LifeSciences India- a Confederation of Indian Industry publication

Mr. Apurva Shah
Group Managing Director
Veeda Clinical Research
Mr. Arun Sawhney
Chairman, CII National Committee on Drugs &
Pharamaceuticals and CEO & Managing Direc-
tor
Ranbaxy Laboratories Ltd
Dr. Arvind Lal
Chairman and Managing Director
Dr Lal PathLabs
Dr. Devi Shetty
Chairman
Narayana Hrudayalaya
Prof. N.K. Ganguly
President, JIPMER,
Distinguished Biotechnology Research
Professor, DBT & Former DG, ICMR
Mr. Hari Bhartia
Co-Chairman and Managing Director
Jubilant Life Sciences Ltd
Dr. Kiran Mazumdar-Shaw
Chairman and Managing Director
Biocon Limited
Dr. R.A Mashelkar
National Research Professor and Former DG,
CSIR
Dr. Mrutyunjay Suar
Director, School of Biotechnology &
CEO, KIIT-Technology Business Incubator
Dr. Naresh Trehan
Chairman
Medanta-The Medicity
Dr. Nitya Anand
Former Director, CDRI
Dr. Rajesh Jain
Joint Managing Director
Panacea Biotec Ltd
Managing Editor: Vipin Balakrishnan
Editor: Hareeni Mageswaran
Consulting Editor: Shikha Dhawan
Consulting Editor: Dr Saji Salam
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August - September 2013

Innovation is increasingly being seen as the currency of the 21st century. The future
prosperity of India in the new knowledge economy will increasingly depend on its ability to
generate new ideas, processes and solutions, and through the process of innovation convert
knowledge into social good and economic wealth. In this endeavour there is a need to
network people, ideas, experiences and resources to galvanise the innovation community in
India and build a sustainable eco system.
Competition is vital to unleash innovation. India must encourage stronger competition among
enterprises. A focus on increasing competition as part of improving its investment climate,
supported by stronger skills, better information infrastructure, and more ﬁnance—public
and private. We must strengthen efforts to create and commercialize knowledge, as well
as better diffuse existing global and local knowledge and increase the capacity of smaller
enterprises to absorb it—if all enterprises could costlessly achieve national best practice
based on knowledge already used in India, the output of the economy could increase more
than ﬁvefold. Fostering more inclusive innovation—by promoting more formal R&D efforts
for poor people and more creative grassroots efforts by them, and by improving the ability of
informal enterprises to exploit existing knowledge
More concessional matching grants should be given to grassroots innovators once
prototypes are developed, they would become candidates for the fund-of-funds window,
which considers pro-poor grassroots innovation. The most important policy change for
increasing knowledge creation, commercialization, diffusion, and absorption is to sharpen
competition among enterprises so that innovation becomes essential. Unencumbered entry
and exit of enterprises is perhaps the most important stimuli to innovation. Meaningful
Industry academia collaboration is critical in creating a positive climate for innovation. IPR
is Intellectual property protection is critical for a country like ours, our Innovation success
parameter would be in creating an IP Economy
With cross-cutting, multipronged strategies, catalysts like NIC can make Innovation a way
of life for Indians. The road ahead is bumpy but not very bleak if we are able to help our
Innovators Ideate, integrate and Implement.
Hareeni Mageswaran
hareeni.lifescienceindia@gmail.com
EDITOR'S NOTE
The I’s of Innovation Ideate,
Integrate and Implement

CONTENTS
LSI | October - November 2013
Cover stories on India's Innovation
10 Innovation: a tryst with reality
It’s no secret that the life sciences industry is undergoing radical change due
to new regulations, innovative research, and the threat of generics. Often,
industry leaders see themselves at the forefront of these forces – but to move
forward during these uncertain times, biotech companies must be innovative
in how they do business, not just in their products. The real challenge is to
be fast enough to develop a strategy, and then accelerate to successfully
implement that strategy in time to take advantage of the opportunity
Healthcare Scenario
in India – Innovations
and Improvements
The Indian healthcare
industry, which comprises
hospitals, medical
infrastructure, medical
devices, clinical trials,
outsourcing, telemedicine,
health insurance and medical
equipment, is expected
to reach US$ 160 billion
by 2017.On the back of
continuously rising demand,
the hospital services industry
is expected to be worth
US$ 81.2 billion by 2015.
The Indian hospital services
sector generated revenue of
over US$ 45 billion in 2012.
This revenue is expected
to increase at a compound
annual growth rate (CAGR)
of 20 per cent during 2012-
2017, according to a RNCOS
report titled,‘Indian Medical
Device Market Outlook to
2017’
42 Innovations in
Industrial Biotechnology
Biotechnology deals with
the application of biological
knowledge and techniques
pertaining to molecular, cellular
and genetic processes to develop
significantly improved products
and services. The applications of
biosurfactants reduce the surface
tension of water by adsorbing at
the liquid-gas interface

CONTENTS
45 Innovations in treatment adherence
Adherence to treatment is a complex phenomenon
influenced by many factors like patient characteristics-
age, beliefs, literacy status,co-existing health conditions,
duration of treatment regimen, sociodemographics and
interactions with healthcare system. For illness requiring
long term medication like HIV-AIDS, tuberculosis and
diabetes, adherence is critical to treatment success
56 Innovation -Detection of Food
Adulterants-
Food is adulterated if its quality is ¬¬lowered or affected by
the addition of substances which are injurious to health or
by the removal of substances which are nutritious
37 Innovation in Nutrition
Nutrition plays an important role in human health and
wellbeing throughout the lifecycle –beginning with
conception, and through all stages in life. Nutrition is
essential for sustenance in babies, infants, adolescents,
young and older adults.
60 Innovation -Medicinal products from
Nature
Natural product has been a source of medicine for thousands
of years and earlier used as tinctures, teas, powders, and
other herbal formulations. Natural molecules exhibit
uniqueness, vast diversity in chemical structure and also
have multiple properties like antioxidant, anti-inflammatory,
anti-aggregating, etc which added extra advantage to drug
discovery process.
52Innovation in Environment Friendly
Technology
Paper making from agricultural residues, non-woody plants
and waste paper is gaining momentum. In general pulping
of non woody plants is cheaper than wood. They are low in
lignin and, thus, do not require as much chemical.
16Our need to Innovate
The global population is projected
to rise from 6.5 billion in 2005 to
7.6 billion in 2020. It is also aging
rapidly; by 2020, about 719.4m
people – 9.4% of the world’s
inhabitants – will be 65 or more,
compared with 477.4m (7.3%) two
years ago
22 A prescription for
Innovation
A holistic approach to Innovation is the key to
success Life sciences innovation is critical to
growth and socio-economic development as
healthy people produce healthy economies.
Efficient and effective delivery of patient-focused products
and services can improve a population's longevity, wellness,
productivity and economic potential

10 LIFESCIENCE INDIA | October - November 2013
LSI
COVER STORY

LIFESCIENCE INDIA | October - November 2013 11
LSI
COVER STORY
India needs to
position herself in the
affordable excellence
segment in the
area of life sciences
Dr RA Mashelkar, former
director general, Council
for Scientific and Industrial
Research (CSIR)
-Gouri Athale
W
ill `jugaad’ (a creative or
innovative idea provid-
ingaquickfixalternative
to a problem) be India’s
answer to delivering healthcare that
is accessible, affordable and available
to larger segments of our population?
What happened to our `frugal engi-
neering’, the Carlos Ghosn phrase
which encapsulated our ingenuity.
India’s healthcare sector requires
innovation across the board: from
technology, work flow, systems de-
livery, organisation, funding... so it is
unlikely that a quick fix, one size fits
the whole country solution of `jugaad’
will do the job.
Scientists and academicians are
unanimous that what might work
better would be innovation in our
traditional methods, through a part-
nership between commercial inter-
ests in collaboration with government
systems. After all, the government’s
reach is hard to replicate and when it
comes to health, a government pres-
ence is essential. Often, it is also the
only one.
“India needs to position herself in
the affordable excellence segment in
the area of life sciences,” said Dr RA
Mashelkar, former director general,
Council for Scientific and Industrial
Research (CSIR), the country’s apex
research organisation and chair of
several committees which have ad-
dressed issues pertaining to the sec-
tor. He stressed that àffordable excel-
lence’ is not an oxymoron despite the
popular belief that what is affordable
cannot be excellent and what is excel-
lent cannot be affordable.
There is the example of Shantha Bio-
tech which received funding sup-
port and access to government-run
research institutions which helped
bring down the cost of the recom-
binant vaccine for Hepatitis B from
US $18 per dose to 40 cents per dose.
“This is affordable excellence and is
an area where India can carve out a
niche,” Mashelkar said.
There have been several success sto-
ries of government-industry partner-
ships, going back to the time when the
government set up the Department of
BioTech (DBT), three decades ago, in
the early 1980s. This gave the country
a lead, creating a trained manpower
resource necessary to take the move-
ment forward. While biotech began
around the same time as the offshor-
ing of the IT sector began, players in
the healthcare and biotech sectors
point to crucial differences: Informa-
tion Technology began without gov-
ernment controls and oversight but
BT cannot do without government
since its products affect the health of
people.
Deepak Ghaisas, chairman, Genco-
val Strategic Services Pvt Ltd, hold-
ing company for stem cell company
Stemade, and former CEO, i-flex Soft-
ware Services (now Oracle Financial
Services Software Ltd), noted, “The
IT sector was targeted at the export
market while biotech is for the do-
mestic masses. Government has to
play a regulatory role here.” He went
on to say, “The biotech and healthcare
market is here, in India,” noting that
delivery is expensive now but that
should come down.
However, in the stem cells and re-
generative area where his company
works, Ghaisas said there is no regu-
lation. Companies working in the field
are currently devising norms for a
self-regulatory framework and Ghai-
sas was confident that this should be
ready in three-six months time.
Stressing the need for govern-
ment’s role in the healthcare sector,
Mashelkar said that unlike the IT sec-
tor, healthcare products move from
the mind to the marketplace, need-
ing trials in which humans are used.
“The regulatory system needs to be
quick and fair. Currently, the situa-
tion in India is very critical with the
legal system having placed controls.
So, even if a new molecule is devel-
oped and benefits Indians, it goes to
the US or Canada for human trials.
The prevailing regulatory system has
placed challenges and penalties so
people are going abroad and India is
losing her competitive advantage. We
need to quickly implement provisions
of the Ranjit Roy Chaudhury commit-
tee report.”

