Views and opinions have been arrived at by BMO Global Asset Management and should not be considered to be a recommendation or solicitation to buy or sell any companies that may be mentioned.
Increasing levels of non-communicable diseases, such as heart disease and diabetes, have led to a significant rise in the cost of healthcare in India. This has had negative impacts on the livelihoods of households as the lack of comprehensive health schemes (either private or public) means that healthcare expenses are usually incurred by people from their own pockets. Within the combination of a public health system hampered by weak infrastructure, poor healthcare delivery mechanisms and serious quality issues, people have little choice but to seek healthcare in more expensive private institutions.
The economic success India has had over the past three decades has helped lift millions of its citizens out of poverty. However, access to basic services such as healthcare and finance remains elusive for millions more.
Many Indian pharmaceutical companies have made great strides in adopting innovative practices to deliver cost-effective and affordable medicines. Two of the companies we met stand out. One of them has an access to medicines strategy that is not only premised on pricing, but also on high-profile awareness campaigns, patient and doctor education, and optimised distribution logistics to reach lower tier cities and rural India. The second one has an innovation strategy that involves the development of affordable follow-on versions of biologic drugs, or biosimilars, to provide cost-effective alternatives.
India has achieved significant progress towards financial inclusion this decade. However, there has been less success in the usage of financial services, as only an estimated 20% of the population actually use the accounts. People continue to rely on the informal sector, which could explain the mainly dormant bank accounts.