Why Pharmaceutical Firms in India Hardly Took the Village Road

Tuesday, July 7, 2015

It’s easier to spot an auto showroom in a small town than to locate a pharmacy that sells anything beyond cough and cold, and birth-control pills.

If you are desperate to get hold of life-saving drugs, or insulin or drug for epileptic seizure, chances are you would run out of luck. That’s because pharma firms have largely stayed away from villages. At a time when every business – from toothpaste to mobile handsets to luxury cars – are luring customers in rural India, this may appear strange. But there are reasons.

The growth of the Rs 85,000-crore pharma industry in India has been largely driven by demand from urban Indian patients. The penetration of pharma companies in villages (with population less than 10,000) is limited: their presence is largely restricted to selling acute therapy products — medicines for common or short-term ailments.

According to data from IMS Health, rural India contributed 18% to the total industry’s revenues for the year ended March 2015 – marginally up from 16% in end 2011. This despite the fact that the rural market is the fastest growing segment, buoyed by demand for cough syrups – often a substitute for alcohol — and food supplements. The industry earns two-third of its revenues from metros and towns with population of more than a lakh.

Thus, while pharma remains a stunning story in India, it has bypassed Bharat. The biggest challenge is the poor medical assistance. The doctor-to-patient ratio across the country is at 1 doctor for 1700 people – way below the level recommended by World Health Organisation – but skewed, almost four times, in favour of cities. This confines pharma companies to metros and other cities despite a high patient population in the hinterland.

Source: The Economic Times (link opens in a new window)

Health Care