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The Ranjit Roy Choudhury expert
committee to formulate policy and
guidelines for approval of new drugs,
clinical trials and banning of drugs,
submitted its report in July 2013.
Among the 25 recommendations in
the report are issues over conflict of
interest, compensation to volunteers
who experience serious adverse events
during the drug trial, strengthening
of infrastructure, changes in some
existing legislation, transparency and
science based decision making, effi-
ciently functioning of ethics commit-
tees, etc.
Hitting out strongly against the
current scenario, Ghaisas said,
“The primary challenge for inno-
vation is on the regulatory front,
primarily driven by a lack of ex-
pertise, nervousness in taking re-
sponsibility and a firmly engraved
follower mindset. In such a sce-
nario, self regulation could be the
best way to go, as we have seen in
the IT industry.”
The global experience has been
increasing costs and decreasing pro-
ductivity have hampered growth and
investment in global life sciences and
healthcare sectors. Hence, there is a
push towards an open innovative ap-
proach. This could help bring prod-
ucts and services to market quickly
and efficiently.
There is another view, captured in an
article in the Harvard Business Re-
view, on the transformation of the
healthcare systems. The article notes,
“Rather than ask complex, high-cost
institutions and expensive, specialised
professionals to move down-market,
we need to look at the problem in a
very different way. Managers and
technologies need to focus instead on
enabling less expensive professionals
to do progressively more sophisticat-
ed things in less expensive settings.”
Commenting on a meeting of the FT
US Healthcare and Life Sciences Con-
ference in New York, Pete Mooney,
managing director, global life scienc-
es and healthcare industry practice at
Deloitte Touche Tomahtsu, a consul-
tancy firm, wrote, “There is massive
data analytics, diagnostics, genom-
ics, nanotechnology, pluripotent cell
research, proteomics, regenerative
medicine.. all of these need multi-
disciplinary expertise, collaboration
and cooperation. From a traditional
vertically integrated R&D industry, it
is moving to a more collaborative, co-
operative model.”
This is something that has already be-
gun in India, witness the government
programmes encouraging industry to
work with government- backed re-
search institutes. However, Ghaisas
pointed out that in India, collabora-
tive action seems to be limited to the
R&D space, adding, “The cause of re-
stricted action is because there is very
little focus on R&D as a whole. India
has always successfully capitalised on
collaborative models in all other as-
pects of the value chain. Take the case
of India which can be regarded as the
bench mark in co-marketing and co-
manufacturing in the healthcare in-
dustry. There’s the notable example of
Ranbaxy and Wockhardt, to improve
reach and access in global markets
for their products, or co-marketing
products within India by Roche and
Mankind to market and sell glucom-
eters, Accucheck-Go. For a successful
collaboration, the major challenges to
be overcome are those of cultural dis-
parities and a transparent win-win,
typical for any collaboration.”
A businessman, requesting anonymi-
ty, who had ventured into the contract
research space, pointed to the dilemna
posed by regulations. He said, “The
regulations are such that we decided,
after having set up a CRO that the
business would eventually go south.
So, we sold it off. The regulations re-
quire the researcher to not know the
patient, to ensure the randomness of
the test and to keep out biases. The
patient has to agree, give her full con-
sent and this is difficult when you are
not supposed to know the patient.”
When it comes to newer areas like
stem cell research, Ghaisas said, “The
latest advancements in life sciences
are highly specialised biological
products, customised to the individ-
ual patient. These have a very short
shelf life, demand a few processes
be done at the point of delivery. For
example, stem cell therapy for burns
or use of PRP for tissue healing or
cell products for arthritis for myocar-
dial infarction. Here, these biological
cells have to be processed in aseptic
conditions and delivered to patients
immediately. Customisation builds up
cost and the demanding infrastruc-
ture to support newer therapies builds
on the cost. Hence, government needs
to push innovation in not only prod-
ucts but in building infrastructure for
the delivery of products.”
An article in the Harvard Business
Review published over a decade ago,
titled `Will disruptive innovations
cure healthcare?’, authors Clayton M
Christensen, Richard BOhmer and
John Kenagy claim that the health-
care system is “change averse”. The
go on to state, “When healthcare is
complex, expensive and inconvenient,
many afflictions simply go untreated,”
something Indians working in this
area concur heartily.
Government’s helping hand:
The success stories in PPP mode don’t
end with just the formation of a de-
partment. There was the Biotechnol-

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COVER STORY
ogy Industry Research Assistance
Council (BIRAC) and the CSIR’s New
Millenium Indian Technology Initia-
tive (NMITI). The latter was the larg-
est PPP effort in the country for R&D,
looking “beyond technology, seeking
to build, capture and retain for India a
leadership position by synergising the
best competencies of publicly fund-
ed R&D institutions, academia and
private industry.” Government is a
catalyst in this, financing projects via
soft loans to industry which partner
with institutions. Industry returns the
funds on achieving success.
NMIT Life Sciences, launched in
2003, was based on the premise of
consciously and deliberately identify-
ing, selecting and supporting poten-
tial winners. It has so far evolved 60
projects across sectors in life sciences,
involving 85 industry partners, 280
R&D groups from different institu-
tions and has had a cumulative outlay
of Rs. 550 crore. Describing the gov-
ernment intervention in promoting
innovation via such funds, Mashelkar
said this opened “a new and com-
petitive avenue. It is not how much
money put into a project but how the
money is put in. A judicious Public-
Private Partnership (PPP) funding
and positioning strategy, with a role
for government, is the best model.
The regulatory system becomes more
facilitating and public funds require
trust.”
BIRAC, on the other hand, is a not-
for-profit Company set up by the gov-
ernment, to act as a single window
for the emerging biotech industry
and was incorporate early last year, in
March 2012. Its stated objectives are
to stimulate, foster and enhance stra-
tegic research and innovative capa-
bilities of the Indian biotech industry
especially among small and mid-size
companies (SMEs).
Emphasise traditional
methods for healthcare:
Innovation in the life sciences sector
is regarded as critical to growth, the
premise being that healthy people will
be more productive, lose less time....
all benefitting the economy and the
country. While there are no disagree-
ments over this, there are differing
views on how to approach the prob-
lem. Bhushan Patwardhan, direc-
tor of the Interdisciplinary School of
Health, Pune University, said health-
care problems in the country are re-
lated to 3As: affordability, accessibil-
ity and availability. And there is need
for innovation at all three levels. He
was keen, too, that we reclaim tradi-
tional knowledge and systems since
these have been successful.
Dr Patwardhan stressed that Indian
research has to be focused on the
needs of people living here. He re-
ferred to the grand challenge project
of the central government, to design
and develop a toilet suited to India.
“There are two major health-related
issues: toilets and clean drinking wa-
ter. If we can address these two is-
sues, a lot of health related issues in
the country will be controlled.”
Dr Dileep Deobagkar, honorary pro-
fessor, Dept of Bioinformatics and
Zoology, Pune University, pointed
to the Indian dietary system which
included eating curds at the end of
the meal. “The lacto bacillus in curds
stays in the gut, cleans the system.
Eating curds or curd rice at the end of
the meal is a traditional system which
won’t harm us to revive,” he said.
Product innovation:
A country with more cell phones than
access to toilets pays the economic
cost of this imbalance. According to
UNICEF and WHO data, inadequate
sanitation cost the country economic
losses equivalent to US $ 53.8 bil-
lion, or 6.4% of the country’s GDP in
2006. The UN’s Millenium Develop-
ment Goals, or MDG, had stated that
by 2015 everyone would have access
to proper sanitation, a goal that India,
and other developing countries, will
not be able to meet.
Working on devising a low-cost toi-
let, Thammarat Koottatep, associate
professor, environmental engineering
and management at the Asian Insti-
tute of Technology, Thailand, said that
early next year, Pune and Bangkok will
host pilot schemes offering affordable
sanitation for urban poor. The plan
is to have six-eight toilets per slum,
with three-four households using one
unit, creating a system robust enough
to handle these quantities. While
the ideal would be individual toilets,
one per dwelling unit, but pressures
on land and water and issues around
costs, development is headed towards
the community toilet.
News reports have mentioned the
development of a low cost device for
cardio vascular screening developed
by the Healthcare Technology Inno-
vation Centre at the IIT-Madras Re-
search Park in Chennai. This device,
which is the size of a television set
top box and costs Rs. 1 lakh and can
be operated by someone with mini-
mal training and skills, measures the
stiffening of blood vessels. Currently,
this is done by ultra sound machines
which cost between Rs. 15-40 lakh.
Then, there’s innovation in work flow
processes. Take the case of malaria:
Our partnership model
allows hospitals even
inTier three cities
to install expensive
scanning machines
Amol Naikawadi, joint
managing director, Indus
Health Plus.

