Date:11/02/2006 URL: http://www.thehindu.com/2006/02/11/stories/2006021117800500.htm

Andhra Pradesh - Hyderabad

Ernst & Young predicts growth in health, pharma

Special Correspondent

`Nation on threshold of surge in medical tourism'

HEALTHY TRENDS: Chief Minister Y.S. Rajasekhara Reddy greeting captains of pharmaceutical industry at the Ernst & Young CEO Conclave in Hyderabad on Friday. - Photo: P.V. Sivakumar

HYDERABAD: Ernst & Young, a reputed professional services company, has projected a robust growth for biotech, pharmaceutical and healthcare service sectors in the country in the coming years.

In its first ever health sciences report, Health Quotient, it said that the country was on the threshold of strong growth driven by consolidation in generics market, reform in the distribution side and a surge in medical tourism. Chief Minister Y.S. Rajasekhara Reddy released the report at the CEO Conclave organised by the company, here on Friday evening.

The report foresees the next wave of reform in the "highly fragmented" distribution model in the domestic pharmaceutical sector that had adversely impacted the industry in several ways. The high distribution margins and logistics cost, ineffective control on channel inventory leading to entry of counterfeits and ineffective implementation of laws and regulation at the retail level were resulting higher costs for the end users.

Medical tourism

New models incorporating features like third party logistics providers and pharmacy chains & institutional sales were on the anvil

Elaborating on the heightened merger and acquisition activities in the generics segment and the adverse impact of the fringe benefit tax on the industry, the report dealt at length on the emergence of India as a global medical tourism major.

The country, however, was facing tough competition from its Asian counterparts like Thailand, Singapore and Malaysia as these countries were together attracting 10 times more medical tourists from abroad than India.

Though there was tremendous scope for growth, there were several inadequacies in support infrastructure like clean cities, good roads and airports, lax domestic regulation and lack of international recognition of Indian medical standards, which needed to be addressed.