Final Deliverable

April 29, 2018

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Contents
1 Market Sizing 4
1.1 Background 4
1.2 Chennai and Bangalore 4
1.2.1 Key References 4
1.2.2 Estimated Ranges 5
1.2 Tamil Nadu & India 5
1.2.1 Key References 5
1.2.2 Implications 5
1.2.3 Recommendations 6
1.3 Affordability 6
1.3.1 Overview 6
1.3.2 Methodology 6
1.3.2 Relevant Data 6
1.3.4 Cost Burden as Percentage of Income 7
1.3.5 Conclusion 7
1.4 Willingness to Pay 7
2. Ways to Sell Phoenix-Aid in India 8
2.1 Overview 8
2.2 General Process 8
2.3 Contacting Chain Pharmacies 8
2.3.1 Apollo 8
2.3.2 MedPlus 8
2.3.3 Sample Website to Find an Agent 8
2.4 E-Commerce 9
2.4.1 Business to Consumer 9
2.4.2 Business to Business 9
3. Diabetic Spending Patterns 10
3.1 Key Studies 10
4. Diabetic Specialty Centers 11
4.1 MV Hospital for Diabetes 11
4.2 ARH 11

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 4.3 Apollo Sugar Clinics 11
4.4 Conclusions & Implications 11
5. Remissions and Recurrence 12
5.1 Key Studies 12
6. Policies & Overview of the Pharmaceutical Market 13
6.1 Classification 13
6.2 Approval of Manufacturing & Selling 13
6.3 Patent Information 13
6.4 Trade Names for Foreign Companies 13
6.5 Distribution of Pharmacies & Products 13
6.6 Distance Selling 14
6.7 Pricing & Pricing Build-up 14
6.8 Restrictions of Imported Drugs 14
6.9 Likelihood of Receiving Recommendations from Doctors 14
6.10 Link to Hospitals and Pharmacies 15
7. Hospitals and Pharmacies 16
7.1 Overview 16
7.2 List of Hospitals 16
7.3 Another Look into Leading Diabetes Treatment Facilities 16
7.4 More on Spending Patterns 16
7.5 Some Implications 17
7.6 Number of Pharmacies in Chennai & Bangalore 17
7.7 Relevant Revenue 17
7.8 Some Implications 17
8. Policies & Pharmaceutical Landscape Deep-Dive 19
8.1 India Pharmaceutical Policies 2017 19
8.2 CDSCO 20
8.2.1 Overview 20
8.2.2 Key Updates 20
8.3 OPPI 51st Annual Report 2016-2017 20
8.3.1 The Pharmaceutical Landscape 20
8.3.2 Challenges 21

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 8.3.2 Policies 21
8.4 India Pharma 2020 by McKinsey 22

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1 Market Sizing
1.1 Background
Although foot ulcer is a relatively common occurrence accompanying diabetes, there
appears to be no data bank citing accurate numbers on it. However, such numbers can be
logically estimated from relevant data that are publicly available. To dive deeper into the
size of this market, we have further broken it down into three sub-segments, the total
population of patients, the total population of patients who can afford the product and the
total population of patients who will be willing to pay for the product.

1.2 Chennai and Bangalore

1.2.1 Key References
1. Study One1
• Survey conducted with a random sample of more than 25,000 individuals in
Chennai
• Across all ages and sexes, prevalence is found to be 2.9% diabetics, with over
99% of those cases being Type 2 diabetes
• Age group over 20 has a 4.9% prevalence
• For over 40, prevalence is 10.5%
2. Study Two2
• Study conducted by the Madras Diabetic Research Foundation (MDRF), in
collaboration with Emory University in the U.S., the Public Health
Foundation of India, the All India Institute of Medical Research in New Delhi,
and the Aga Khan Foundation in Karachi.
• 25% prevalence in over 20
• 38% prevalence in over 40
3. Study Three3
• National Center for Biotechnology Information – studies show 5.5% of
diabetics in India suffer from foot ulcers
4. Study Four4
• Doctors estimate 10-15% of adults in Bangalore are diabetic
5. Study Five5
• Another statistic on the prevalence of diabetes in Bangalore puts it at 12%
6. Study Six6
• Health ministry statistics put the diabetes rate in Bangalore at 14%