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COVER STORY
between 2001-09, deaths due to this disease have remained
almost unchanged, at just over 1000 million according to
the National Vector Borne Diseases Control Programme
(NVBDC) of the central government. The Centre for the
Development of Advanced Computing (C-DAC) came up
with MoSQuIT or Mobile based Surveillance Quest using
Information Technology. Control of malaria is a thrust area
under the UN’s Millenial Development Goals.
Dr Medha Dhurandhar, associate director and head of the
department at C-DAC, said, ”MoSQuIT helps keep a watch
over the status of malaria in a group or a community. The
solution also helps identify a potential outbreak of the dis-
ease and provides an early warning to the state health sys-
tem for its control. The solution also helps the state health
agencies track the performance of the staff who, in turn,
find it easier to work with than the paper based system.”
Believing in the need for process and delivery systems in-
novation, Indus Health Plus Pvt Ltd, a Pune based provider
of preventive health check- ups with a multi-state footprint,
has worked on the backend to deliver services which are
accessible and affordable. Indus is focused on lifestyle dis-
eases since these are spreading rapidly and preventive care
could perhaps be the way to check their spread. “We have
worked on innovating in the delivery mechanism. This is
a price sensitive and under-served market so we needed
to take out inefficiencies in the system. We partner with
hospitals, high end diagnostics centres, etc and bring them
the patients, the volumes, which brings down costs of the
their high end equipment, provides preventive checks for
patients and ensures that the medical equipment manu-
facturers also win. Our partnership model allows hospitals
even in Tier three cities to install expensive scanning ma-
chines,” explained Amol Naikawadi, joint managing direc-
tor, Indus Health Plus.
Through this partnership, Naikawadi said they can af-
ford to offer services at half the rate at which a hospital
usually charges. Moreover, Indus Health Plus ensures that
more people come in from rural areas to the Tier three cit-
ies since everything, from check up to report handing over
and counselling is done in the course of one visit. Another
innovation has been in getting access to equipment that
lies largely unused in hospitals in the late evenings. Indus
Health Plus offers access to such machines till 2-3 am at its
partner hospitals: again, it is tweaking the system to ensure
that equipment is fully optimised.
Traditional systems across the country have used copper
containers as a storage for water. Now, with the rising costs
of copper, Padma Venkat of the Bangalore-based Institute
of Translational Health Research and Technology, has de-
vised a copper coil which is inserted in a plastic jar. This
low cost solution does the same job as the older traditional
method: overnight exposure to copper kills all the organ-
isms in the water, making access to clean drinking water a
possibility.
The canteen at the the modular laboratory at BARC, Mum-
bai, sources half of its fuel from a bio-gas plant powered by
food waste from the canteen. This is a technology which
the laboratory is keen on commercialising but has not had
too many takers.
Stem Cell, animal health etc:
There have been some developments in animal healthcare,
with domestic dairies located as far apart as Punjab and
southern Maharashtra where technology has been har-
nessed to achieve better health management of livestock.
Large dairy herds in Punjab and one notable example in
Sangli district of southern Maharashtra, have used RFID
tags for their animals. This allows them to track feed and
health issues, all of which translates into higher revenues
for the dairy owners and better products for the consumer.
Poultry is another area where delivery of healthcare at the
farmers’ doorstep has led to better practices. A fallout of
this has been that when there have been bird flu outbreaks,
these have been contained and the outbreaks have hap-
pened wherever it has been a backyard operation and not
an organised venture. This highlights a core issue in animal
healthcare: sectors which are organised have better health-
care and other management systems, hence better output,
as opposed to a backyard operation where the individual
farmer is left to fend for himself.
Academicians are clear that not enough is being done in
a collaborative manner between industry-academia and
government. Some experts talk of using the government
channel for healthcare delivery in an innovative manner, of
the need to remove the target-oriented approach associated
with government programmes. But in all cases, the empha-
sis remains on partnerships: with government, NGOs, and
most of all, with corporate entities.

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Our Need
to Innovate
T
he global population is projected to rise from 6.5
billion in 2005 to 7.6 billion in 2020. It is also aging
rapidly; by 2020, about 719.4m people – 9.4% of the
world’s inhabitants – will be 65 or more, compared
with 477.4m (7.3%) two years ago:
i. Older people typically consume more medicines than
younger people; four in ﬁve of those aged over 75 take
at least one prescription product, while 36% take four
or more.
ii. Demand for effective medicines is rising, as the popu-
lation ages, new medical needs emerge and the disease
burden of the developing world increasingly resembles
that of the developed world.
iii. The leading pharmaceutical companies will lose be-
tween 14% and 41% of their existing revenues as a re-
sultof patent expiry.
iv. Pharma is trying to ﬁnd cost effective methods to im-
prove its R&D productivity, if it is to meet the world’s
unmet medical needs and capitalize on the market op-
portunity that is now emerging.
v. Tuberculosis -Disease impact: Estimated 2 million
deaths per year, 90% in developing countries. Some 2
billion infected.
vi. Malaria -Disease impact: Estimated 1 million deaths
-Rajaseevan
Founder Trustee
Indian Centre for Social Transformation
A Public Charitable Trust

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per year, 90% in sub-Saharan Africa, mostly children
under five years. Annually, 300-500 million people con-
tract malaria.
vii. Dengue / Dengue Hemorrhagic Fever -Disease impact:
Estimated 24,000 deaths per year (probably an under-
estimate; deaths could be as much as 1% of all infec-
tions). 50-100 million infections per year, of which 250-
500,000 are the potentially fatal hemorrhagic form.
There is an urgent need for a coordinated mechanism to fill
this gap and support the translation of available scientific
knowledge (for example genomics) into product leads.
Meeting these needs requires a multi-disciplinary network
of investigators working together as well as partnerships
between industry and the public sector
Bioinformatics is becoming increasingly important due to
the interest of the pharmaceutical industry and biotechnol-
ogy companies. A number of recent market research reports
estimate the size of the bioinformatics market is projected
to grow to $243 billion by 2010
i. Infectious diseases are now the world's biggest killers
of children and young adults. Account for more than 13
million deaths a year – One in two deaths in developing
countries" infectious diseases as stated by the WHO.
ii. The Human Genome Project opens the field to estimate
80’000 - 100’000 new genes. The validity of this ap-
proach has to be proven first.
iii. Molecular fallout-In one recent analysis of 73 molecules
that failed in Phase III, 50% of the compounds that
failed did so because they could not be proved effective.
Compounds with novel mechanisms of action failed
more than twice as often as those using established
ones. Such studies show that the industry is sinking
large sums of money in developing molecules whose
pharmacological impact it does not comprehend in suf-
ficient detail beforehand.
iv. Reducing the time of new drug discovery will benefit
the Indian patients immensely as they will have quicker
access to life saving drugs at an affordable price.
v. The U R Rao Committee has projected that India needs
well over 10,000 PhDs and twice as many M Tech de-
gree holders for meeting its huge research and develop-
ment needs, but India produces barely 400 engineering
Ph.Ds a year.
vi. There continues to be exciting new subfields of engi-
neering, including nanotechnology, biotechnology, bio-
informatics, information technology and logistics.
vii. Today many students who are passing out from these
colleges / institutes lack the appropriate training and
qualifications even for entry-level jobs at pharmaceu-
tical and biotechnology companies. Unfortunately,
most undergraduate and graduate programs do not of-
fer training in drug development, quality systems, and
manufacturing.
viii.In response the government has been increasing in-
vestment in education and training as a proportion of
national income. However, the effort has been inade-
quate to address the direct needs of our country’s drug
discovery needs or for that matter the global Pharma
sector requirements.
ix. However, the bottleneck seems to find the people with
the knowledge and experience to exploit the incredible
large data volumes that are created in this field.
Our human capital Challenge
Human resource development in New dug discovery in-
strumentation is an area of concern today. The declining
popularity of science and the unwillingness among the
youth to take up science as a career will jeopardize India’s
future. Imaginative and innovative programs would need
to be undertaken to attract the students to drug discovery
research and enhance the number of young scientists.
1. How do we become the global leader and supplier of
Ph.D human resources for new drug discovery in the
global arenaby the year 2015 from India?
2. How do we create the high quality Ph.D manpower
that is capable of creating the lowest cost base for in-
novation, a strategy pursued by other nations including
China?
3. How do we develop Indian human resources who not
only can compete but differentiate themselves doing
high-value innovation?
4. How do we develop human resources who can not only
work but understand the new technologies at the Phar-
ma companies and help them to improve its under-
standing of disease, reduce its R&D costs significantly
and increase its productivity in the lab?
5. Indian Industry is capable but are struggling to find the
required financial support towards infrastructure, in-
strumentation, consumables etc. how can the Govt. of
India help the industry by providing the support and
grant for this kind of ventures?
6. How can the Govt. of India provide the same kind of
educational system support for the industry towards

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accessing the global network of scientists/experts who
can be asked to work in under this industry venture in
India?
i. For finding a treatment of a particular disease
ii. For improving the use of other medicines
iii. For developing solutions for prevention of specific dis-
eases
iv. For providing direction towards the enhancement of
“quality of life” of patients and “healthy” individuals in
India
As computers become more powerful, it is increasingly fea-
sible to simulate various aspects of the drug discovery and
development pipeline in silicorather than undertake exper-
iments or trials in the real world. This could lead to signifi-
cant savings in both time and cost. As knowledge expands,
it is becoming more possible to simulate complex interac-
tions among targets and leads, and among all the proteins
involved incomplex pathways within the body.
The availability of trained professionals with required skill
sets is a major issue, particularly in the area of biology. In-
dia needs to invest in creating more academic institutions
to develop and train researchers.
Our mission is to make a difference to the quality of life
by reducing the burden of disease. As the DBT’s, CSIR’s ,
ICMR’s and other government of India Science and Tech-
nology, Ministry initiatives is to extend support for Ph. D.
programmes, under the 11th plan for both for expansion
and quality improvement which is our high priority too.
India, with its rich intellectual capability, can be a leader
in basic new drug discovery research, if proper strategic
thinking, adequate funding and facilitating mechanisms
are provided. If the problem of the dwindling number of
young students opting for science and scientific R&D is not
effectively addressed in the near future, India will cease to
be a storehouse of quality technical manpower. Our na-
tional laboratories, universities and higher educational in-
stitutions have an aging faculty profile requiring infusion
of quality young manpower.
• Reverse Brain Drain
n It is an encouraging first step from DBT’s, CSIR’s , IC-
MR’s trying to attract the talent back in India
n The Key question is how do we effectively utilize their
talent and skills
n Provide them the challenging work else retention can
be a problem
n Provide them the access to the World Class facilities to
make them successful
n Use these scientists to Seed and Generate new Drug
Discovery PHD’s
• Drug Discovery PHD Program
n We would like to start a Drug Discovery PHD Program
n We will take up a Disease of National Concern as a seri-
ous Research Program
n The PHD’s will be an outcome of the above Research
Program
n Focus of the PHD program will be an all round devel-
opment of the Scientist
n These scientists will have access to the world class fa-
cilities
• Post Graduate Degree in Biotech In-
strumentation
n This is an urgent need of the Industry, producing em-
ployable Talent
n The aim of this program would be
n Students get to work on real time problems in Industry
facilities
n The Syllabus will be made tailored to the immediate In-
dustry Needs
n Soft skills development
• Cheaper Access to World Class Re-
search Facilities
n The Public Research Institutes can be provided an at
cost fee for the Services
n Encourage the small and medium scale Industries to
engage in Core research
n This can be done by providing access to this facility at a
subsidized cost
Objectives
New advanced health technology must help the poor and
needy our best minds in science must engage themselves in
providing solutions to the problems that can make a differ-
ence to humanity.

