

Khubchandani said his group has been exploring partnerships with public hospitals, which often are mismanaged and lack adequate infrastructure, manpower or equipment to sustain patient volumes. "The red tape is so colossal that it is incredibly difficult to do these kinds of partnerships without government policies in place. There has to be an effective way to get around this roadblock." Reddy said the private sector will spur the necessary changes. "There are clear inefficiencies in the public sector, such as technology absorption, lack of adequate reward for doctors, lower quality of clinical outcomes, and absence of right to second opinion," she noted. "The private sector addresses these issues. You can't blame patients for wanting to access better levels of care."

A Need to Embrace Risk in Life Sciences
If the future of health care delivery in India remains a still-distant promise, little more than a change of mind-set stands in the way of the life sciences sector. Cost and competitive pressures on Big Pharma and India's strengths as a low-cost location combine to present huge opportunities, according to panelists at the Harvard Business School India Conference. They advised India's life sciences entrepreneurs to shed their "service" mind-set and embrace risk, while tapping into the emerging "innovation ecosystem."

Rashmi Barbhaiya, CEO of Advinus Therapeutics, a research-based pharmaceutical company in Bangalore and Pune, noted that Indian life sciences entrepreneurs "generally like to follow rather than do something different and take risks." While Indian pharmaceutical companies have demonstrated their success with generic drugs, he said, they have to make the transition from being a service provider to being an innovator. He added that he's often asked about the challenges Indian companies face from their Chinese counterparts. "When India makes the transition from service to innovation, U.S., Japanese or European companies will come to India, and [India] will not have to worry about China."

Shiladitya Sengupta, a professor at Harvard Medical School, said he doesn't like seeing "90% of research dollars go to 10% of the population." From his point of view, technology is the key to providing affordable health care to the five billion people "at the bottom of the pyramid." Sengupta encountered skeptics when he helped found Tempo Pharmaceuticals, which uses proprietary nanocell technology to create medicines at a fraction of the price of branded products. Tempo, which licenses its nanocell technology from the labs of cofounder Ram Sasisekharan, a Massachusetts Institute of Technology professor, has an asthma drug that will go into trials next year, and the company has raised $22 million in venture capital.

Tempo's asthma drug uses off-patent ingredients to lower production costs to about a tenth of that for Advair, a $4 billion GlaxoSmithKline brand that is the market leader, Sengupta said. Tempo is currently developing nanobiology-based drugs for oncology, rheumatoid arthritis, atherosclerosis, inflammatory bowel disease and other diseases.

From Bench to Bedside to Market
Health care solutions for underserved markets like those in India should not just be affordable and accessible, but also "translatable and scalable from bench to bedside and to market," Sengupta noted. In another venture, he is working on developing low-cost diagnostic kits for markets such as India. "A glucose meter costs about $350 in the U.S.; a hemoglobin injection kit costs $50 to $100. You have to actually price it at 20 cents. Those are business opportunities."

A survey of India's research and academic infrastructure conducted by Sengupta to support the development of new drugs and medical devices yielded a list of 300 universities and "a similar number of national institutes of excellence," but without any connectivity. Subsequently, he brought together heads of universities and government officials to create a strategy for collaboration and new institutions.

Within two years of launching this effort, Sengupta won Indian government approval to set up two organizations -- the Translational Institute for Health Science and Technology and the UNESCO University of Biotechnology, which received funding from the United Nations agency. Among the institutions in the pipeline over the next five years are a stem cell institute, four national institutes of pharmaceutical sciences, a national institute of medical genetics, an animal biotechnology institute, a marine biotechnology institute, three molecular medicine centers and an agri-food biotechnology center, he said.

According to Sengupta, India currently needs 5,000 PhDs annually but produces only 1,500, "most of whom are of questionable quality." He said he and his colleagues have identified areas of need in teaching, R&D, testing and validation, manufacturing, regulation and marketing. The talent needs include biologists, medicinal chemists, molecular biologists and organic chemists, he noted.

From Generics and Low Costs to Development
Rakesh Bamzai, president of marketing at Biocon, a biotechnology company in Bangalore, said new doors opened for the Indian life sciences industry three years ago after the Trade Related Intellectual Property Rights agreement brought India's patent laws closer to those of the United States and Europe. "Over the years, India has focused a lot on generics, big volumes and low-cost manufacturing," he said. "But after 2005, people are looking at more and more development. Research is still a big dream for companies in India, but development is a reality."

Bamzai said India is also emerging as a big market for clinical development. Biotech and pharmaceutical companies, he added, are extending product life cycles by looking at the development of other indications of existing products.

Already, India has emerged as a dominant player in many pharmaceutical segments. According to Bamzai, Biocon is the world's fourth-largest producer of human insulin; Biocon and Wockhardt, another Indian pharmaceutical company, make India the third-largest producer of human insulin. India is also the "leading maker of anti-diabetes drugs; we have a 20% market share in anti-retrovirals and a 40% share in hypercholesterol drugs," he added.

India's R&D labs are also cranking up 30% of the abbreviated new drug application filings in the United States, he said. And they file half the "drug master files" -- submissions to the U.S. Food and Drug Administration with information about facilities, processes or articles used in the manufacture and storage of drugs.

Indian companies also have 40 to 50 new chemical entities under development, said panelist Anuradha Acharya,CEO of Ocimum Biosolutions, which has offices in Indianapolis and Hyderabad. She described her firm as a "global genomics outsourcing partner for discovery, development and diagnostics" for pharmaceutical companies. She said more than three-fourths of the top 50 pharmaceutical companies are doing clinical development in India.