1
https://www.ncbi.nlm.nih.gov/pubmed/11848329
2
http://www.thehindu.com/news/cities/chennai/chen-health/one-in-four-in-chennai-has-diabetes-study-reveals/article6584289.ece
3
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3920109/
4
http://www.thehindu.com/todays-paper/tp-national/tp-karnataka/Why-is-Bangalore-the-Diabetes-Capital/article15340335.ece
5
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4535103/
6
http://www.indushealthplus.com/karnataka-health-statistics.html

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 1.2.2 Estimated Ranges
Chennai: 12,500 - 64,000 Diabetics with foot ulcers
Bangalore: 67,800 - 101,800 Diabetics with foot ulcers

1.2 Tamil Nadu & India

1.2.1 Key References
1. Study One7
• India population (2016): 1.324 billion
o >62 million diabetics (2014)
• Tamil Nadu population (2017): 79.79 million
o 4.8 million diabetics (2014)
o Maharashtra - 9.2 million diabetics (2014)
• Southern India is generally more affected by diabetes
• Prevalence of diabetes in rural populations is 25% that of in urban
populations
2. Study Two8
• DFI (diabetic foot infection) 6-11% likely in diabetic patients
• Diabetic foot issues in India are neuropathic and infective, instead of
vascular as it is in most developed countries
• Diabetic foot issues can lead to many complications - hypertension,
retinopathy, heart disease, etc.
3. Study Three9
• Total expenditures for patients in South India with foot problems ranges
from 1111-528955 rupees
• Simple random sample for diabetic patients with and without foot issues to
see total cost of treatment

1.2.2 Implications
market for treatment concerning diabetic foot issues in Tamil Nadu, and India as a
whole, is not very mature. It is saturated with products, all of which attempt to
remedy the issue, at varying price points. That being said, many of them are still too
high for people to afford. InMedBio could potentially be able to obtain a sizeable
portion of market share, based on two factors. For market entry price, tentatively
recommend an expansive approach, taking into consideration the range of prices
and innovativeness of the product. For revenue projection, manufacturing and
distribution needs to be figured out (Request flow chart). Tentatively recommend
conducting a study in South India to determine Cost of Customer Acquisition.

7
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3920109/
8
https://www.researchgate.net/profile/Vijay_Viswanathan2/publication/7881632_Amputation_Prevention_Initiative_in_South_India_Positive_impact_of_fo
ot_care_education/links/54bf85f60cf28ce68e6b5cdc.pdf
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https://www.researchgate.net/profile/Vijay_Viswanathan2/publication/12053730_Cost_Burden_to_Diabetic_Patients_with_Foot_Complications_-
_A_Study_from_Southern_India/links/54f55bc10cf2eed5d7373719.pdf

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1.2.3 Recommendations
• Prospective cohort study for further biomedical research for Phoenix Aid in India
using a stratified random sample
o Following certain groups of individuals could help to provide better insight
into how the product could be improved technically and in terms of
marketing
• Surveying patients with diabetic foot issues in Tamil Nadu using a simple random
sample and the Gabor-Granger pricing technique to determine an exact market
entry price for InMedBio
o Directly asking consumers about prices lends credibility to pricing choices
and asking patients will help as well
• Tentatively recommend a cross sectional study of rural and urban hospitals in Tamil
Nadu and South India to determine the cost to acquire customers
o The current market in South India favors products that have favorable
margins and pricing, and obtaining a snapshot of the current state of the
market would be beneficial to market entry later
o Revenue increases as cost of customer acquisition (and cost of value
delivered) goes down

1.3 Affordability
1.3.1 Overview
In a research paper published in the Journal of the Association of Physicians of India in
December 2000, diabetic patients without foot problems typically spend 9.3% of their
income on medication and treatments. However, diabetic patients with foot problems
typically spend 32.3% of their income on medication and treatments. This shows that the
financial burden on patients drastically increases if the patient is suffering from foot
infections. Although the research is rather old, based on the price of some of Phoenix-Aid’s
competitors, we do believe the numbers given in the research are relevant and acceptably
accurate.