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Breakthroughs cannot occur unless our most creative brains
dedicate themselves to these problems. We must create al-
ternative paths of drug discovery, where India has distinct
comparative advantage and a chance to win.
1. Create a PPP venture that will be managed by the in-
dustry for effective implementation, maintaining the
schedules, completing the milestones and it will be the
responsibility of the industry to honor all the deliver-
ables of the said project.
2. Introduce for the first time an integrated drug discovery
instrumentation Ph.D program in the country that can
cater to the Global drug discovery human resources re-
quirements.
3. Develop a Joint collaborative project under the DBT’s,
CSIR’s , ICMR’s special PPP program and set up an in-
tegrated infrastructure for the DDI Ph.D program to be
solely managed by the industry.
4. The Ph.D and training programs will be aligned for the
current needs of the neglected diseases, pharmaceuti-
cal industry research requirements and catering to im-
mediate market demands or for bridging the skill gap.
Bioinformatics research emphasis will be given to indi-
vidual diseases hereditary and others by combiningBio-
informatics with wet lab.
5. Strategic investments will be made for enhancing ex-
cellence in the programs so that the Ph.D products are
at the competitive forefront and to build the various
operational processes that allow us to accomplish our
primary missions.
6. Major investments to be provided for the setting up
high-end information systems, construction of various
discovery labs, team salaries for 5 years, supporting the
quality faculty members, for designing the informative
educational materials etc., training of specific manpow-
er, providing the students with live projects, for brand-
ing, research marketing activities and for getting the
various quality certifications.
Overall Objective
To facilitate and support the discovery of new drug leads
for tropical diseases through networks and partnerships
between pharmaceutical companies, academia and disease
endemic country (DEC) institutions.It is time that we need
to develop more 'molecules to drugs' indigenously. We have
the human power, but what we need to do is to organize
ourselves to attain global standards. This is imperative if
we have to develop products that are universally accepted.
Since these involve different technologies like preclinical‘s,
phase I and phase II clinical trials, pharmacology, bioinfor-
matics etc, we need to develop co-operative skills.
The Strategy and Implementation Plan
1. To establish an international standard infrastructure
for drug discovery instrumentation as a center of excel-
lence, this will be happening for the first in India.
2. To identify and coordinate the knowledge base of ex-
perts involved in drug discovery research across the
various Indian and International Academic, Research,
Pharmaceutical, Biotechnology, Nanotechnology, In-
strumentation and Product Development disciplines
who could teach at this center.
3. To fully equip and make the COE-DDI operational with
in 18 months from date of funds sanctioned.
4. To start the all the various training and drug discovery
instrumentation Ph.D programs that are focused, prac-
tical, create all the required leaders under this program
and to make it fully operational by end of 2009 in In-
dia.
5. To manage and train the high quality market driven re-
search Ph.D manpower under this program.
6. To professionally manage this facility 24X7 for conduct-
ing high quality research and managing all the training
programs and schedules.
7. To attract world top 50 Biopharmaceutical companies to
getting their required manpower from this center or for
doing their research or design or innovation work.
8. To provide effective, user oriented support, drug discov-
ery services, information technology, human resources,
and offer the facilities.
9. Promote the global coordination of drug discovery ac-
tivities through the network and partnership model.
10. Promote technology transfer and innovative drug dis-
covery in the collaboration networks and partnerships.
11. Support targeted fundamental research on generation
of new tools to facilitate drug discovery.

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12. Establish an incentive system and culture that encour-
ages team-based, multi-disciplinary progress.Manage
the ownership of intellectual properties and valuation
that results in intangible assets
Outlining a practical business model
i. The R&D programs models can be designed based on
the strategic value, gestation period, technology risk
and commercial potential of the technologies.
ii. Huge investments made in this sector will have long
gestation periods like a min of 7 years for breakeven to
happen and to see its profitability a few years later.
iii. Research funding must be made available during this
period though some part will be supported by way of
international outsourcing work.
iv. Huge knowledge equity will be generated in form of
new IP’s, patents, publications and of course a few pos-
sible new molecules which will be the major output of
this business initiative.
v. In-house high quality research manpower and innova-
tive process algorithms will be available for doing own
drug research projects.
vi. It’s a high risk business but does have its own BIG prof-
its as its product development and research business.
vii. The benefits of long-term R&D training programs are
uncertain and the gestation period could be more than
10 years. Such initiatives may be unattractive for private
sector funding and therefore, long term R&D programs
will have to be funded by the government.
viii.It is essential for the Center to initiate new drug de-
velopment for diseases of relevance to Indian popula-
tion not only presently but in the years to come as well.
Based on this assessment the priority Center were
identified as follows:
i. Communicable and infectious diseases : T.B., Malaria,
gastro intestinal infections, (e.g. cholera, hepatitis, etc.),
kalaazar, filaria, H.I.V and sexually transmitted diseas-
es (STD’s), lower respiratory diseases.
ii. Cardiovascular diseases: Hypertension, atherosclerosis
and myocardial infarction, coronary artery diseases,
rheumatic fever and heart disease.
iii. Cancer
iv. Eye and ear diseases
v. Metabolic diseases : diabetes, arthritis, dyslipidaemia
and obesity
vi. Neurological diseases: e.g. Alzheimer diseases, Parkin-
sonism, Epilepsy.
vii. Nutritionally linked diseases: Malnutrition,Aneamia,a
vitaminoses.
viii.Paediatric diseases: Neo-natal diseases to reduce infant
mortality.
ix. Reproductive diseases
x. Respiratory diseases : Asthma and other allergic respi-
ratory disorders.
One of the major limitations to the future expansion of bio-
informatics as there is a lack of trained personnel in this
interdisciplinary field.
Over the past 15 years, there has been a noticeable shift
in these industries away from drug discovery toward drug
development and commercial manufacturing. This shift in
emphasis has created jobs in analytical chemistry, phar-
macology, toxicology, regulatory affairs, bioprocess and
process developments, validation, quality control, qual-
ity assurance, clinical trials management, and large-scale
manufacturing. This shift has also resulted in a decreased
demand for science Ph.D.s--who are highly sought in drug
discovery--and an increased demand for baccalaureate-
and master's-level scientists to fill jobs in quality systems,
regulatory affairs, clinical trials management, and manu-
facturing.
n Human Resource Development
n Infrastructure Development
n Focus on Research And Innovation
n Promoting Drug Discovery Instrumentation Entrepre-
neurship
n Encouraging New drug discovery related Business
n Educating leaders for tomorrow
n Hiring and retaining brightest minds
n Exploring new horizons
n Enabling new capabilities
n Opening new avenues for basic and applied research
n Speeding new inventions
n Accelerating technology commercialization
n Creating high-tech life science industry
n Making economic impact
n Shaping the future of students
Long Term Trends That Will Influence
Bioscience Technologies
n Aging Population
n Systems Biology & Scientific Convergence
n Customization of Therapeutics (personalized medi-
cine)
n Continued Innovation Explosion
n Increased Distributed Computing
n Miniaturization and Automation
n Increasing Cost Containment
n Focus Areas of Economic Development (by many gov-
ernments/entities)
n Improvements in Agricultural Production
n Need for Education and Training
n Bioterrorism (actual and preventive measures)
Health
n Advanced healthcare: genomics, imaging
n Healthcare Management: Telemedicine
n Genomics & Preventive medicine

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OUTLOOK
A Prescription for
Innovation
Dr. Saji Salam MD, MBA
I
n 1998, two Stanford graduate
students, Sergey Brin and Larry
Page published a paper that be-
gins: "In this paper, we present
Google, a prototype of a large-scale
search engine...” Not many know
that research that led to the cre-
ation Google was supported by the
National Science Foundation and
DARPA (Defense Advanced Research
Projects Agency and NASA. Among
other innovations that drew on US
government funding support are the
Internet, GPS devices, and DNA se-
quencing technology.
Israel produces more start-up compa-
nies on a per capita basis than Japan,
China, India, Korea, Canada, and all
of Europe, and after the United States,
Israel has more companies listed on
the NASDAQ than any other coun-
try in the world. Israel has less than
one lakh engineers in all, while India
churns out about 5 lakh engineers ev-
ery year….
Foreign competition, an outdated
manufacturing base and strained la-
bor relations were just a few of the
causes of the collapse of the steel in-
dustry in the Pittsburgh region back
in the 1970’s. When economic wellbe-
ing is tightly coupled with one indus-
try, its collapse can leave economic
devastation in its wake. In an effort to
reinvent itself Pittsburgh invested in
education, healthcare and technology,
which led new economic leaders to
emerge. Research and development is
a major driver in the new innovation-
led economy, with more than $3 bil-
lion pumped annually into area R&D
programs.
Innovation may be the hottest disci-
pline around today in business circles
and beyond. Innovation transforms
markets and entire economies. It's
the key to solving several social and
economic challenges. Innovation in-
volves variation, selection, and repli-
cation. This article examines some of
the criteria for success in innovation,
especially for developing economies
like India. Building an innovation
economy is a collective effort that in-
volves the entire society and is a re-
sponsibility not limited to business
and government.
The Innovation Soup –
Key ingredients
This is the right time for India to en-
hance the effort that has gone into
building an innovation economy. At
the same time, one needs to be realistic
in term of the expectations in terms of
the scope and timelines when it comes
to return on investment. The mission
to Mars was more than 50 years in the
making partly due to the resources
that could be deployed in the space
research program given competing
priorities post-Independence. As a
more mature nation today with the
knowledge gap with the developed
world closing and knowledge acqui-
sition becoming less expensive, the

