India’s proposed universal health coverage scheme – Implications for the global pharma industry

Abstract

India’s current healthcare system under serves the basic healthcare needs of its huge population, as demonstrated by India’s below-benchmark performance in key health indicators, such as infant mortality, malnutrition, maternal mortality and burden of communicable diseases. The fact that public healthcare spending in India is just 1.2% of its gross domestic product, which is low even when compared to countries of similar income levels, shows that healthcare has not previously been a high priority for various presiding governments. In order to address these issues, in 2010 the Planning Commission (a central government body), with permission from the Prime Minister of India, instituted a high level expert group to propose an overall framework for establishing universal health coverage (UHC) in India. A pivotal question is, therefore, if UHC is implemented in India, what would be its impact on the pharmaceutical industry? This paper describes how:

the UHC will primarily grow the generics market, with low prices moderating the financial impact of increased volume, thereby eroding the margin for multinational corporation generic players competing with low-cost locals;

innovator brands are already under significant threat as next compulsory licensing candidates, as demonstrated by the recent court orders related to the compulsory licensing of Nexavar® and the listing of Sprycel®, Ixempra® and Herceptin® considered to be priced too high for India. Allowing generic versions of these drugs to be sold before patent expiration is to the detriment of both multinational corporation pharma revenues and Indian public health as, under these circumstances, new products are less likely to launch in India and

author’s contend that, despite these twin pressures, UHC will unlock pockets of value in a growing Indian healthcare market, which agile multinational corporations with smart customer segmentation, supportive pricing strategies and local collaboration partners should be able to access.