1.3.2 Methodology
We seek to determine the cost of using Phoenix-Aid as a percentage of the patients’ income.
If the cost renders no significant additional financial burden to the patients, we would
conclude that the patients are able to afford Phoenix-Aid. We assume a typical patient
suffering from foot ulcers use Phoenix-Aid for 5 months in a year.

1.3.2 Relevant Data

• The cost to use Phoenix-Aid for 5 months is $53.89
• GDP per capita (nominal) in Chennai is $1,870
• GDP per capita (nominal) in Bangalore is $1,420
• GDP per capita (nominal) in Tamil Nadu is $1,627
• GDP per capita (nominal) in India is $1,573
Note: 2014 GPD numbers are used for consistency across the cities/state

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1.3.4 Cost Burden as Percentage of Income
• Chennai = 53.89 / 1870 = 2.88%
• Bangalore = 53.89 / 1420 = 3.80%
• Tamil Nadu = 53.89 / 1627 = 3.31%
• India = 53.59 / 1573 = 3.43%

1.3.5 Conclusion
Assuming patients already spend 10% of their income on treatments for diabetes, we can
see that using Phoenix-Aid to treat foot ulcers posts no significant additional burdens on
them, especially compared to some other treatments that can cost 20% of their income. As a
result, theoretically, almost all diabetic foot ulcer patients should be able to afford Phoenix-
Aid.

1.4 Willingness to Pay

It is important to distinguish between the idea of being able to pay for something and being
willing to pay for something. Our research shows that there is no shortage of products in the
diabetic foot infection treatment market at varying prices. However, many of the patients
choose to have their foot ulcers untreated, mainly due to cost and awareness issues.
Therefore, because of the lack of information on manufacturing and distribution data of
Phoenix-Aid as well as the information on collaborations with pharmacies and hospitals, we
cannot give reliable estimations at the moment. However, if we are given the percentage of
patients who are currently using the competitor products of Phoenix-Aid, such as Aquacel
Foam AG, DuoDERM and Cultinova Alginate, we will be able to generate a rough estimation
of the percentage of patients who will be willing to use Phoenix-Aid through a regression
model.

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2. Ways to Sell Phoenix-Aid in India
2.1 Overview
To sell in India, there are three main methods of doing so; contacting a distribution
company who will put your product in stores, contacting stores directly, and listing
products on eCommerce websites. Our recommendation would be to list the product on
multiple eCommerce websites because they have great amounts of exposure and are mostly
free. It will help to better understand market demand, pricing, and logistics. Next, because of
inexperience in the Indian market, we would recommend contacting a stockist who would
be able to get your products into a wide range of stores across all of India, usually on a
commission basis. Once there is a point of entry and the market is well understood, we
would then recommend contacting retailers directly.

2.2 General Process

The three-tier system: Most Indian manufacturers use a three-tier selling and distribution
structure that has evolved over the years. This structure involves redistribution stockists,
wholesalers, and retailers. As an example, an FMCG (Fast Moving Consumer Goods)
company operating on an all-India basis could have between 40 and 80 redistribution
stockists (RS). The RS will sell the product to between 100 and 450 wholesalers. Finally,
both the RS and wholesalers will service between 250,000-750,000 retailers throughout the
country. The RS will sell to both large and small retailers in the cities as well as interior
parts of India.