LSI
OUTLOOK
right policy measures can be applied
to see results in a shorter amount of
time. The fundamental challenge is to
buildknowledgecapitalandenablethe
right policy to drive innovation. When
compared to the financing challenges
for nation to fund the space research
program, financing innovation today
should not be a major concern. Good
leadership especially in policy making
is the need of the hour.
Though various innovations models
are available, and not one model suits
every country, some of the enablers
listed below are vital to the process of
innovation.
Knowledge Capital
A central component of a capacity to
innovate is access to advanced knowl-
edge and the ability to successfully
assimilate and utilize this knowl-
edge. For any innovation economy, a
critical factor necessary for success is
a knowledgeable workforce. However
the focus needs to be on quality and
not quantity of resources as illustrat-
ed by Israel’s teeming startups. Per
NASSCOM, though India churns out
half a million software professionals
from various IT training institutions
in India, only about 25% are readily
employable. It is obvious that it is high
time, we introduced quality controls
in place. Barring a few of the reputed
institutions, the quality and creden-
tials of the faculty needs further scru-
tiny. I have section later dedicated to
social capital and the Indian diaspora,
but would like to mention here that
models like the Indian School of Busi-
ness, led by NRIs can be replicated in
other sectors as well.
Industry Academia Col-
laboration
Per a recent All-India Council for
Technical Education ( AICTE ) and CII
report “Established institutes appear
to have weak linkages with industry
in the areas of research and consul-
tancy, technology transfer, interaction
between faculty members and indus-
try,” states the survey report released
last week.
Out of 2,230 eligible colleges, only 660
engineering institutes, all well-es-
tablished, participated in the survey.
They were evaluated on the strength
and quality of their linkages with in-
dustry based on various parameters.
The survey gave 98% colleges a rating
of less than four on a scale of eight.
On faculty-industry interaction, 93%
institutes scored less than seven on a
scale of 14.
Following the report there has been a
spate of finger pointing, but the real-
ity is that many academic institutions
in India need to really beef up their
research capabilities to be relevant to
the industry. Thanks to the Internet,
the industry today is aware of the cut-
ting edge research and development
in several academic institutions across
the world, driving up the expectations
for academia in India working with
fewer resources. Probably one way to
bridge the gap is to have more indus-
try experts teach part time at universi-
ties. Other strategies include angel in-
vestment funds set up by universities
in partnership with industry.
Please refer to case study on Institute
of Bioinformatics & Applied Biotech-
nology (IBAB) for a model that can be
replicated by other states.
Research and Development
To make progress with innovation, it
is imperative to prioritize fundamen-
tal research; but given the long term
nature of returns from fundamental
research, involvement of industry will
be limited. In the United States more
than half of all fundamental research
is financed by the federal govern-
ment.
One approach to leapfrog innovation
is by outright purchase of technology
from other universities and research
organizations worldwide. Research
collaborations with global universi-
ties structured to research in priority
sectors for the Indian economy can be
another approach.
Facilitating research by providing in-
centives to multinational companies
to setup research centers is yet anoth-

LSI
OUTLOOK
er way to create the knowledge capital
required to leap frog into innovation.
When a $ 2 billion healthcare fund
came to India to identify companies
to invest in medical devices sector,
a company set up by alumni from a
multinational research firm in Banga-
lore was one of the very few compa-
nies that got funding. The fund man-
agers were not able to find many other
quality opportunities worth investing
in. This is a case in point where the
knowledge capital generated by an
MNC research firm resulted in an in-
novative device company from India.
Infrastructure
For knowledge capital to bear fruit
another key component required is
infrastructure. Adequate laboratory
and office space is vital for start-ups
in sectors such as biotechnology.
Shared infrastructure would be vi-
tal especially for entrepreneurs who
might not have the resources to in-
vest in capital-intensive equipment/
laboratories. Biotech parks typically
have “ready-to-go” laboratories and
office space, providing opportuni-
ties for startups to set shop at short
notice.
TechShop with three locations in the
US is a chain of member-based work-
shops that lets people of all skill levels
come in and use industrial tools and
equipment to build their own projects
paying a low monthly membership fee.
Techshop has the state of lasers cut-
ters, welding and 3D printers among
other tools, where you are working
regularly with other entrepreneurs.
According to a study of 120 countries
by the World Bank, for every 10% rise
in broadband penetration, there is a
1.3% rise in GDP.
India ranks 122 in the world for fixed
Broadband Penetration, with only
1.1 per every 100 inhabitants having
broad band connectivity. However,
mobile phone users have reached an
astonishingly high number of 554
million. More than 298 million (54%)
of the 554.8 million mobile users are
in rural areas as compared to 256 mil-
lion users in urban areas.
The recent World Bank report quotes
a study that an additional 1 percent
of world GDP spent on infrastructure
would increase global GDP by 2 per-
cent and GDP in developing countries
by almost 7 percent. Per McKinsey,
investment in infrastructure of 1% of
GDP would lead to 3.4 million jobs in
India. Traffic in India has grown 150
times since 1951, while roads have
grown by only 9 times. The poor qual-
ity of the roads leads to $ 5-7 billion in
annual economic losses. Investment
in infrastructure in developing coun-
tries is a no brainer.
Social Capital – the
diaspora effect
Social capital is the expected col-
lective or economic benefits derived
from the preferential treatment and
cooperation between individuals and
groups. Although different social sci-
ences emphasize different aspects of
social capital, they tend to share the
core idea that social networks have
value. India has a diaspora in influen-
tial positions in businesses and gov-
ernments across the world.
There are several ways in which
diaspora can nurture the knowledge
base in their home countries. One is
by returning home with new knowl-
edge gained elsewhere (e.g. Taiwan).
This rarely happens on a large scale
without professional and financial
incentives provided by the govern-
ment. The home country must be able
to provide the infrastructure and ca-
reer opportunities necessary to meet
the aspirations workers may have
developed during their stay abroad.
Foreign direct investment is another
option chosen primarily by the Chi-
nese diaspora. A third contribution
is by way of remittances to the home
country.
The Indian diaspora can be tapped in
a multitude of ways, the need of the
hours is knowledge transfer needed
to bridge the knowledge gap in In-
dia. Indian entrepreneurs needs role
models to look forward to and unfor-
tunately do not find many companies
that have been successful overseas
like the Israeli companies. Despite
the “success” in the IT industry, the
focus has been on providing low cost
labor to developed markets and hence
these IT firms are not the right role
models for entrepreneurs seeking to
innovate.
Apart from the technical knowledge
in subject areas India has a deep gap
in marketing and packaging. The oth-
er gap is access to global markets for
innovative products. In some of the
industries like medical equipment,
the industry is virtually nonexistent
and hence does not have a base to
grow from.
So there is work to be done in get-
ting the diaspora to collaborate with
entrepreneurs and policy makers in
India. Policy makers could explore tax

LSI
OUTLOOK
breaks, and other incentives to interest-
ed NRIs. However the missing piece is
a sincere outreach program to identify a
new generation of overseas Indian tal-
ent and get them involved in the inno-
vation story.
Legal and Regulatory
Framework
Innovation of the future being IP driv-
en, and time to market will be key,
streamlining intellectual property and
regulatory framework would be vital
to attracting global players to collabo-
rate. Celera, the company that mapped
the human genome, filed for over 6000
patents in one week.
Intellectual Property
Per Forbes, “in a recent study by the
U.S. Chamber of Commerce, India (not
China, whose intellectual property
practices have received far more scru-
tiny from American politicians and the
media) ranked dead last in patent pro-
tection and treaty participation, as well
as second-to-last in copyright protec-
tion - behind China and ahead of only
Russia
Starting in March of 2012, India be-
gan issuing compulsory licenses for
drugs under a new policy requiring lo-
cal manufacturing, a condition which
is clearly illegal under international
trade law. The first compulsory license
was issued on Nexavar, a Bayer can-
cer drug. Then they began outright
revoking patents, starting this past
October with Sutent, on which Pfizer
has a clearly valid patent recognized
in over 90 countries. Similar moves
to revoke and deny patents followed
against Roche's Tarceva and Novartis's
Glivec.”
I am not an expert on intellectual prop-
erty or the nuances of this specific sce-
nario involving big pharma. However
the global attention highlights that
intellectual property will be central to
a future of innovation. Capacity build-
ing in intellectual property law experts
should be a priority for policy makers.
Regulatory Framework
In August 2012, the Ministry of Corpo-
rate Affairs set up the Committee for
Reforming the Regulatory Environment
for Doing Business in India. The proxi-
mate cause of the establishment of the
Committee was the Word Bank’s Doing
Business Report which ranked India
among the countries ranked at the bot-
tom of various sub-indices. Among
other findings, the report highlighted
redundant regulations and sometimes
rules and regulations created by cen-
tre and states contradicting each other.
The report submitted its report in Sep-
tember 2013 with several recommen-
dations. Step in the right direction,
however acting on recommendations
to simply regulations is what will make
the difference.
Legal System
With regard to the legal system, though
India has a more robust legal frame-
work when compared to many other
developing countries, the country faces
a problem of delay in administration of
justice. The 13th Finance Commission
however made specific recommenda-
tions for the grant of funds to improve
justice delivery. The Union government
announced a series of policy initiatives
aimed at reducing pendency from an
average of 15 years to three years. Once
again, positive recommendations needs
to be followed through with execution.
Role of Government
As discussed in previous sections, the
government especially in developing
countries has a major role to play in cre-
ating a culture of scientific growth and
innovation. The early investments by
the government in space research is one
such step which has been able to push
India to the frontiers of space research.
The government has a central role that
runs across all the other enablers.
Leadership:
Leadership makes all the difference in
making the transition to an innovation
economy. A new generation of leaders
in politics and business is needed to
take the country forward on the path to
Chief Innovation Of-
ficer
The Chief Innovation Officer for
the country (ideally a technocrat)
would at high level be focused
on improving the key enablers of
innovation, reporting to the Prime
Minister’s Office.
He/She must be able to
n Identify and prioritize sectors
for innovation
n Review and propose changes to
existing policies to enhance the
enablers
n Streamline various government
initiatives in innovation and
channel them in one direction
n Minimize bureaucracy by or-
ganizing for effective decision
making
n Work on Tax reforms, financial
and other incentives to advance
innovation
n Create and implement financ-
ing models in collaboration
with investors
n Review and deploy best practic-
es in innovation used elsewhere
n Collaborate with various
departments/agencies in the
government
n Able to navigate the bureau-
cracy and politics in India
n Collaborate with external stake-
holders across the globe

