Medicine ensures safe sector

There have been many recent, truly remarkable developments in global healthcare. Rather than stonewalling responsibility for the poorest regions in the world, leading companies are embracing the opportunity for serving low-income populations with specialised products, new distribution models and affordable pricing. In short, they have found new ways to serve 90 percent of the world’s population that may have been previously overlooked.

Healthcare as an industry is seen as an economic growth engine for developing nations with domestic as well as export income benefits. The evolution of emerging markets has created new challenges and opportunities for companies, and they’ve made significant strides into particular regions such as Brazil, China and India. By introducing new products into these nations, these companies are often establishing deeper ties including the acquisition of domestic healthcare manufactures, API (active pharmaceutical ingredients) sourcing; construction of manufacturing plants and research facilities; partnerships with governments and domestic producers and assertive product positioning with healthcare professionals, players and patients.

“These healthcare companies exemplify the principles of shared value creation,” said Mark Kramer, co-founder and MD of FSG. “They are re-conceiving products and markets, re-inventing their value chain, and strengthening local healthcare clusters in ways that contribute both to the profitability of the business and the welfare of society.”

For example, one of the UK leaders in diagnostic solutions, Roche, is piloting a new breast cancer screening process in Thailand and GE are working on low-cost, portable medical devices such as a handheld ultrasound machine that can be used in remote rural communities and transmit pictures to clinics for diagnosis and study.

Merck has developed tiered pricing models to drive sales volumes for its drugs in emerging markets and GlaxoSmithKline also sells millions of products annually through a similar system, and a newly designed low-cost sales force and risk-sharing arrangement.

Supported by advanced clinical and technological resources as more and more companies become active participants in shaping efficient and effective healthcare systems, governments with ownership stakes in domestic pharmaceutical manufacturers are able to expedite policy decisions and decide more treatment options. Coupled with their formal healthcare benefit plans, they are able to create new and efficient services for the patient population. This cyclical progression is beginning to share efficient and effective healthcare systems in developing nations.

For example, Swiss-based Novartis hired hundreds of people to provide health education to remote Indian villages, addressing previous medical constraints that affected people living in that area, in order to distribute drugs there, and in recent months, Eli Lilly & Co announced a $30m initiative to educate healthcare providers and patients about non-communicable diseases, working with governments to improve conditions for chronic disease care in four-emerging markets. In May, the company opened a new diabetes-focused research and development centre in Shanghai, China showcasing its significant and sustainable commitment to Asia.

Sustainable systems
To be competitive, healthcare companies need to quickly identify when “emerging market” nations mature into ‘intermediate’ or ‘established’ markets, adjust their business models accordingly and re-position their brands to keep pace with evolving demands and maintain their lead in the global marketplace. Many emerging markets have already entered a new phase of existence and are no longer open field-running opportunities of revenue for companies headquartered outside their borders. They are quickly maturing due to governments and healthcare communities becoming directly involved with cost, outcome assessments and more establishment of care and payer structures; an increasing number of people with greater access to care, a more fortified relationship between domestic and foreign healthcare; more permanent industrialisation and modernisation; and greater access to advanced biological and IT technology. This evolution has created new business environments with opportunities for healthcare companies and global brand management.

About one third of the population of Brazil has health insurance; 75 percent is through commercial operators or companies with self-managed plans. Despite Brazil’s Minister for Health and Aging administering a national health policy where healthcare can be obtained through private and government institutions, decentralisation of healthcare is widening, with more of it overseen by individual states. The government strongly supports the manufacturing and use of generic drugs within the nation’s healthcare system, and 15,000 pharmacies participate in “Pharmacia Popular” and “Health Has No Price” state programmes which distribute products at minimal or no cost to patients.

China has a three-tiered distribution system to treat the 20 percent of the world’s population who live in the country, with over half of all private healthcare paid for by the people themselves. The system has become increasingly united via enhanced information systems from healthcare companies, who offer improved logistics and reporting. There are 3,000+ drug companies with complete product development, manufacturing and distribution capabilities for domestic needs as well as global export. A very large portion of the market is in hospitals and hospital-based pharmacies with a rapidly growing retail pharmacy segment.

The remarkable growth of the private health sector in India has come at a time when public spending on health care at 0.9 percent GDP is among the lowest in the world. However, while the upper and middle classes have access to a high level of care, one third of the nation is rural and significantly impoverished by comparison, and only has access to substandard care. Employers pay for nine percent of spending on private care, health insurance five to ten percent, and 82 percent is from personal funds. As a result, more than 40 percent of all patients admitted to hospital have to borrow money or sell assets to cover expenses, and 25 percent of farmers are driven below the poverty line by the costs of their medical care.

The market transition of healthcare companies is indicating quite significant development in emerging markets and growing economies. According to a recent report from Healthcare Medical Pharmaceutical Directory, the widening adoption of contemporary healthcare methods, with increased access to technology including new procedures, has allowed for significant medical progression. The introduction and expansion of a permanent healthcare provider presence beyond metropolitan zones and into rural areas has been extensive due to increased funding. There are now higher levels of clinician expertise, with a greater ability to manage more challenging patient healthcare issues, and the establishment of domestic healthcare industries that include product development and manufacturing, as well as producing quantities to export, has allowed for an increased flow of funds that can be re-invested into  nations.

As markets shift and the globe’s economies find themselves stimulating new and diverse ways of utilising resources, healthcare industries have found themselves well positioned to re-imagine their outlook. With that in mind, The New Economy has spent the past few months analysing the best firms in the field, thanks to reader feedback, and here announces the magazine’s 2012 Healthcare awards. Congratulations to all of our winners.