Once again it’s time to welcome the new year. Every new year brings hope. Sometimes the hope is based on a solid foundation of reasoning or/and analysis of previous developments. But, sometimes it is merely an expectation or a wish without any base. For Indian healthcare sector, various studies and projections have brought good news and are showing hope of better performance.
Despite general slowdown of economy, the healthcare sector is the fastest growing sector. Its growth is projected to continue till 2020 as the factors like rising incomes, greater health awareness, lifestyle diseases and increasing access to insurance that help propel the growth till now will continue. Various organisations have made projection of the healthcare sector’s growth ranging from 16 to 22 per cent CAGR and reaching to USD 280 billion by 2020.
Deloitte, in one of its reports, has projected the healthcare spending in India to grow 16.1 per cent each year till 2019. Both, FICCI-KPMG report and Indian Brand Equity Foundation, have almost similar projections. They all have painted a bright picture of 2017 and ahead. But, in view of the much discussed possible effects of the demonetisation on the economy, it will be important to watch carefully if the sector performs this year as per the expectations.
In the projected growth of the sector, a major contributory factor is private players. Government’s current spending of 4.1 per cent of GDP, much less than APAC region’s anticipated average of 6.5 per cent, is expected to continue, according to the Deloitte’s projections. However, the government has set a target to increase spending on the healthcare infrastructure development from 1.2 per cent to 2.5 per cent. Still, this would be much less than required as the healthcare infrastructure is very poor. Services in the public hospitals have to be stretched much beyond their maximum limits due to the adverse ratio of patients to infrastructure.
For the Indian pharma sector too, similar bright projections have been made till 2019. For part of pharma sector involved in production and sale of fixed dose combination (FDC) drugs, the new year brought some hope as the Delhi High Court in the last month of 2016 admitted petitions challenging the government’s order banning 344 FDC medicines, implying setting aside the order.
The government had banned these FDC drugs in March 2016 following the expert committee report that they have little therapeutic value, unsafe, promote antibiotic resistance, some banned in other countries, and sold without the approval of drug controller as they are manufactured under the licences issued by state governments. The Drugs Controller’s notification banning these drugs was challenged in the court by pharma companies by filing over 450 petitions.
The petitions were allowed as the court felt that the government had not followed the procedure prescribed in the Drugs and Cosmetics Act, 1940, to ban the drugs without consulting Drugs Technical Advisory Board or Drugs Consultative Committee and giving three months notice to drug manufacturers before the ban.
The government has two options now. It has already moved the Supreme Court with a plea to combine and transfer all cases in the matter, to combine all petitions on the issue, or it can also re-issue the ban order by following the prescribed procedure.
There are two lessons in the whole issue. The government has to carefully examine and implement the procedures prescribed by the law to avoid embarrassment of striking down of its order on technical grounds. The situation arose to a certain extent due to the licences issued by states. Such types of loopholes need to be plugged. Besides the allocations and expenditure, the government will have to pay attention to such issues too for the robust growth of the sector during this year.
Milind Kokje Chief Editor email@example.com