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OUTLOOK
innovation. To bring innovation cen-
ter stage, I would propose the creation
of the role of Chief Innovation Officer
for the country with counterparts in
each state. (Refer CIO)
Transparency
Per research studies, one-unit in-
crease in the corruption index reduces
the growth rate by 0.45 -0.55 percent-
age points.
The most important channel through
which corruption affects economic
growth is political instability, which
accounts for about 53% of the total
effect. Efforts at transparency initi-
ated by the Right to Information Act
is a step in the right direction. How-
ever we have a long way to go. Lack
of transparency is a challenging es-
pecially from an entrepreneurs point
of view starting with basics like name
for a company to trademarks. Though
some of these functions have gone on-
line and are available to public, there
is a lot more to be done. With a new
generation that lives and breathes so-
cial networks, we will see even more
demand for transparency.
Perhaps a new generation of politi-
cians will usher in the right level of
transparency in government that
can create exponential benefits to the
economy. Incidentally studies show
that increase in transparency leads to
increase in foreign direct investment.
Law and Order
The primary role of the government
is protecting life and property of its
citizens. For an anecdotal perspec-
tive of the impact of law and order on
growth you don’t need to look further
than Egypt, Libya and Syria three
countries in turmoil which were un-
til recently relatively stable political
countries.
These countries have much more than
a law and order challenge today, the
law and order challenge is threaten-
ing to be a macro environment stabil-
ity challenge. I am not going to take
up much space here stating the obvi-
ous connection. When your house is
on fire you are not thinking of build-
ing the next iphone or Google !!!
Facilitate reverse brain drain
In my discussion I point out the vital
role of social capital especially the role
of diaspora with extensive global ex-
Case Study – Israel
(Source: CORDIS, European Commission)
Israel is especially strong in the
early stage development of
new projects and transforming
innovative ideas into market-
able products. This entrepre-
neurial spirit encompasses a
wide range of advanced tech-
nology sectors from biotech-
nology and medical equipment
to electronics and electro-
optics, Information Technology
and software, communications
and Internet applications, aero-
space and new materials, safety and security systems. Many commercial develop-
ments are spin-offs from the leading edge defense systems developed in Israel.
Role of the government
Expenditure on R&D in 2001 in Israel represents 4.5% of GDP compared to 1.6% in
the UK, 2.3% in the US, 3.0% in Japan and 4.1% in Sweden. Israel's seven universi-
ties as well as many colleges and government research centers are leading inter-
national academic institutions in such areas as computer science and engineering,
electronics and the sciences.
Knowledge Capital
• Israel has some of the world's finest universities, which excel in pioneering
basic and applied research in medicine, the life sciences, agriculture, electron-
ics, robotics, computer science, engineering, and energy as well as in emerging
disciplines such as nanotechnologies.
• Some 30% of the total R&D carried out in Israel (including the defense sector)
and 45% of civilian R&D takes place at the country's universities, colleges and
R&D centers.
• About half of Israel's 220,000 students currently in academic programs are
studying medicine, the sciences or engineering.
• Israel has 135 academically educated engineers and scientists per 10,000 popu-
lation compared to 81 per 10,000 in the US.
• There are nearly 70,000 scientists and engineers working in advanced technol-
ogy industries.
• There are 30,000 scientists and engineers engaged in academic research.
Industry Academia Collaboration
• Israel's universities work closely with industry. University researchers have a
keen awareness of market needs and hands-on industrial experience. At the
same time scientists and engineers in Israeli industry maintain their rigorous
academic standards and openness to new ideas, directions and discoveries.
• All seven universities have their own technology transfer companies, which take
out thousands of new international patents each year.
• Most Israeli universities have holdings in technological incubators for start-up
companies and have ties with nearby high-tech industrial parks.

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OUTLOOK
perience in a variety of business and
technology areas. It is therefore es-
sential for the government to devise
ways to facilitate reverse brain drain.
The model followed by Taiwan can be
a pointer in this direction.
As part of its expanding effort to re-
cruit overseas Taiwanese for both
state-run and private entities, the
ROC government has often sent tal-
ent search missions to organize sev-
eral job search workshops in San
Francisco, Los Angeles, Dallas, and
New York as a means of locating tal-
ented overseas Taiwanese since 1995.
Perceiving a need to speed up indus-
trial upgrading projects in Taiwan, the
government is currently offering sal-
ary subsidies5 to indigenous private
enterprises for the sole purpose of at-
tracting overseas-trained Taiwanese
in the areas of technology, research
and development (R&D), manage-
ment, and marketing.
Tax Policies and other incentives
There are a variety of tax policies, in-
cluding tax holidays, R& D tax cred-
its, and other tax related interven-
tions that government does and can
do more to attract NRIs, Investment
funds, MNC research organizations
etc. I have emphasized the need to
provide ample tax benefits for early
stage investors since that can make a
dramatic impact in funding for inno-
vative companies.
PublicPrivatepartnership(PPP)models
The public private partnership mod-
els when implemented in a win-win
manner can go a long way in pro-
moting innovation. (please refer to
the figure on IBAB) Apart from PPP
the government has been active in
promoting various incubators, and I
guess it is about time that economists
and academia started to evaluate the
success of these models.
Finance
In my mind deployment of financial
resources is one of the most criti-
cal factors for an innovation econo-
my. This calls for close coordination
among various government agencies
to formulate and implement policies
to finance innovation. Direct funding
by government by way of grants and
loans has been a policy of the govern-
ment and agencies like BIRAC have
been very successful in the biotech
sector in funding startups. Financing
innovation needs suitable financing
partners during the early stages. Angel
investors and venture capitalists play
a key role in this crucial stage. Policy
makers can make tremendous impact
by reforming existing tax structures
and capital gains and profit repatria-
tion policies to reward these firms
for risking their capital in early stage
ventures. If done right this interven-
tion can accelerate entrepreneurship
and innovation in the economy. Tar-
geted tax benefits for angel investors
and VCs would provide the best value
vs growth stage investors such as pri-
vate equity players. A tiered incentive
model that rewards investors based
on the risks and industry sectors that
early stage investors focus on could be
a winning strategy.
Banks can be pushed to improve
credit deposit ratios, in states where
the credit deposit ratio is poor. China
for instance, provided more than $30
billion in credit to the country’s larg-
est solar manufacturers through the
government-controlled China Devel-
opment Bank.
In conclusion, a multipronged ap-
proach is necessary to transform
the country into an innovation led
economic model. It calls for indus-
try, academia, government and so-
ciety working collaboratively with a
common sense of purpose. Lessons
learned from India and abroad can be
leveraged to make this transition. The
time is right to build an foundation for
innovation which will bear fruit in the
years to come.
IBAB – a new model for PPP in technology
The Department of IT & BT, Government of Karnataka, in association with ICICI Bank established the
Institute of Bioinformatics and Applied Biotechnology. ( www.ibab.ac.in)
The evolution of this institute involves some of the successful strategies utilized by academic facilities in
global economies. This may be a model that facilities in other states could follow.
Role of Government ü A government initiative in collaboration with ICICI Bank
Industry Academia Collaboration ü Biocon, Merck, Astra Zeneca endowed Faculty Chairs at IBAB
GANIT Labs is a partnership between IBAB and Strand Life Sciences.
Social Capital ü Nobel Laureate Venkatraman Ramakrishnan, and others share knowledge, has
several internationally experienced professionals faculty
Knowledge Capital ü Generates Knowledge capital in advanced bioinformatics Incubation of an
immunologist entrepreneur
Finance ü ICICI ventures in collaboration with the government
Intellectual Property ü Neem sequence database, sweet proteins that can replace low calorie
sweeteners
Infrastructure ü World class infrastructure for bioinformatics

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SPOTLIGHT
-Dr.S.Jayaprakash
Innovations in Healthcare can be attributed to various factors
like improvement in healthcare technology, spread of
infrastructure, innovations in healthcare financing schemes,
improvement in observing healthcare behavioural economics etc.
Healthcare
Scenario in India
Innovations and Improvements