Besides supplying the developed world, Indian pharmaceutical companies are successfully tapping markets in Syria, Iraq, Iran, Azerbaijan and Algeria, Bamzai said. "If you see the [profit-and-loss statements] of companies that are doing well in India, it is because they are doing better in these countries. The values are higher and entry barriers are low in these markets."

Spotting Opportunities in Big Pharma's Challenges
Acharya, who returned to India from the United States to found Ocimum in 2000, has already made three international acquisitions --Gene Logic Genomics in the United States, Isogen Life Science in the Netherlands and the genomic diagnosis business of MWG Biotech in Germany. Previously financed by the International Finance Corp., the World Bank's private equity arm, Ocimum recently raised $17 million in venture capital.

"It's the big firms that are feeling the pressure and that pressure is becoming opportunity for companies like us," Acharya said, adding that the Indian cost arbitrage opportunity "is still a big attraction." Preclinical trial costs in India are about a tenth of what they are in developed countries, while clinical trials could be done for half the cost, she noted, citing research by Rabo Finance of the Dutch Rabobank Group.

According to Acharya, the top drivers for Indian life sciences companies are drugs going off patent, workforce reductions at Big Pharma companies, and the advance of "personalized," genomics-based medicine. Also creating opportunities are such trends as a shift in focus from "treating sickness to preventing sickness," pharmaceutical companies' preference for being "virtually integrated" rather than fully integrated, and a change in mind-set from being "U.S. centric to global centric."

As for seizing such opportunities, Barbhaiya of Advinus Therapeutics said that rather than adopting a "Just Do It" philosophy, it would be better to be able to say, "Just Done It." He reminded the students in the audience that, "If a non-MBA like me can do it, I am sure you all can do it as well."

Medical Industry Diagnosis: Triage for Health Care and New Vision for Life Sciences

By M H Ahssan

If inefficiency is the path to opportunity, the future for India's health care sector may be bright. Just how close that future is varies by market segment. In the case of life sciences, its arrival could coincide with industry participants' greater willingness to accept risk, while health insurance could seize its day amid rising treatment costs. As for health care delivery's chance to shine, that could be more in the distant future, stymied by a lack of infrastructure investment and trained professionals.

On the one hand, medical tourism is on the rise. On the other, tuberculosis seems unstoppable in certain states. "Paradox is one characterization," said Bhaven Sampat, professor of health care management at Columbia University and panel moderator. "But challenge is another. Like every rapidly developing country, India is faced with the challenge of how to manage growth with distribution, how to balance equity with efficiency, and how to ensure that as parts of the Indian health care sector enter the worldwide elite, the masses are not left behind."

An assessment of Indian health care reveals poor performance on the key dimensions of coverage, purchasing and delivery. "Despite India being the largest exporter of generics, most people have never seen a tablet," said Rajiv Gulati, director of India-China strategy at Eli Lilly. "Patients from the U.S. and the UK come to India for treatment, but approximately 70% of Indian patients have never seen a doctor."

'A Good and Sustainable Growth Rate'
But everything starts somewhere, and "despite the woefully inadequate infrastructure, the health care sector is growing at a compound annual growth rate of 15%, which is a good and sustainable growth rate due to the ever-widening gap between demand and supply," said Suneeta Reddy, finance director at Apollo Hospital Enterprises, a network of 41 hospitals with a combined 8,000 beds.

India has only 1.5 beds per thousand people, while China, Brazil, Thailand and Korea have an average of four beds per thousand people. Investments of $20 billion may be needed over the next five years to increase the availability of doctors and hospital beds. In the meantime, changing demographics and disease profiles, as well as rising treatment costs, may cause spending on health care delivery to double over the next 10 years. Reddy noted that one driver of this growth is "the move from chronic to lifestyle diseases. India is becoming the diabetic capital of the world and Indians have a predisposition to heart disease." Other drivers include a demand for tertiary care that had not existed before, medical tourism representing a $2.5 billion dollar opportunity, and the growth of preventive health care, she said.

In addition, consumers have become far more knowledgeable about what is available in the market and more demanding about quality and service. The typical Indian is looking at clinical outcomes, with a focus on success rates and infection control similar to those of their U.S. counterparts, Reddy said. Two-thirds of India's spending on health care is out-of-pocket, due in large part to an inefficient and inequitable coverage and prepayment system. Despite this, Reddy hopes that rapid growth in the insurance sector will "necessitate a credible provider network to grow simultaneously."

For now, though, the health care paradox is entrenched. In a nation of 250 million cell phone users, there are no statistics on immunization control, noted Prakash Khubchandani, founder and managing director of KrimsonHealth, a developer of healthcare infrastructure based in Mumbai. He linked this to the nation's acute shortage of medical professionals and stated that "if we can increase education levels to what we are gearing up for over the next decade, India can be the next health care superpower." However, education is not the only hindrance. Primary health care and immunization programs fall on the government, whose infrastructure is inadequate. Forty percent of primary health centers are understaffed. Asked whether this was a technical issue or a matter of priorities, Khubchandani pointed to a "lack of private-public partnerships, policy regulations and proper regulatory authorities."

Reversal of the Brain Drain
Yet whereas the lack of opportunity often takes people overseas to find their careers, "the brain drain process is being reversed at a very rapid pace," Khubchandani said. "In the past, India lacked the education and paying capacity and people often went abroad to make the right kind of money." He noted the experience of a 750-bed hospital being built in Mumbai. Owing to the shortage of domestic professionals, foreign doctors are eligible to apply. To make the move to India more attractive, foreign doctors are offered amenities, including apartments, and are guaranteed five-year contracts.

