McKinsey.

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in depth PHARMA

Healthcare consumption Top 14 pharma Top 14 pharma By absolute growth, India

India Pharma 2015 expected to triple markets, 2005 markets, 2015 will be among the top 5

A McKinsey report
Share of avg. household consumption CAGR US (248) US (444) US (196)
Per cent Per cent Japan (68) Japan (82)
China (23)

Prescribed
(60) (82) (140) (248) Healthcare 9 France (32) France (46)
4 7 9 13 Education & Germany (31) Germany (38)
1 11 3 9 India (14)
5 recreation Incremental
2 6 Italy (20) China (38)
4 growth
2 17 3 9 Communication 12 France (14)
14 UK (19) UK (32) 2005-15
19 6 Transportation 7
5 8 Spain (14) Spain (25) Japan (14)

growth
3 20 Personal products 8 Canada (13) Italy (25)
12 9 and services
3 China (13) Canada (25) UK (13)
6
12 11 Household 5
3 products Mexico (10) India (20)
5 10 5 Canada (12)
5 Housing & utilities Brazil (9) Brazil (20)
56 42 34 25 Apparel
5 Brazil (11)
South Korea (8) Mexico (19)
Food, beverages 3
Turkey (7) South Korea (15) Germany (7)
1995 2005E 2015F 2025F and tobacco
India (6) Turkey (15)
Figures have been rounded off; Figures in brackets are average Figures in $billion Source: IMS World Review, analyst
household consumption in Rs thousand Source: McKinsey report 07 Figures in $billion Source: IMS World Review, analyst projections, McKinsey India Pharma demand model projections, McKinsey India Pharma demand model

M KEY TAKEAWAYS
cKINSEY’S just released report on
the Indian pharmaceutical market Rural and tier-II markets to contribute Mounting number of chronic diseases
says the industry will treble in the almost half of growth till 2015
By 2015, India will be among
Prevalence rates of key chronic diseases in India 2005
next decade, and catapult the country into the the top 10 global pharma mar-
top 10 markets in the world by 2015, overtak- Market by geographic tiers, 2015 Absolute demand growth Contribution to total growth kets by value. It will add revenues Per cent of population
Per cent $billion (2005-15) Per cent 2015
ing Mexico, Turkey and South Korea. The rep- the fastest after the US and
ort, ‘India Pharma 2015: Unlocking The Poten- Rural 24 China, which is $14 billion in
tial Of The Indian Pharmaceuticals Market’, is 3.6 27
Class II-IV drug sales, more than double the
the culmination of a year-long research pro- 20
(Tier 2) 100% 2.7 18 country's pharmaceutical mar-
ject by the Pharmaceuticals and Medical =$20
3.31 4.91 2.80 3.70 2.50 2.70 1.30 2.70 0.18 0.20
Class I/IA 27 ket in 2005.
Products (PMP) practice of the consulting billion 3.2 25 Coronary heart Diabetes Asthma Obesity Cancer
company. The project was undertaken to as-
Indians are expected to spend disease
Metros Number of
sess the potential of the Indian pharmaceuti- 29 4.1 30 far more on healthcare than they patients 36 62 31 46 27 34 14 34 2.0 2.5
cals market, identify opportunities and un- 2015 are now. Healthcare’s share of the (million)
derstand the implications for industry and Metros: more than 1 million population, Class I towns: 0.1-1 mn, Class II-IV: 5k- 0.1 mn, Rural: less than 5k wallet will rise as fast as that of
Source: McKinsey India Pharmaceutical demand model Source: NCMH, Central Bureau of Health Intelligence, WHO, Decision Resources, McKinsey analysis
policy makers. An exclusive sneak peek. education and three times as
much as the share of food, bever-
Affordability and medical infra- Private investment in ages and tobacco. 20 per cent of the population insured by 2015
structure to drive demand growth hospital infrastructure
Rising incomes, healthcare
Components Key drivers Coverage (million)
CAGR insurance and better healthcare
Market growth, 2005-15 Source of growth Per cent Key drivers infrastructure will spur growth. 2006 2015
$billion Per cent 2005-15 Premium-based Removal of regulatory hurdles; active market
Many more Indians will have
Top- tier private hospi- Demand for higher quality
health insurance
shaping by private health insurers; entry of inter- 25-30 ~125
tals (>100 beds, 26 40 12-14 services in high and medium health cover, and there will be national players and life insurers
~20 ~14 Increase in Others
40 income households; rapid
including corp. chains) more hospitals to spend it in. Relaxation in income ceiling or enterprise crite-
prevalence 10 15 14 expansion by existing play- Social insurance/
Income Medium-tier private
ers; entry of new players
Upcoming small city and rural welfare funds
ria (though this will be limited by small size of 35-40 ~50
growth hospitals 11 5-6 organised workforce with wage employment)
15 (30-100 beds) Segment losing value propo- centres will contribute almost as
Insurance 20 26 sition Employer provided Employers increasingly preferring premium-
6.3 Private nursing homes 30 9-10 much to the pharma growth as
penetration
(<30 beds)
Large unmet need for beds in
metros and top-tier towns. (sponsored benefits) based coverage plans; no appreciable growth 30-35 ~35
the primary healthcare seg- expected in public sector employment
Medical ment in tier-II towns
By 2015, millions more will
2005 2015 Growth bet infrastructure Government hospitals 34 19 ~2 Community insurance
Moderate investments by the suffer from chronic, costly-to- Increased efforts of NGO/self-help groups 2-3 8-10
2005-15
government
(self-funded)
2005 2015
treat diseases such as diabetes,
Source: McKinsey India Pharmaceutical demand model Source: Secondary research annual reports; interviews; McKinsey analysis Source: Secondary research, interviews, McKinsey analysis
asthma and cancer than in 2005.

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