LSI
SPOTLIGHT
O
ptimal health of a person depends upon the
habits and living conditions and availability of
medical facilities. There is an adage that ‘Food
itself is a medicine’. The growth of agricultural
sector itself will help people to overcome various issues re-
lated to malnutrition etc. India has progressed significantly
due to the advancements in agriculture, health infrastruc-
ture and also the availability of immunization vaccines,
there are other factors that determine the health system.
A few factors are as below
• Demographic trends – India is second largest popu-
lated country in the world, the issues related to popula-
tion growth should be a problem.
• Social trends – Increase of urbanization and related
issues both at rural level and urban level should pose
challenges in providing Healthcare.
• Life expectancy - Life expectancy denotes the expected
number of years that a child born today will survive.
Health infrastructure and demographic issues play
vital role in the life expectancy. As life expectancy at
birth and at older ages lengthens, the quality of that
longer life becomes a major issue. This creates a new
concept of ‘Healthy life expectancy’. It refers to the av-
erage number of years that a person may expect to be
free of limitation of function due to one or more chron-
ic disease conditions. This also warrants for creation of
infrastructure for ‘Geriatric’ (old age related) diseases.
• Mortality - Mortality varies from region to region
and various diseases has accounted for higher rate of
deaths
In the pre-independence era, India has witnessed lot of
deaths due to various epidemic diseases, our freedom
fighters and national leaders having witnessed the same
felt the need for giving more importance to the healthcare
in the independent India and hence health was mentioned
in the constitution of India. However, ‘Right to Health’
is not included as fundamental right in our constitution.
However, it is imposed in the Directive Principles of state
Policy wherein it directs the state to be responsible to take
care of the health of its people. But it also kept check on the
central government by placing some of the health care is-
sues in the concurrent list like population control and fam-
ily welfare, medical education, prevention of food adulter-
ation, quality control in manufacture of drugs etc. which
means that both centre and state has the responsibility to
issue legislations based on the dynamics. Central Govern-
ment has also taken important initiatives like Rashtriya
Swasthya B ima Yojana (RSBY) in the recent past.
RSBY has been launched by Ministry of Labour and Em-
ployment, Government of India to provide health insur-
ance coverage for Below Poverty Line (BPL) families. The
objective of RSBY is to provide protection to BPL house-
holds from financial liabilities arising out of health shocks
that involve hospitalization. Beneficiaries under RSBY are
entitled to hospitalization coverage up to Rs. 30,000/- for
most of the diseases that require hospitalization. Govern-
ment has even fixed the package rates for the hospitals for
a large number of interventions. Pre-existing conditions
are covered from day one and there is no age limit. Cover-
age extends to five members of the family which includes
the head of household, spouse and up to three dependents.
Beneficiaries need to pay only Rs. 30/- as registration fee
while Central and State Government pays the premium to
the insurer selected by the State Government on the basis
of a competitive bidding.
Significant Achievements in India due to
Healthcare Innovations
Changes in Life Expectancy at Birth
Life expectancy in India has more than doubled in the last
sixty years. It increased from around 30 years at the time of
independence to over 63.5 years in 2002-06. Although the
decadal increase has slowed from 5.7 years in the 1970s to
3.2 years in the 1990s, the overall life expectancy increased
by 14.1 years in the rural areas and 9.9 years in the urban
areas during the period 1970-75 to 2002-06. The wide vari-
ance in performance across states is of special concern.
While inKerala, a person at the time of birth is expected
to live for 74 years, the expectancy of life at birthin states
like Assam, Bihar, Madhya Pradesh, Orissa, Rajasthan and
Uttar Pradesh is in the rangeof 58-62 years
Improved Child Survival
India’s infant mortality rate too has shown a steady de-
cline, from 129 deaths per 1,000 live births in 1971 to 53 in
2008. The rate of decline has been slowing, from 19 points
in the 1970s to 16 pointsin the current decade. Currently
the urban IMR is 36 as compared to the rural IMR of 58.

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SPOTLIGHT
Decreasing Maternal Mortality
The problem in estimating MMR has been the fixing of a
reliable denominator due to the comparativerarity of the
event, necessitating a large sample size. However, given
this constraint, data suggeststhat India had a MMR of 460
in 1984, declining to 254 deaths per 100,000 live births in
2004-2006.
The Causes of Deaths
Communicable diseases, maternal, peri natal and nutri-
tional disorders constitute 38 per cent of deaths. Non-com-
municable diseases account for 42 per cent of all deaths.
Injuries and ill-defined causes constitute 10 per cent of
deaths each. However, it should be noted that the incidence
of diseases like Malaria, Tuberculosis, Dengue Fever (Com-
municable) and Incidence of non-communicable diseases
like Cancer is on the raise is a matter of concern
HIV Prevention and Control
India had an estimated 2.27 million HIV-positive persons
in 2008, with an estimated adult HIV prevalence of 0.29
per cent. This is nearly 7 per cent of the global burden of 33
million HIV cases.
Integrated Disease Surveillance Programme
Disease surveillance means early detection and timely re-
sponse to disease outbreaks.Which requiresconstant con-
tact with multiple sources of information—health workers,
laboratories and healthfacilities, and capacity for prompt
investigation into each outbreak. Towards achieving this
anetwork of regional laboratories have been established
and the aim is to put an epidemiologist inplace in every
district
Trends of Communicable Diseases in India
Dengue, Chikungunya, HIV-TB Co-infections, Cholera ,
Japanese Encephalitis, Leptospirosis, Novel H1N1 Infec-
tions shows increasing trends. Diseases like Poliomyelitis,
Tuberculosis, Neonatal tetanus, Measles, HIV/ AIDS shows
decreasing trends. Diseases like Small pox, Guinea worm
has been eradicated while Leprosy was eliminated.
The Public Health Sector
The provision of health care by the public sector is a re-
sponsibility shared by the state government,Central Gov-
ernment and local governments. General health services
are the primary responsibilityof the states with the Central
Government focusing on medical education, drugs, popu-
lationstabilisation and disease control. The National Health
Programmes of the Central Governmentrelated to repro-
ductive and child health and to the control of major com-
municable diseases likemalaria and tuberculosis have al-
ways contributed significantly to state health programmes.
Morerecently, under the NRHM, the Central Government
has emerged as an important financier of statehealth sys-
tems development.
Government health care services are organised at different
levels. Primary health care is provided through a network
of over 146,036 health sub-centres, 23,458 PHCs and 4,276
CHCs. Atthe district level on an average there is a 150-
bedded civil/district hospital in the main district townand
a few smaller hospitals and dispensaries spread over other
towns and larger villages.
The Private Health Sector
At the time of independence only about 8 per cent of all
qualified modern medical care was providedby the private
sector. But over the years the share of the private sector in
the provision of healthcare has at about 80 per cent of all
outpatient care and about 60 per cent of all in-patient care.
The private sector in India has a dominant presence in all
the submarkets—medical educationand training, medical
technology and diagnostics, pharmaceutical manufacture
and sale, hospitalconstruction and ancillary services and,
finally, the provisioning of medical care. Over 75 per centof
the human resources and advanced medical technology, 68
per cent of an estimated 15,097hospitals and 37 per cent of
623,819 total beds in the country are in the private sector.
Of thesemost are located in urban areas. Of concern is the
abysmally poor quality of services being providedat the ru-
ral periphery by the large number of unqualified persons.
Its relationship to health outcomesat the population level
has never been established.
The private sector’s predominance in the health sector has
led to inequities in access to healthcare. Hospitalisation
rates among the well-off are six times higher than those
among the poor.Such inequities lead to a situation where
women from families who can afford suffer unnecessary-
Caesarean operations in delivery of babies —in some urban
centres close to half the deliveries areC-sections—while in
contrast poorer, rural women are more likely to die during
childbirth due tolack of access to these operations.
Health care Human Resources
One international norm is a minimum of about 25 skilled
health workers per 10,000 population (doctors, nurses and
midwives) in order to achieve a minimum of 80 per cent
coverage rate for deliveries by skilled birth attendants or
for measles immunisation as seen in cross-country analysis
(JLI, WHO, 2006). Workforce estimates based on the 2001
Census suggest that there are around 2.2 million health
workers in India but these are based on self-reported occu-
pation which is susceptible to unqualified providers being
counted as qualified ones. Adjusting for this, the density of
health workers falls to a little over 8 per 10,000 population
of which allopathic physicians are 3.8 and of nurses and
nurse-midwives are 2.4 per10,000 population. Allopathic

LSI
SPOTLIGHT
doctors comprising 31 per cent of the workforce, followed
by nursesand midwives (30 per cent), pharmacists (11 per
cent), AYUSH practitioners (9 per cent) andothers. It is im-
portant to note however that the overall health workforce
estimates do not includethe substantial number of commu-
nity health volunteers and workers introduced under the
NRHMafter 2005.
The nurse-doctor ratio in India is heavily skewed in favour
of doctors. According to a computationfrom census there
are approximately 1.2 nurses and midwives per allopathic
physician. In comparison,developed countries such as USA
and UK have nurse-physician ratios of 3 and 5 respectively.
Almost 60 per cent of health workers reside in urban area.
This mal-distribution is substantiallyexacerbated when
adjusted for the larger share of the population residing in
rural areas. Themajority (70 per cent) of health workers are
employed in the private sector.
According to the 2001 Census, almost 60 per cent of health
workers reside in urban areas, which skews their distribu-
tion considerably. The density of health workers per 10,000
population inurban areas (42) is nearly four times that of
rural (11.8) areas. The majority (70 per cent) of healthwork-
ers are employed in the private sector.
Innovations in Health Economics
Steps taken by India at various stages in providing health-
care to the people, how health played important role in
various laws and regulations etc. For any health care re-
lated expenses, the role of out of pocket expenses happens
at some level. Even if the health care is provided at ‘Free of
Cost’ in any Government hospital, there are other health
related expenses in the form of transportation, recuperating
expenses etc. In this context, it is important to know about
the role of Health Economics, its importance, how health-
care financing happens across the globe and what are the
lessons for India. Also, Health insurance is emerging as an
important factor to bridge the gap in these days, thanks to
the critical role played by schemes like RSBY.
While the student will know about various health insur-
ance models in the following chapters, it is important to
know about the history and growth of health insurance in
India so that they can appreciate the role of health insur-
ance in the contemporary era
• India is increasing its visibility in the global arena on
various accounts, be it is nuclear treaties, Oil explora-
tions, investment climate etc. Having the attraction
and attention of the global investors and countries in
various stocks & options, Analysts and analytics are
revolving around the number games of stock market
indices, inflation rates. The growth predicted is based
on various factors like distinct demographical factors of
youth population, rich natural resources etc. Accord-
ing to 2011 census, India has 1.21 Billion populations
and is second populous country after China and more
than half of the population is young which an enviable
proportion when compared to other countries is.
• At this juncture, If India could take care of the health
care needs and make the population as healthy, India
as a country depending more on its human resources
for excelling in many streams can make it possible to
become the superpower. If we can assume that each
citizen to be a capital asset, it is important to preserve
the capital value of the individual and improve his pro-
ductivity through various measures like Education,
Health care etc. to keep him contributing to the Gross
Domestic Product (GDP). Any lacunae in this will ei-
ther (a) reduce his productivity or (b) develop the Busi-
ness Continuity Risks for the nation. Even at the micro
level, every organization wish to perform annual medi-
cal checkup for its key employees to identify the diseas-
es at the earliest and also to avoid any losses to due to
health care related absence. To be in precise Economics
has taken the centre stage in the contemporary politics
& Governance, and hence it is the need of the hour for
integrating more of economics with health by increas-
ing the focus on the branches of economics viz. health
economics, Behavioral Economics etc
• Health Economics is a branch of Economics that deals
with the efficiency factors of the health care delivery
and consumption. Even the developed countries like
United Kingdom or United States of America face the
issue of affordable healthcare. There are still lot of wait-
ing to get major surgery done in the UK hospitals that
makes it difficult for those countries to get an efficient
‘Demand-Supply Equilibrium’. Even in the US presi-
dential elections, Health care becomes one of the criti-
cal factor in deciding the election of the president.
• Due to rising cost concerns, concepts like ‘Medical
Tourism’ is on the raise wherein people travel to coun-
tries like India, Philippines, Thailand to get treatment
at lower cost. Approximately, more than 3 lakh people
travel to India every year for the medical treatments
which also shows that we have best quality doctors and
hospitals in the world. There are lot many learning’s for
India from the models of other countries and similarly,
there are various learning’s for other countries from In-
dia. To be precise, no health care system can be perfect
The nurse-doctor ratio in India
is heavily skewed in favour of doctors.
According to a computation from census
there are approximately 1.2 nurses and
midwives per allopathic physician