"The lack of professionals directly correlates to the number of colleges, which are extremely few and difficult to set up," Reddy said. "Health is a state subject and therefore government permission is required for the setup of any medical or nursing facilities. This is a dichotomy that needs to be addressed in order to meet India's health care aspirations." That said, India offers an attractive value proposition for doctors based abroad. Its private-sector infrastructure and clinical outcomes match those of developed nations. Patient volumes are large, living standards are comparable and, most important, doctors don't need to set aside large amounts of their salary for legal insurance.

To stimulate a more universal growth and radically improve the quality of health care, the panelists added, the government needs to encourage private investment, define and enforce minimum standards for health care facilities, facilitate the supply of quality manpower, support the growth of insurance, and reform the government's role as payor and provider.

For many years, health insurers were reluctant to enter the business because of a one billion rupee capital requirement and unattractive market conditions. However, recognizing that the government would be unable to cover a population of 1.2 billion people, a bill was passed encouraging investment in the private health insurance sector and relaxing capital requirements. "But it's a complex industry that is fraught with issues," Reddy noted. "In the U.S., providers deal with corporate hospitals such as HCA and Tenet, while in India they have to deal with nursing homes that don't follow any standardized reporting procedures." This is changing as new hospitals that enter the sector look to protect their brand.

An Untapped Population
Tapping a population that has never been insured before in a market with a 35% compound annual growth rate opens the door for opportunity, Reddy said. "With this growth, there has to be a credible risk management framework. Institutions are publishing clinical protocols and insurance companies are looking at this data. Earlier, there was no actuarial data for people to price their products, but with the data now available, private insurance will offer many more products and we will see a growth in this sector."

Khubchandani was not as optimistic. He focused his argument on the inefficient coverage of the middle class and those in rural India. Over the last few years, the government has introduced several programs to subsidize villagers but "this will only increase the problem because the trickle down to the grassroots level of money is so bureaucratically dodged that the end consumer doesn't receive much," he said. "That is going to be the tremendous challenge; I don't see how foreign insurance companies are going to deal with this level of corruption."

Additionally, many Indians have shied away from medical insurance policies because of lengthy and costly claims processing. Reddy, however, believes that, in the future, "patients will not have access to hospital care without insurance claims as treatment costs continue to rise." Health insurance, she added, "was subsidized for a long time and the loss ratio was 200%. Currently the loss ratio on corporate health care is 100% while retail is only 60%. People are realizing that they need to be honest and hospitals are recognizing that they need to be transparent if they wish to get their money back to make this system work."

On the provider side, panelists said, more efficient delivery can be achieved by giving greater autonomy to government hospitals, forming public-private partnerships and focusing government effort on public health and rural primary care. There has been a distinct shift from public to private health care over the last decade; patients turn to private providers for most of their needs because doctors and medicines are more easily available and the quality of care is better.

Khubchandani said his group has been exploring partnerships with public hospitals, which often are mismanaged and lack adequate infrastructure, manpower or equipment to sustain patient volumes. "The red tape is so colossal that it is incredibly difficult to do these kinds of partnerships without government policies in place. There has to be an effective way to get around this roadblock." Reddy said the private sector will spur the necessary changes. "There are clear inefficiencies in the public sector, such as technology absorption, lack of adequate reward for doctors, lower quality of clinical outcomes, and absence of right to second opinion," she noted. "The private sector addresses these issues. You can't blame patients for wanting to access better levels of care."

A Need to Embrace Risk in Life Sciences
If the future of health care delivery in India remains a still-distant promise, little more than a change of mind-set stands in the way of the life sciences sector. Cost and competitive pressures on Big Pharma and India's strengths as a low-cost location combine to present huge opportunities, according to panelists at the Harvard Business School India Conference. They advised India's life sciences entrepreneurs to shed their "service" mind-set and embrace risk, while tapping into the emerging "innovation ecosystem."

Rashmi Barbhaiya, CEO of Advinus Therapeutics, a research-based pharmaceutical company in Bangalore and Pune, noted that Indian life sciences entrepreneurs "generally like to follow rather than do something different and take risks." While Indian pharmaceutical companies have demonstrated their success with generic drugs, he said, they have to make the transition from being a service provider to being an innovator. He added that he's often asked about the challenges Indian companies face from their Chinese counterparts. "When India makes the transition from service to innovation, U.S., Japanese or European companies will come to India, and [India] will not have to worry about China."

Shiladitya Sengupta, a professor at Harvard Medical School, said he doesn't like seeing "90% of research dollars go to 10% of the population." From his point of view, technology is the key to providing affordable health care to the five billion people "at the bottom of the pyramid." Sengupta encountered skeptics when he helped found Tempo Pharmaceuticals, which uses proprietary nanocell technology to create medicines at a fraction of the price of branded products. Tempo, which licenses its nanocell technology from the labs of cofounder Ram Sasisekharan, a Massachusetts Institute of Technology professor, has an asthma drug that will go into trials next year, and the company has raised $22 million in venture capital.

Tempo's asthma drug uses off-patent ingredients to lower production costs to about a tenth of that for Advair, a $4 billion GlaxoSmithKline brand that is the market leader, Sengupta said. Tempo is currently developing nanobiology-based drugs for oncology, rheumatoid arthritis, atherosclerosis, inflammatory bowel disease and other diseases.

From Bench to Bedside to Market
Health care solutions for underserved markets like those in India should not just be affordable and accessible, but also "translatable and scalable from bench to bedside and to market," Sengupta noted. In another venture, he is working on developing low-cost diagnostic kits for markets such as India. "A glucose meter costs about $350 in the U.S.; a hemoglobin injection kit costs $50 to $100. You have to actually price it at 20 cents. Those are business opportunities."

