Healthcare just got an energy shot

Call the doctor, he's well within earshot. When and X-ray appears fuzzy, or a diagnosis is too skeletal, there's a whole aid kit waiting to be dug into right here.

You could say it's the back office clinic. We're not talking billing and coding work here. This is about high-end services in the medical transcription field. The kind that involves trained doctors.

Compared to basic back office functions such as customer care, accounting, legal and human resources, outsourcing of healthcare services is low profile, although widely prevalent among healthcare organisations. All the same, it could spell bid business for domestic business process outsourcing (BPO) firms. The global healthcare market is said to be in excess of a trillions dollars, with medical transcription, coding and billing presenting an opportunity in excess of $25bn. According to some estimates, providing ITES/BPO services in healthcare would bring in revenues of Rs 23,000 crore to India by '08. It firms offering back-office healthcare services are to be believed, the growth of outsourcing revenue from India is in excess of 40%, driven largely by the ability to get quality capacity on board.

Currently, medical image processing and diagnostics are being outsourced in small numbers, However, the future looks promising, say industry sources. According to Praveen Soti, a business consultant with Infosys' healthcare practice: " The high cost of trained radiologists and pathologists in the US has compelled healthcare organisations to think of alternative models, including outsourcing. India has large numbers of such trained professionals and often internationally qualified medical professionals who could be employed for these outsourcing clinical services."

Several healthcare organisations have outsourced business processes to India on an experimental basis, and most of these initiatives are on a pilot basis and at the lower end of the value chain. If these initial engagements prove successful, BPO providers might be inclined to outsource increasingly complex functions.

[Economic Times dated 31/12/2003]

Budget Impact on Pharma  

The impact on pharmaceutical companies appears slightly positive as overall importers are around 10-11% of total sales. Import duty on bulk and intermediates has been cut to 20%, form 25%. So, companies will be gainers of 50-60bp of sales or 2-3% of net profits. In some cases, it will have to be passed on to the consumer. But those companies, whose sales are through exports and enjoy duty entitlement pass book benefits and are derived form export oriented units, won't have a major positive impact. The duty on specified life saving bulk drugs, formulations, medical equipment, which has been reduced to 5%, will have a slight positive impact on companies as these drugs account for less than 2% of overall sales of the industry.

Pharma (Positive)

Measures

• Reduction of peak duty on bulk drugs, intermediates and formulations to 20 per cent from 25 per cent.

• Reduction of customs duty on many life saving drugs form 25 per cent to five per cent.

• Abolition of SAD.

• Reduction of customs duty on parts of artificial limbs and specific rehabilitation aids to 5 per cent.

• Reduction of excise duty from 16 per cent to 8 per cent for medical, surgical, dental and veterinary furniture.

• As many as 24 medical devices, including X-ray goniometer and teletherapy stimulator machines have been brought under the 5 per cent customs duty umbrella.

• Reduction of customs duty on sulpha drugs and alkaloids (which are used as drugs) from 19 per cent to 14 percent.

IMPACT

• The duty cuts relating to the pharma and healthcare industry will bring tariffs in the domestic pharma industry closer to global tariff rates.

• The peak duty cut is expected to benefit companies which import bulk drugs and intermediates.

• Lowering of customs duty won't have much of an impact as drug prices in India are already among the lowest in the world.

• Indian companies do not have to pay duties on raw materials to make products for exports. MNCs, which import products from their parents to be sold in the domestic market, will also benefit from duty reduction.

Ranbaxy, Dr. Reddy's : Peak duty cut likely to benefit companies like Ranbaxy which import 53 per cent of its raw material requirements. Dr. Reddy's (43 per cent) and Aruobindo (65 per cent) are also in the same boat.

MNCs who import products from their parents to be sold in domestic markets like Glaxo SmithKline, Novartis and Aventis are likely to gain. The duty cut on life saving drugs will benefit pharma companies like Pfizer, Aventis, Wyeth, Lederle and Fulford which import one or more of those medicines either as bulk drugs or formulations.

Apollo Hospitals : The company is expected to gain from reduced duty on hospital equipment.

[Economic Times dated 12/01/2004]