World over the advent of technology and increased competition has seen the costs of many items such as food, clothing, cars and electronics drop. However, in most developed countries technology has been unable to impact the costs of healthcare and education. In fact, in most countries healthcare and education are regulated, subsidized and effectively government run resulting in a continuous increase in costs. This system of government and private vested interests has prevented true innovation in these areas, but with a lack of significant government spend and a rapidly growing chronic patient base, India is a unique market.
The Indian pharmaceutical industry is a $33 billion industry, making it the 3rd largest market globally in terms of volume and 13th largest by value. Sales of medicines in India account for $18 billion, with the balance being exports. The market is expected to grow to $55 billion by 2020, making it the 6th largest pharmaceutical market by size.
India spends $63 per capita on healthcare every year. Much lower than developed economies and even lower than many of our neighbors. Indian government spending on health is abysmal. India allocates 2.3% of a $400 billion Union budget ($9.2 billion) as compared to the US, which allocates 18% of a $3.8 trillion Federal budget ($684 billion). Consequently the burden of health falls to the Indian consumer. Indians bear a disproportionate amount of their healthcare expenditure compared to other countries. Medicines make up the largest portion of healthcare expense, at 35% of total healthcare expenditure, and 52% of what individuals spend on healthcare. Every year 38 million people drop below the poverty line due to the cost of medicines.
As of 2017, India had 72 million diabetes cases representing 49% of all diabetes cases in the world. That number is expected to hit 134 million by 2025. With a growing chronic diseased population and negligible government spend on healthcare there is a need to reimagine healthcare. The idea of “pop-a-pill” to solve a problem doesn’t work effectively for lifestyle-based diseases like diabetes and hypertension. Pills can help deal with the symptoms but in order to truly manage the disease patients need to change behavior and ideally the population needs to implement more preventive rather than reactive means.
The preventive healthcare space is estimated to be comprised of 130 million Indians and be worth $100 billion by 2022. Unfortunately, the current trifecta of doctors, pharmaceutical companies and pharmacies are not structured to deal with this opportunity. The new age online pharmacies are simply replacing rental costs with online customer acquisition costs. None of the players (old or new) in the healthcare value chain are incentivized to address the new needs of the Indian consumer.
Chronic patients have no source of reliable information or network to rely on to help them manage their diseases. Doctors are short on time and pharmacies operate like dispensaries, dolling out pills alongside shampoo and mosquito patches. This is where Generico steps in. Generico currently runs a network of 40 pharmacies. These pharmacies sell pills but also provide a suite of preventive health services that give patients the solutions to managing their conditions.
By building community, content and services that go well beyond the simple dispensation of pills Generico is offering an alternative way of approaching healthcare. We are pleased to announce our investment in the business. With our investment the company will scale up its health centers and layer in more tech and community based preventive care services.
Given India’s unique position in the chronic disease space, the lack of government involvement in healthcare and the rapid penetration of connected devices India has a chance to be at the forefront of a new approach healthcare. We can merge the benefits of an ancient history rooted in understanding preventive healthcare with modern technology and medicine.