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MedicinMan August 2012

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IS THERE BUSINESS IN RURAL MARKETS?


According to census 2011, 91.21 million households in rural India have access to phone, compared to 64.67 million households in Urban India. Internet usage in rural India has overtaken usage in urban India.

Dr. Surinder Kumar Sharma

Medicin Man
India lives in its villages. - Mahatma Gandhi And after so many years, we still wonder is there a business in rural markets? According to census 2011, out of 1.2 billion Indians, 68.84% live in Rural India. Rural India is undergoing a tremendous change machines are replacing man and tools and as a result farmers and their families have a lot of time for non-farming activities. According to census 2011, 91.21 million households in rural India have access to phone, compared to 64.67 million households in Urban India. Computer is not a magic-box or a genie for a rural folk anymore. There are 8.64 million households with a computer in rural India. Internet usage in rural India has overtaken usage in urban India - more Internet

users in rural India than in urban. TV and dish antennas are common sight in rural India. 56 millions households have a TV, compared to 60 million urban households. Government is aggressively spending for rural development. Active steps are being taken to improve healthcare. Rashtriya Swasthya Bima Yojna (RSBY) was launched in 2008. Its purpose is to cover all BPL families with a health insurance of Rs. 30,000/ (government or private hospital treatment, no age limit and pre-existing ailments are also covered). One thousand more PG seats are sanctioned for private medical colleges, and 4000 more seats are created in existing government colleges. Land required to open a medical college is being reduced from 25 to 20 acres. To meet the shortage of teachers in medical colleges, age-bar for faculty position is being increased from 65 to 70 yrs. To encourage rural healthcare, 50% PG seats are allocated to doctors working in rural areas. There is narrowing of rural urban divide due to: 1. Better income from farming 2. Increasing income from non-farming avenues and immigrants 3. Industry projects in rural areas 4. Infrastructure development 5. Increase in literacy and awareness 6. Affordability of technology & white goods

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MedicinMan August 2012


Income from non-farming sector is increasing. Now around 50% income in rural India is being generated from trade, food processing, industry, and money brought back by emigrants. Better procurement prices for crops, a run of good monsoons, cash crops, etc. have increased disposable income. Rural folks are buying cars, flat screen TVs, microwaves and high-end mobile phones. Rural income is 43% of national income. In terms of absolute numbers disposable income and middle class is more in rural India. Literacy is improving in rural India - there are 493 million literates in rural India, 285.4 million in urban. In spite of its huge potential, as indicated by various parameters mentioned earlier, rural markets contribution to pharma remains abysmal; even its growth, over the past few years, has been suboptimal. What are the factors that are preventing the rural pharma market to achieve its potential? Road Blocks Inadequate Infrastructure There are gaping holes both in government as well as private sectors initiatives to create a good healthcare infrastructure. There are gross inadequacies - be it the number of hospitals, dispensaries, staff, or doctors (only 1 doctor per 3000 people in rural area, compared to 2/3000 in urban). Quacks rule the roost. 60% of rural diseases do not get treated at all. Lack of awareness Lack of awareness towards diseases, even the highly prevalent ones, continues. Superstition and belief in witchcraft is still rampant. Most of folks still believe that diseases are due to Gods curse, and have fatalistic attitude towards health and disease.
60000 50000 40000 30000 20000 10000 0 2009 2010 2011 2012 6766 7084 9937 11686 12351 13622 8725 7435 8392 14728 16998 9513 10678 10517 RURAL CLASS II TO VI METROS CLASS I TOWNS

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Lack of affordability Many drugs remain expensive. Rural masses have stronger value for money. A few days, or a little, suffering is preferred to spending money on medicines. Poor accessibility Highly disbursed markets make distribution expensive and a logistic nightmare. Maintaining cold-chain or special storage conditions is a challenge due to erratic electricity supply. To establish a dependable distribution system in

interiors one needs strategic approach, rather than tactical, as ROI period is long. What is the way forward? To develop rural markets, one needs a multipronged approach, and need to: 1. Improve Healthcare System 2. Create Awareness 3. Provide Affordability 4. Ensure Accessibility Improving healthcare system It shall be viewed as a community responsibility and corporations shall take active responsibility. Various steps that can be taken to develop and robust healthcare system in rural India are: 1. Partnering with government, NGOs and other key stake holders 2. Training rural doctors and supporting staff 3. Providing microfinance to doctors, retails, etc. to create healthcare infrastructure Some of the initiatives taken in this area are: 1. MSD India launched Project Transcend, a program to train GPs on evidence based management of diabetes. 2. Sanofi Aventis PRAYAS - a program to meet rural Indias healthcare needs and to bridge the gap by training rural doctors - plan to train 150,000 doctors across India. Creating awareness 1. Educating rural masses about safe and reliable remedies for common ailments 2. Partnering with rural institutions and NGOs

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MedicinMan August 2012


3. Making use of annuals fairs, weekly haats and mandis to spread awareness Some aspiring initiatives, which have done good to both company as well as masses are: 1. Novo Nordisk Education Foundation is undertaking massive diabetes control program that involves screening, spreading awareness and training doctors. 2. SPARSH, a multilingual helpline for diabetics to support Januvia and Janumet. 3. NPL had run Teach more, reach more campaign to educate masses about epilepsy. 4. J&Js Mobile health for mothers helped many. Providing affordability 1. Making medicine more affordable is very important. Companies can think of differential pricing strategy for rural areas, e.g. Microsoft has low prices for its products for students. 2. Rural healthcare insurance can help decreasing the burden of payment on the individuals 3. Training medical staff for cost effective disease management may help in establishing trust in allopathic medicines. Arogya Parivar (Healthy Family), a low-profit social initiative developed by Novartis, is a good example. This program is proved to be a commercially sustainable program.

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Ensuring Accessibility Highly disbursed market and thinly populated area make setting an effective distribution system a nightmare. Maintaining cold chain etc becomes very difficult due to frequent power failures. Various options could be: 1. Company delivery vans 2. Pooling of resources by collaborations between companies to set up viable distribution channels 3. Developing products suitable for rough storing conditions 4. Mobile clinics and mobile pharmacies 5. Post offices duplicating as pharmacies Ranbaxy and Pfizer have formalized an alliance with ITC to penetrate the rural markets for their over-the-counter (OTC) products. Traditionally Indian companies, especially mid- & smallsize, have a better penetration in rural and class II-VI markets. Now multinationals (Indian & foreign) are becoming more aggressive in these markets. Every other day, there is news of some or other company hiring to enter into rural markets. In view of these developments, mid- & small-size companies need to be proactive to make the most of the new markets created by these companies and, more importantly, to protect their current business in these markets. Dr. Surinder Kumar Sharma is Head - Strategy & Business Development, TTK Healthcare Ltd

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