Big Pharma plans to turn rural India into a cash cow

By Ari Altstedter

First, foreign food brands flooded India with chips, cookies and soft drinks that fundamentally changed the nation’s eating habits. Now, Big Pharma wants to cash in on an upsurge in cases of diabetes and heart disease in the country’s most distant corners.

Global pharmaceutical companies, from Indianapolis-based Eli Lilly & Co. to Switzerland’s Novartis AG, are heading into smaller cities and rural areas to learn about the healthcare needs of about 70 per cent of the population. These remote regions of the developing world are the final frontier for the international drug industry.

In the farming village of Thana Kalan outside New Delhi - where buffalo roam narrow streets and the scent of cow dung used for fuel hangs faintly in the air - Ajit Singh had never heard of diabetes. That was until community health workers showed up at the door and warned him and his wife they were at high risk of it.

The Singh's were part of a free door-to-door screening program funded by Eli Lilly, which is among the world’s biggest makers of diabetes medicines. Even though families like theirs might only start off with cheap generic drugs the hope is that they will be more likely to shift to pricier brands as their incomes rise. And if Big Pharma can figure out a way to serve these patients while turning even a slim profit, the sheer numbers could mean a huge payout down the road.

"Companies are interested in taking a longer-term stance and understanding the characteristics of these markets and positioning themselves in a way that could help them down the line capture market share," said Sebastien Mazzuri, a director with consulting firm FSG, who specializes in developing pharmaceutical markets.

Foreign Brands

India’s two decades of economic growth has attracted consumer brands such as Coca-Cola Co. and Unilever. Rising incomes have powered increased motor vehicle ownership and also greater demand for processed foods. Active lifestyles were replaced by sedentary ones. In recent years, the country has been home to about 69 million diabetics, according to the International Diabetes Federation. China has about 110 million diabetes patients.

Over the last five years, virtually all the growth in the volume of medicines sold globally has been in the largest developing markets, while the developed world stagnated, according to a report last year by Quintiles IMS Holdings Inc. Among the fastest growing were China and India.

Chinese spent $116.7 billion on medicine in 2016, a figure that could reach as much as $170 billion in 2021. Spending in India is forecast to grow at an even faster rate-from $17.4 billion to as high as $30 billion over the same time frame.

In rural India and China, where health-care access ranges from spotty to non-existent, there are almost 1.5 billion people, many of whom have never been tested for cholesterol levels, diabetes or heart disease.

The Lilly-funded pilot program that screened Singh, run by the non-profit Public Health Foundation of India, sends community health workers house to house in two mid-sized Indian cities and the surrounding countrysides with tablet computers programmed to screen people for diabetes and hypertension. It also raises awareness of the diseases and is training local health workers to better diagnose and treat them.

David Ricks, Lilly’s chief executive officer, says such programs represent a long-term business opportunity and let the company gain a better understanding of the challenges of medicine in the developing world, such as refrigeration and supply-chain setup. “By running these pilots, we can learn and experiment,” he says. “Our projects are working on all of those angles to try and stand up, within difficult environments, better ways to treat diabetes.”

Lifestyle Diseases

Meanwhile, Merck & Co., India’s Sun Pharmaceutical Industries Ltd. and GlaxoSmithKline Plc. are funding programs, also run by PHFI, that train general practitioners to treat similar lifestyle diseases in small Indian urban centers, where there’s unlikely to be a specialist.

Since 2007, Swiss health giant Novartis AG has run a "for-profit social initiative" designed to bring health care to rural India by dispatching doctors to villages and distributing affordable medicines through local pharmacies. The program has since expanded to Kenya, Indonesia and Vietnam.

It’s a way of "building health ecosystems" that will eventually help Novartis grow in untapped market segments, Jawed Zia, country president of Novartis India, said in an e-mailed statement. "This is simply good business sense."

Sailesh Mohan, an associate professor with PHFI, who is running the Lilly-funded pilot project that screened Singh, said he’s had complete independence in the execution of his study, and nothing in the pilot recommends any particular company’s products. He said Lilly’s funding had no strings attached and patient data is kept confidential.

The ultimate goal of these pilot programs is to develop cost-effective strategies that can be adopted by government and deployed more broadly, Mohan said. "Obviously, if they manage to get more people to be aware of their condition, to be evaluated, confirmed, and then put on treatment, those companies are going to benefit."

Playstation

Over the course of this decade about 28 million households in rural India will have climbed out of the lowest income class, according to a report by consultancy McKinsey & Co.

From his sons’ PlayStation 3 to the Korean-made car outside, Ajit Singh’s home is full of evidence of the prosperity that’s changed life in his largely rural state of Haryana. Singh doesn’t work in the village, but instead commutes to Delhi each morning where he works for the central government, drafting maps of the local area, for a monthly income of about $1,200.

The community health worker has been going through a long list of changes to his lifestyle and diet Singh will have to make to ensure he stays healthy. "Can I consume tea?" the 56-year-old asked, bemused and a little exasperated.

Nevertheless, he plans to get tested for diabetes. His wife, Sudesh Devi, did after the health worker advised it, and found out she’s diabetic. While a shop across the street is adorned with displays of potato chips, sweets and Indian snacks, the couple say they’ve been trying to eat healthy.

To get treated, his wife didn’t bother waiting in line at a public health facility, but paid for the convenience of a private hospital. Singh said he’ll do the same. They can afford it.