A survey of India's research and academic infrastructure conducted by Sengupta to support the development of new drugs and medical devices yielded a list of 300 universities and "a similar number of national institutes of excellence," but without any connectivity. Subsequently, he brought together heads of universities and government officials to create a strategy for collaboration and new institutions.

Within two years of launching this effort, Sengupta won Indian government approval to set up two organizations -- the Translational Institute for Health Science and Technology and the UNESCO University of Biotechnology, which received funding from the United Nations agency. Among the institutions in the pipeline over the next five years are a stem cell institute, four national institutes of pharmaceutical sciences, a national institute of medical genetics, an animal biotechnology institute, a marine biotechnology institute, three molecular medicine centers and an agri-food biotechnology center, he said.

According to Sengupta, India currently needs 5,000 PhDs annually but produces only 1,500, "most of whom are of questionable quality." He said he and his colleagues have identified areas of need in teaching, R&D, testing and validation, manufacturing, regulation and marketing. The talent needs include biologists, medicinal chemists, molecular biologists and organic chemists, he noted.

From Generics and Low Costs to Development
Rakesh Bamzai, president of marketing at Biocon, a biotechnology company in Bangalore, said new doors opened for the Indian life sciences industry three years ago after the Trade Related Intellectual Property Rights agreement brought India's patent laws closer to those of the United States and Europe. "Over the years, India has focused a lot on generics, big volumes and low-cost manufacturing," he said. "But after 2005, people are looking at more and more development. Research is still a big dream for companies in India, but development is a reality."

Bamzai said India is also emerging as a big market for clinical development. Biotech and pharmaceutical companies, he added, are extending product life cycles by looking at the development of other indications of existing products.

Already, India has emerged as a dominant player in many pharmaceutical segments. According to Bamzai, Biocon is the world's fourth-largest producer of human insulin; Biocon and Wockhardt, another Indian pharmaceutical company, make India the third-largest producer of human insulin. India is also the "leading maker of anti-diabetes drugs; we have a 20% market share in anti-retrovirals and a 40% share in hypercholesterol drugs," he added.

India's R&D labs are also cranking up 30% of the abbreviated new drug application filings in the United States, he said. And they file half the "drug master files" -- submissions to the U.S. Food and Drug Administration with information about facilities, processes or articles used in the manufacture and storage of drugs.

Indian companies also have 40 to 50 new chemical entities under development, said panelist Anuradha Acharya,CEO of Ocimum Biosolutions, which has offices in Indianapolis and Hyderabad. She described her firm as a "global genomics outsourcing partner for discovery, development and diagnostics" for pharmaceutical companies. She said more than three-fourths of the top 50 pharmaceutical companies are doing clinical development in India.

Besides supplying the developed world, Indian pharmaceutical companies are successfully tapping markets in Syria, Iraq, Iran, Azerbaijan and Algeria, Bamzai said. "If you see the [profit-and-loss statements] of companies that are doing well in India, it is because they are doing better in these countries. The values are higher and entry barriers are low in these markets."

Spotting Opportunities in Big Pharma's Challenges
Acharya, who returned to India from the United States to found Ocimum in 2000, has already made three international acquisitions --Gene Logic Genomics in the United States, Isogen Life Science in the Netherlands and the genomic diagnosis business of MWG Biotech in Germany. Previously financed by the International Finance Corp., the World Bank's private equity arm, Ocimum recently raised $17 million in venture capital.

"It's the big firms that are feeling the pressure and that pressure is becoming opportunity for companies like us," Acharya said, adding that the Indian cost arbitrage opportunity "is still a big attraction." Preclinical trial costs in India are about a tenth of what they are in developed countries, while clinical trials could be done for half the cost, she noted, citing research by Rabo Finance of the Dutch Rabobank Group.

According to Acharya, the top drivers for Indian life sciences companies are drugs going off patent, workforce reductions at Big Pharma companies, and the advance of "personalized," genomics-based medicine. Also creating opportunities are such trends as a shift in focus from "treating sickness to preventing sickness," pharmaceutical companies' preference for being "virtually integrated" rather than fully integrated, and a change in mind-set from being "U.S. centric to global centric."

As for seizing such opportunities, Barbhaiya of Advinus Therapeutics said that rather than adopting a "Just Do It" philosophy, it would be better to be able to say, "Just Done It." He reminded the students in the audience that, "If a non-MBA like me can do it, I am sure you all can do it as well."

Medical Industry Diagnosis: Triage for Health Care and New Vision for Life Sciences

By M H Ahssan

If inefficiency is the path to opportunity, the future for India's health care sector may be bright. Just how close that future is varies by market segment. In the case of life sciences, its arrival could coincide with industry participants' greater willingness to accept risk, while health insurance could seize its day amid rising treatment costs. As for health care delivery's chance to shine, that could be more in the distant future, stymied by a lack of infrastructure investment and trained professionals.

On the one hand, medical tourism is on the rise. On the other, tuberculosis seems unstoppable in certain states. "Paradox is one characterization," said Bhaven Sampat, professor of health care management at Columbia University and panel moderator. "But challenge is another. Like every rapidly developing country, India is faced with the challenge of how to manage growth with distribution, how to balance equity with efficiency, and how to ensure that as parts of the Indian health care sector enter the worldwide elite, the masses are not left behind."

An assessment of Indian health care reveals poor performance on the key dimensions of coverage, purchasing and delivery. "Despite India being the largest exporter of generics, most people have never seen a tablet," said Rajiv Gulati, director of India-China strategy at Eli Lilly. "Patients from the U.S. and the UK come to India for treatment, but approximately 70% of Indian patients have never seen a doctor."