LSI
SPOTLIGHT
and lot of changes happen very often. Health Econom-
ics tries to achieve the optimum utilization of resources
in order achieve efficiency in the health care delivery
mechanism and the way it is consumed as well.
• In this aspect, Health Insurance should also be consid-
ered as part of the health economics because; health in-
surance enables the financing aspect of the health care
through risk pooling mechanism.
• Health Economics also gains importance in the context
of lack of Demand Supply Equilibrium, Issues pertain-
ing to Rising Health care cost, behavioral economics,
sociological changes etc. The issues are highlighted in
the following sections.
Application of Behavioral Economics in
Health care
• In India, controls over the health insurance sector is not
wholly rested with the regulator as it has limited pow-
ers over the hospitals wherein Medical council of India
has more controls over the hospitals. Hence it requires
an integrated approach to solve the problems. Health
Insurance is mostly seen as a subject of insurance &
medical care and there is an immediate requirement
to view the health insurance as part of the econom-
ics to understand the sector in a better way. Especially
given the fact that India is a multi-facetted country in
terms of religion, demography, language and cultural
factors this becomes very important for understanding
the health care needs of the people and matching their
expectations.
• For an example the behavioral economics stream, which
discusses about the emotional factors that influence the
purchasing decisions, the extent to which it affects the
market equilibrium etc? Behavioral economics present
various themes like ‘heuristics’ where it says that people
take most of their decisions based on the ‘rule of thumb’
and the way a problem is presented to the people will
affect the action.
• Some of the concepts fit very well with respect to the
health insurance and especially Indian scenarios. The
concept of hyperbolic discounting explains well about
the claims made by the people in the first year of health
insurance. Hyperbolic discounting refers to the empiri-
cal finding that people generally prefer smaller, sooner
payoffs to larger, later payoffs when the smaller payoffs
would be imminent; but when the same payoffs are dis-
tant in time, people tend to prefer the larger, even

LSI
SPOTLIGHT
though the time lag from the smaller to the larger would
be the same as before. This hyperbolic discounting oc-
curs to large extent such that people take health insur-
ance policies and in the first year claim the possible and
switch over the health insurance company taking ad-
vantage of the lack of integrated data base of claimants
that is shared among the insurance companies. But at
the same time, if you are able to keep the policyholder
away from making claim for the initial year, the prob-
ability of the claims goes down. This principle was ap-
plied in some of the products in India wherein the policy
condition states that ‘4 claim free years’ will make poli-
cyholder eligible for the coverage against pre-existing
diseases. The above example is only an instance of the
successful application of behavioral economics princi-
ples in the insurance.
Health Economics and Rising Healthcare cost
• Rising healthcare costs impact the developed economy
and developing economy in a different manner. While
in developed economies, it is estimated by experts that
it will double by 2050. Standard & Poor infact warns
developed economies that it will be difficult to man-
age the healthcare spending compared to developing
economies. One of the reason for this may be due to
the higher old age propositions of the country citizens.
However, developing economies may not have such an
issue of adverse old age proposition, however, they will
have budgetary challenges.
• To overcome any challenges related to healthcare cost
and spending, it is important to leverage upon the tech-
nological advances, increase preventive medical care
apart from looking at the factors of increase in infra-
structural challenges, sociological challenges etc.
Sociological challenges and Health care
and Economics.
• Statistics indicate that 94% of our labor force falls un-
der ‘Unorganized Sector’ which tantamount to close to
43 crores of people. 1.5 Crore families are pulled Be-
low Poverty Line every year, due to Medical expenses.
All macro economic factors like Inflation etc. pull more
people. There are instances wherein some families mi-
grated to a nearby town by selling their land and other
assets in their village, for better treatment in big hos-
pitals. After migrating, they usually take up other un-
skilled jobs to pay for daily expenses in the city while
undergoing the treatment concurrently. Unfortunately,
the majority of this workforce is illiterate, impoverished
and lacks any fall back plans to take care of their fami-
lies when they fall sick. Most of these workers visit such
hospitals only when they start to suffer from chronic
diseases. By the time, they reach the hospital, it is either
too late or they lack the required money for treatment.
Some workers cannot afford to be hospitalised for a few
days because of loss in their daily earnings. Sometimes,
this also leads to social dissatisfaction among the mi-
grants as they see the other segments prospering with
wealth benefitted by liberalisation policies.
• Statistics indicate that nearly one million Indians die
every year due to inadequate healthcare facilities; Some
700 million people have no access to specialist care, as
80 per cent of the specialists live in urban areas. With a
world average of 3.96 hospital beds per 1000 individuals
India stands just a little over 0.7 hospital beds per 1000
people.
• Despite the fact that it is the second most populated
country in the world, the budget allocated for health
care by the government of India is currently less than 2
per cent of the GDP currently. Consequently, the pub-
lic’s out-of-pocket expenses are around 4.75 per cent of
the GDP. Every year millions of people fall below the
poverty line (BPL) due to their personal spending on
healthcare. With the down turning factors of reces-
sion, economic volatility, inflation and unemployment
there are chances that even more people will fall into
poverty. A quick analysis indicates that the majority of
those who are pulled to BPL belong to the unorganised
sector.
• Needless to say, the workforce forms the basis of any
nation’s economy. The National Sample Survey Or-
ganisation had recorded total employment in both the
organised and unorganised sectors as 45.9 Crore work-
ers (2004-2005), of which unorganized workers formed
94 per cent. Out of the 43.3 Crore unorganised workers,
26.9 Crore workers were employed in the agriculture
sector, 2.6 Crore in construction and the remaining in
manufacturing activities, trade and transport, commu-
nication and services. A large number of unorganised
workers were home based and were engaged in occupa-
tions like bidi-making, agarbatti-making, papad mak-
ing, tailoring, servant maids and embroidery work (list
is only indicative).
Sociological dynamics and its impact
• A few decades ago, the joint family system was highly
present in India to take care of the needs of an ailing
family member. But with sociological changes, the joint
Health Insurance is mostly seen as a
subject of insurance & medical care
and there is an immediate requirement to
view the health insurance as part of the
economics to understand the sector in a
better way

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SPOTLIGHT
family system is slowly disappearing in India leaving
the family in a lurch.
• India is predominantly an agriculturally based econ-
omy. Agricultural labourers form the majority of the
unorganised sector. A drop in the agricultural based
income for these labourers made many of them migrate
to nearby cities for jobs. The government of India rec-
ognised this and subsequently launched a scheme, ‘Na-
tional Rural Employment Guarantee Act’ (NREGA).
• The NREGA scheme aims to enhance the livelihood
security of people in rural areas by guaranteeing one
hundred days of wage-employment in a financial year
to a rural household whose adult members volunteer to
do unskilled manual work. Under this scheme, approxi-
mately Rs.100 per day were guaranteed for 100 days of
work per year. However, this also has side effects. The
agricultural labourers who stayed in villages moved to
places that ran NREGA schemes for better wages leav-
ing challenges for the landlords to hunt for replacement
agricultural labourers. Even if the landlords could
get the labourers, the wage demand of those labour-
ers increased by more than 100 per cent compared to
the past, as they guaranteed higher wages under the
NREGA scheme. The end result is the increase in the
cost of agricultural produce, the increase in purchasing
power of the rural mass which is also one of the factors
for inflation in rural India.
• To save poor people from spending on healthcare that
usually leads to bankruptcy, the government of India
has introduced a laudable scheme ‘Rashtriya Swasthya
Bima Yojana’ (RSBY) scheme which is health insurance
for the poor. Beneficiaries under RSBY are entitled to
hospitalisation coverage of up to Rs. 30,000/- for most
of the diseases that require hospitalisation. The govern-
ment has even fixed the package rates for hospitals for a
large number of interventions. Pre-existing conditions
are covered from day one and there is no age limit. Cov-
erage extends to five members of the family which in-
cludes the head of household, spouse and up to three
dependents. Beneficiaries need to pay only Rs. 30/- as
registration fee while the central and state government
pays the premium to the insurer selected by the state
government on the basis of competitive bidding. It has
to be mentioned that both NREGA and RSBY have
various implementation challenges as well and NREGA
beneficiaries are also covered under RSBY scheme thus
making India as a country having widest coverage of
Health Insurance beneficiaries in the world.
Stitching the gap for the unorganised
segment.
• Though RSBY is definitely a welcome move, this does
not deter the poor from falling sick. If we consider that
Phase A is a period wherein these workers contract
diseases and Phase B is a period wherein they require
secondary care treatment, then the RSBY scheme takes
care of Phase B but only Rs.30000. There is no scheme
to take care of Phase A.
• Care during Phase A is provided by medical camps
run by voluntary organisations. Without access to care,
unorganised workers may contract contagious or life
threatening diseases that remain undiagnosed and un-
treated. Until severe symptoms show, they usually work
at a gruelling pace to earn their daily bread. These are
the people who will later sell their eyes to buy a ‘paint-

LifeSciences India- a Confederation of Indian Industry publication

LifeSciences India- a Confederation of Indian Industry publication

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