'A Good and Sustainable Growth Rate'
But everything starts somewhere, and "despite the woefully inadequate infrastructure, the health care sector is growing at a compound annual growth rate of 15%, which is a good and sustainable growth rate due to the ever-widening gap between demand and supply," said Suneeta Reddy, finance director at Apollo Hospital Enterprises, a network of 41 hospitals with a combined 8,000 beds.

India has only 1.5 beds per thousand people, while China, Brazil, Thailand and Korea have an average of four beds per thousand people. Investments of $20 billion may be needed over the next five years to increase the availability of doctors and hospital beds. In the meantime, changing demographics and disease profiles, as well as rising treatment costs, may cause spending on health care delivery to double over the next 10 years. Reddy noted that one driver of this growth is "the move from chronic to lifestyle diseases. India is becoming the diabetic capital of the world and Indians have a predisposition to heart disease." Other drivers include a demand for tertiary care that had not existed before, medical tourism representing a $2.5 billion dollar opportunity, and the growth of preventive health care, she said.

In addition, consumers have become far more knowledgeable about what is available in the market and more demanding about quality and service. The typical Indian is looking at clinical outcomes, with a focus on success rates and infection control similar to those of their U.S. counterparts, Reddy said. Two-thirds of India's spending on health care is out-of-pocket, due in large part to an inefficient and inequitable coverage and prepayment system. Despite this, Reddy hopes that rapid growth in the insurance sector will "necessitate a credible provider network to grow simultaneously."

For now, though, the health care paradox is entrenched. In a nation of 250 million cell phone users, there are no statistics on immunization control, noted Prakash Khubchandani, founder and managing director of KrimsonHealth, a developer of healthcare infrastructure based in Mumbai. He linked this to the nation's acute shortage of medical professionals and stated that "if we can increase education levels to what we are gearing up for over the next decade, India can be the next health care superpower." However, education is not the only hindrance. Primary health care and immunization programs fall on the government, whose infrastructure is inadequate. Forty percent of primary health centers are understaffed. Asked whether this was a technical issue or a matter of priorities, Khubchandani pointed to a "lack of private-public partnerships, policy regulations and proper regulatory authorities."

Reversal of the Brain Drain
Yet whereas the lack of opportunity often takes people overseas to find their careers, "the brain drain process is being reversed at a very rapid pace," Khubchandani said. "In the past, India lacked the education and paying capacity and people often went abroad to make the right kind of money." He noted the experience of a 750-bed hospital being built in Mumbai. Owing to the shortage of domestic professionals, foreign doctors are eligible to apply. To make the move to India more attractive, foreign doctors are offered amenities, including apartments, and are guaranteed five-year contracts.

"The lack of professionals directly correlates to the number of colleges, which are extremely few and difficult to set up," Reddy said. "Health is a state subject and therefore government permission is required for the setup of any medical or nursing facilities. This is a dichotomy that needs to be addressed in order to meet India's health care aspirations." That said, India offers an attractive value proposition for doctors based abroad. Its private-sector infrastructure and clinical outcomes match those of developed nations. Patient volumes are large, living standards are comparable and, most important, doctors don't need to set aside large amounts of their salary for legal insurance.

To stimulate a more universal growth and radically improve the quality of health care, the panelists added, the government needs to encourage private investment, define and enforce minimum standards for health care facilities, facilitate the supply of quality manpower, support the growth of insurance, and reform the government's role as payor and provider.

For many years, health insurers were reluctant to enter the business because of a one billion rupee capital requirement and unattractive market conditions. However, recognizing that the government would be unable to cover a population of 1.2 billion people, a bill was passed encouraging investment in the private health insurance sector and relaxing capital requirements. "But it's a complex industry that is fraught with issues," Reddy noted. "In the U.S., providers deal with corporate hospitals such as HCA and Tenet, while in India they have to deal with nursing homes that don't follow any standardized reporting procedures." This is changing as new hospitals that enter the sector look to protect their brand.

An Untapped Population
Tapping a population that has never been insured before in a market with a 35% compound annual growth rate opens the door for opportunity, Reddy said. "With this growth, there has to be a credible risk management framework. Institutions are publishing clinical protocols and insurance companies are looking at this data. Earlier, there was no actuarial data for people to price their products, but with the data now available, private insurance will offer many more products and we will see a growth in this sector."

Khubchandani was not as optimistic. He focused his argument on the inefficient coverage of the middle class and those in rural India. Over the last few years, the government has introduced several programs to subsidize villagers but "this will only increase the problem because the trickle down to the grassroots level of money is so bureaucratically dodged that the end consumer doesn't receive much," he said. "That is going to be the tremendous challenge; I don't see how foreign insurance companies are going to deal with this level of corruption."

Additionally, many Indians have shied away from medical insurance policies because of lengthy and costly claims processing. Reddy, however, believes that, in the future, "patients will not have access to hospital care without insurance claims as treatment costs continue to rise." Health insurance, she added, "was subsidized for a long time and the loss ratio was 200%. Currently the loss ratio on corporate health care is 100% while retail is only 60%. People are realizing that they need to be honest and hospitals are recognizing that they need to be transparent if they wish to get their money back to make this system work."

On the provider side, panelists said, more efficient delivery can be achieved by giving greater autonomy to government hospitals, forming public-private partnerships and focusing government effort on public health and rural primary care. There has been a distinct shift from public to private health care over the last decade; patients turn to private providers for most of their needs because doctors and medicines are more easily available and the quality of care is better.

Khubchandani said his group has been exploring partnerships with public hospitals, which often are mismanaged and lack adequate infrastructure, manpower or equipment to sustain patient volumes. "The red tape is so colossal that it is incredibly difficult to do these kinds of partnerships without government policies in place. There has to be an effective way to get around this roadblock." Reddy said the private sector will spur the necessary changes. "There are clear inefficiencies in the public sector, such as technology absorption, lack of adequate reward for doctors, lower quality of clinical outcomes, and absence of right to second opinion," she noted. "The private sector addresses these issues. You can't blame patients for wanting to access better levels of care."

A Need to Embrace Risk in Life Sciences
If the future of health care delivery in India remains a still-distant promise, little more than a change of mind-set stands in the way of the life sciences sector. Cost and competitive pressures on Big Pharma and India's strengths as a low-cost location combine to present huge opportunities, according to panelists at the Harvard Business School India Conference. They advised India's life sciences entrepreneurs to shed their "service" mind-set and embrace risk, while tapping into the emerging "innovation ecosystem."

Rashmi Barbhaiya, CEO of Advinus Therapeutics, a research-based pharmaceutical company in Bangalore and Pune, noted that Indian life sciences entrepreneurs "generally like to follow rather than do something different and take risks." While Indian pharmaceutical companies have demonstrated their success with generic drugs, he said, they have to make the transition from being a service provider to being an innovator. He added that he's often asked about the challenges Indian companies face from their Chinese counterparts. "When India makes the transition from service to innovation, U.S., Japanese or European companies will come to India, and [India] will not have to worry about China."

Shiladitya Sengupta, a professor at Harvard Medical School, said he doesn't like seeing "90% of research dollars go to 10% of the population." From his point of view, technology is the key to providing affordable health care to the five billion people "at the bottom of the pyramid." Sengupta encountered skeptics when he helped found Tempo Pharmaceuticals, which uses proprietary nanocell technology to create medicines at a fraction of the price of branded products. Tempo, which licenses its nanocell technology from the labs of cofounder Ram Sasisekharan, a Massachusetts Institute of Technology professor, has an asthma drug that will go into trials next year, and the company has raised $22 million in venture capital.

Tempo's asthma drug uses off-patent ingredients to lower production costs to about a tenth of that for Advair, a $4 billion GlaxoSmithKline brand that is the market leader, Sengupta said. Tempo is currently developing nanobiology-based drugs for oncology, rheumatoid arthritis, atherosclerosis, inflammatory bowel disease and other diseases.

From Bench to Bedside to Market
Health care solutions for underserved markets like those in India should not just be affordable and accessible, but also "translatable and scalable from bench to bedside and to market," Sengupta noted. In another venture, he is working on developing low-cost diagnostic kits for markets such as India. "A glucose meter costs about $350 in the U.S.; a hemoglobin injection kit costs $50 to $100. You have to actually price it at 20 cents. Those are business opportunities."

A survey of India's research and academic infrastructure conducted by Sengupta to support the development of new drugs and medical devices yielded a list of 300 universities and "a similar number of national institutes of excellence," but without any connectivity. Subsequently, he brought together heads of universities and government officials to create a strategy for collaboration and new institutions.

Within two years of launching this effort, Sengupta won Indian government approval to set up two organizations -- the Translational Institute for Health Science and Technology and the UNESCO University of Biotechnology, which received funding from the United Nations agency. Among the institutions in the pipeline over the next five years are a stem cell institute, four national institutes of pharmaceutical sciences, a national institute of medical genetics, an animal biotechnology institute, a marine biotechnology institute, three molecular medicine centers and an agri-food biotechnology center, he said.

According to Sengupta, India currently needs 5,000 PhDs annually but produces only 1,500, "most of whom are of questionable quality." He said he and his colleagues have identified areas of need in teaching, R&D, testing and validation, manufacturing, regulation and marketing. The talent needs include biologists, medicinal chemists, molecular biologists and organic chemists, he noted.

From Generics and Low Costs to Development
Rakesh Bamzai, president of marketing at Biocon, a biotechnology company in Bangalore, said new doors opened for the Indian life sciences industry three years ago after the Trade Related Intellectual Property Rights agreement brought India's patent laws closer to those of the United States and Europe. "Over the years, India has focused a lot on generics, big volumes and low-cost manufacturing," he said. "But after 2005, people are looking at more and more development. Research is still a big dream for companies in India, but development is a reality."

Bamzai said India is also emerging as a big market for clinical development. Biotech and pharmaceutical companies, he added, are extending product life cycles by looking at the development of other indications of existing products.

Already, India has emerged as a dominant player in many pharmaceutical segments. According to Bamzai, Biocon is the world's fourth-largest producer of human insulin; Biocon and Wockhardt, another Indian pharmaceutical company, make India the third-largest producer of human insulin. India is also the "leading maker of anti-diabetes drugs; we have a 20% market share in anti-retrovirals and a 40% share in hypercholesterol drugs," he added.

India's R&D labs are also cranking up 30% of the abbreviated new drug application filings in the United States, he said. And they file half the "drug master files" -- submissions to the U.S. Food and Drug Administration with information about facilities, processes or articles used in the manufacture and storage of drugs.

Indian companies also have 40 to 50 new chemical entities under development, said panelist Anuradha Acharya,CEO of Ocimum Biosolutions, which has offices in Indianapolis and Hyderabad. She described her firm as a "global genomics outsourcing partner for discovery, development and diagnostics" for pharmaceutical companies. She said more than three-fourths of the top 50 pharmaceutical companies are doing clinical development in India.

Besides supplying the developed world, Indian pharmaceutical companies are successfully tapping markets in Syria, Iraq, Iran, Azerbaijan and Algeria, Bamzai said. "If you see the [profit-and-loss statements] of companies that are doing well in India, it is because they are doing better in these countries. The values are higher and entry barriers are low in these markets."

Spotting Opportunities in Big Pharma's Challenges
Acharya, who returned to India from the United States to found Ocimum in 2000, has already made three international acquisitions --Gene Logic Genomics in the United States, Isogen Life Science in the Netherlands and the genomic diagnosis business of MWG Biotech in Germany. Previously financed by the International Finance Corp., the World Bank's private equity arm, Ocimum recently raised $17 million in venture capital.

"It's the big firms that are feeling the pressure and that pressure is becoming opportunity for companies like us," Acharya said, adding that the Indian cost arbitrage opportunity "is still a big attraction." Preclinical trial costs in India are about a tenth of what they are in developed countries, while clinical trials could be done for half the cost, she noted, citing research by Rabo Finance of the Dutch Rabobank Group.

According to Acharya, the top drivers for Indian life sciences companies are drugs going off patent, workforce reductions at Big Pharma companies, and the advance of "personalized," genomics-based medicine. Also creating opportunities are such trends as a shift in focus from "treating sickness to preventing sickness," pharmaceutical companies' preference for being "virtually integrated" rather than fully integrated, and a change in mind-set from being "U.S. centric to global centric."

As for seizing such opportunities, Barbhaiya of Advinus Therapeutics said that rather than adopting a "Just Do It" philosophy, it would be better to be able to say, "Just Done It." He reminded the students in the audience that, "If a non-MBA like me can do it, I am sure you all can do it as well."

'The Future Of Family Planning Now Goes Digital'

One of India’s most vocal advocates for youth rights to sexual health, Franklin Paul, has been introducing digital technologies to the rural youth.

Online shopping may have its pros and cons, but when it comes to buying products that have an invisible morality tag, it’s the safest possible option, believes Franklin Paul.

One of India’s most vocal advocates for youth rights to sexual health, education and products, Paul has spent over two years studying and introducing digital technologies to India’s rural youths.

WELLNESS WAKE-UP CALL FOR 'SLEEPLESS' BPO AGENTS

By M H Ahssan / Hyderabad

Despite aggressive health and wellness campaigns by their employers, two out of three workers in business process outsourcing (BPO) companies continue to live unhealthy lifestyles, with chain smoking and heavy drinking listed as the major vices among the more than 600,000 workers in the industry.

Many of the industry’s workers, whose average age range from 26 to 28, shun regular exercise and the proper diet, Pramod Kumar, executive director of the Call Centers Association of India, said during the launch of “Call Center Olympics,” an event meant to promote health and wellness among BPO employees.

Healthcare: A policy of neglect

By M H Ahssan

The main culprit for the low standards of medical education and the credibility of the regulator is government policy itself, which has consistently placed a low priorty on healthcare.

With the powers of the executive of the Medical Council of India (MCI) being handed over to a select panel of eminent doctors, there is a new expectation that we will see dramatic improvements in medical education. Certain facts, however, need to be kept in mind before one becomes overly optimistic.

The MCI - a body of medical practitioners made up of elected representatives as well as nominees of the government (both central & state) and universities offering medical education - makes regulations governing medical education, but only with the concurrence of the Central Government. In theory, MCI is autonomous, and represents the interests of the medical profession. In practice, the MCI executive, corrupt or otherwise, has all along only implemented government policy. Examining recent regulation changes will bear this out.

Corporate medical schools
In February 2010 the MCI announced a major change in the regulation governing the establishment of medical colleges. With this change, corporate entities were permitted to open medical colleges. The new regulation also carried the following warning: "permission shall be withdrawn if the colleges resort to commercialization". Since the regulation does not elaborate on what constitutes "resorting to commercialization", this will presumably be a matter left to the discretion of the Government.

A basic requirement for a new medical college is a pre-existing hospital that will serve as a teaching hospital. Corporate entities have hospitals in the major metros and that is where they will have to locate medical colleges. The earlier mandated land requirement for a medical college campus, a minimum of 25 acres of contiguous land, cannot be fulfilled in the metros. Not surprisingly, yet another tweak has been made in the regulation, prescribing 10 acres as the new minimum campus size for 9 cities including the main metros. With this, the stage is set for corporate entities like Max Healthcare, the Apollo Group, and Fortis Healthcare to enter the medical education market.

The new regulations will not be a surprise to corporate bodies in the healthcare industry. Over two years back, the Health Ministry of the Government of India had gone public with its desire to relax land norms and allow corporate houses to open medical colleges.

Until now, medical education in India has been projected as a not-for-profit activity to be organised for the public good. While private bodies can run medical colleges, these can only be societies or trusts, legally non-profit organizations. (It is a different matter that illegal donations are collected.) In opening the door to corporate colleges, thus, a major policy change has been effected without changing the law or even a discussion in Parliament, but by simply getting a compliant MCI to change the regulation on establishment of medical colleges.

Colleges without faculty
This and other changes (such as recognising medical practitioners trained in five English-speaking countries including the US and UK) have been justified in the name of addressing the shortage of doctors. At the same time, over 50 existing medical colleges, including 15 run by the government, have been prohibited from admitting students in 2010 for having failed to meet the basic standards prescribed. Ninety per cent of these colleges have come up in the last 5 years.

Particularly shocking is the phenomenon of government colleges falling short of standards approved by the Government. Chattisgarh has three medical colleges, all run by the Government. Of these, two have been found unfit. In Madhya Pradesh, three of the six and in Karnataka four of the 10 government medical colleges have been found unfit. The list even includes a 50-year-old medical college in Jabalpur. The number of students admitted to the MBBS program has remained virtually stagnant - 28,349 in 2006 versus 28,742 in 2010 - though there are nominally 40 more colleges now compared to 2006!

Why are (state) government institutions not able to meet the requirements that have been approved by the (central) government? A severe problem faced by government-run institutions is attracting and retaining teaching faculty, and this is likely to be among the major reasons for these colleges failing to satisfy the MCI norms. The crisis building up on the faculty front has been flagged by various commissions looking into problems of medical education over the years, including the Knowledge Commission in 2006.

An indicator of the crisis is the attempt to conjure up faculty when MCI carries out inspections of new colleges, one of its regulatory functions. Judging by news reports, the practice of presenting fake faculty - students or private medical practitioners hired for the day - during MCI inspections in private colleges is common. What is interesting is that even government colleges are adopting unscrupulous methods. According to a news report (Times of India, April 29, 2010), the Karnataka Government could not find faculty for six newly opened medical colleges in Mandya, Hassan, Shimoga, Bellary, Bidar and Raichur after admitting students, reportedly because government pay scales were not competitive. Faculty were transferred temporarily from established medical colleges in cities like Bangalore and Hubli to the new colleges to be present during the MCI inspections with a commitment that they would be back to their original posts after the inspection was over.

Another indicator is the extraordinary scheme, verging on the ridiculous, that is being put in place by the MCI to make inspections 'foolproof'. Faculty in all medical colleges are to be issued an RFID-based smart card by the MCI with a unique Faculty Number. The card, it is argued, will eliminate the possibility of a teacher being shown on the faculty of more than one college and establish if the qualifications of a teacher are genuine. In the future, it is projected that biometric RFID readers will be installed in the colleges that will enable a Faculty Identification, Tracking and Monitoring System to monitor faculty from within the college and even remotely from MCI headquarters.

The government's response to the shortage of faculty has been little short of a stroke of genius. Post-graduate seats in medical colleges have been increased dramatically by getting the MCI to change the 'standard' - the stipulated maximum ratio of students to teachers in postgraduate courses. Ironically, many state governments have been slow to respond to the MCI's liberal attitude; there may be other more basic constraints to be overcome before they can accept more students, it seems.

Unfavourable global comparisons
How does India compare with other countries, with respect to the numbers of doctors? The table below shows World Health Organization (WHO) figures for the density of doctors & specialists, and the density of trained nurses & midwives, as well as certain mother and child health indicators. India has the worst health indicators as well as the lowest numbers of doctors PLUS nurses for every 10,000 people. The density of doctors, at 6 per 10,000 (not including ayurvedic and homeopathic practitioners), is expectedly far below the numbers for developed countries. The density of nurses in comparison with the developed countries is even more glaring.

What about the comparison with Brazil, China, Russia, and South Africa, a favourite game among those enamored with GDP growth rates? The numbers speak for themselves. What will come as a surprise to many is that South Africa is marginally better than India in health indicators and has a better health worker density. While the health indicators depend on various factors including nutrition and hygiene, it is in some measure also linked to the availability of health workers.

Health centers without doctors and nurses
Even the poor picture above does not reveal the true situation in rural India. Only a fraction of the doctors and nursing professionals serve rural areas where 70 per cent of our population lives. Rural healthcare provided by the government has a three-tier structure - Sub Centre, Primary Heath Centre (PHC) and the Community Health Centre (CHC). The PHC is the first place available for the rural poor to see a doctor. Each PHC serves on average a population greater than 31,000 and must have at least one doctor and one nurse. For specialist consultation, people are expected to go to the CHC. Each CHC serves on average a population greater than 1.7 lakhs and must have 4 specialists – a surgeon, gynecologist, physician and pediatrician – supported by 7 nurses.

These heath care centers are grossly inadequate in number. By the Government's own admission, it needs to establish 50 per cent more CHCs. But even at the current abysmal level of service, a large number of positions of health workers remain unfilled in rural health centres - there are 3537 doctors' posts lying vacant, 11,033 similarly vacant for specialists, and 18,021 more vacancies for nurses and midwives (2008 data).

The Health Ministry, with the help of the MCI, has been active in proposing yet another 'innovative' solution to the problem of lack of doctors in the rural areas. The proposal is for a three-and-a-half year course to obtain the degree of Bachelor of Rural Medicine and Surgery (BRMS). Only rural candidates would be able to join this course. The study and training would happen at two different levels - Community Health Centers for 18 months, and sub-divisional hospitals for a further period of 2 years - and be conducted by retired professors. After completion of training, they would only be able to serve in their own state in district hospitals, community health centres, and primary health centres.

A cynical critic may well paraphrase the thinking behind this proposal this way. "Since we cannot invest more to upgrade rural hospitals and provide doctors and specialists with a competitive salary and a good work environment, we may as well dispense with them all together. We will instead train a new type of health worker in the existing rural health facilities and employ him in the same facilities. He will be more or less a bonded employee, as we will not permit him to practice outside the state or even move to urban hospitals within his state. Since we cannot pay enough to attract teaching faculty, we will use retired professors to train these rural medics; that and a shorter course will reduce the need for faculty and also bring down the cost."

The BRMS proposal has invited sharp criticism from some doctors' organizations on the grounds that it is discriminatory to have two different standards of health care - one for urban and the other for rural areas, and that the health care provided by such graduates will be compromised. At the other end is the opinion expressed by some that "something is better than nothing", that since doctors do not want to serve in rural areas, the government may as well create a new cadre of medics who will be obliged to serve there. The debate will surely pick up after the government formally lays out its plans. What is apparent is that neither this proposal nor the various stopgap measures adopted so far address the root of the problem of health care.

Corruption is certainly a major issue that affects the standards of medical education and the credibility of the regulator. However, the far larger issue is government policy, the low priority attached by the government to the social sector as a whole and the health sector in particular, evidenced in the paltry allocations for maintaining and upgrading medical infrastructure and medical education and for looking after precious human resources.