2.3 Contacting Chain Pharmacies

2.3.1 Apollo
[17:12] V1521220274064931: Hello
[17:12] Rakesh has joined the conversation
[17:12] Rakesh: Dear Customer, Welcome to Apollo Pharmacy Online Chat. How may I assist
you today?
[17:13] V1521220274064931: I'm working with a bandage manufacturer who is looking to
sell their bandages in Apollo pharmacies. Do you know what the process is for getting new
products into Apollo pharmacies?
[17:14] Rakesh: Please drop a mail to "customerservice@apollopharmacy.org", the concern
team will get in touch with you
[17:14] V1521220274064931: Great! Thank you

2.3.2 MedPlus
Just call 040 - 6700 6700
Email Id: wecare (at) medplusmart (dot) com
Customer service available: 8 AM - 10 PM daily

2.3.3 Sample Website to Find an Agent

https://www.allianceexperts.com/en/ten/find-your-agent-or-distributor-in-india/

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 2.4 E-Commerce
India is expected to become the world’s fastest growing e-commerce market, driven by
robust investment in the sector and rapid increase in the number of internet users. Indian
ecommerce sales are expected to reach $120 billion by 2020 from $30 billion in 2016.

2.4.1 Business to Consumer

E-Commerce Site Website “Sell On … ” Link
Flipkart https://www.flipkart.com/ https://seller.flipkart.com/?utm_source=flipk
art&utm_medium=website&utm_campaign=s
ellbutton
Amazon https://www.amazon.in/ https://services.amazon.in/services/sell-on-
amazon/how-it-
works.html?ref=as_in_soa_sticky_nav_hiw
Snapdeal https://www.snapdeal.com/ https://sellers.snapdeal.com/
eBay https://www.ebay.in/ http://sellercentre.ebay.in/selling-
international
Alibaba http://india.alibaba.com/index. https://service.alibaba.com/ensupplier?spm=
html a2700.7724838.scGlobalHomeHeader.21.25e
86eaax5NQw4&tracelog=hd_hp_supplierhp_e
n

2.4.2 Business to Business

E-Commerce Website “Sell On … ” Link
Site
Industrybuying http://www.industrybuying.com/ https://seller.industrybuying.com/
Moglix https://www.moglix.com/ http://supplier.moglix.com/
Amazon https://www.amazon.in/b2b/info/amazon- https://www.amazon.in/b2b/info/amazon-
Business business?layout=landing business?layout=landing

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3. Diabetic Spending Patterns
3.1 Key Studies
1. Study One10
• On average, patients spend 3.6% of monthly income on direct treatment costs, 1.4%
on indirect costs
• Direct costs: 52% on medicines, 12.6% on surgeries, 11.6% on investigations, 10.4%
on clinician fees. Indirect costs: Almost entirely attributed to lost wages and
productivity
• Actual costs of treatment were relatively stable across income groups, but poorer
income groups spend much higher percentages of income on treatment
• Very few people in India have health insurance, so most expenditures are out-of-
pocket
2. Study Two11
• Most studies are concerned with direct costs, avoiding consideration of
healthcare systems (17 vs 2 studies)
o General absence of studies providing reliable diabetes data nationally
• It would take over 2.2 billion dollars to treat everyone in India with Type 2
diabetes
• Data from 19 economic studies in India found here:
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4279984/table/Tab5/
o Data varies from region to region, but without a healthcare system in
place the costs for diabetes treatment including drugs, monitoring,
hospitalization, checkups, consulting, etc. easily reaches into the
hundreds. For patients in a healthcare system, it doesn’t even amount to
half a hundred USD
• Most of the direct costs for patients comes from the price of drugs
• Current studies are flawed - don’t give precise definition of disease, don’t specify
timeframe, too small sample or don’t specify sample size
3. Study Three12
• Good data concerning percentages of patients who experience various other
complications
• Ways to reduce costs of treatment: early screening, monitoring of risk factors,
increasing access to drugs, tight metabolic control
4. Study Four13
• Average cost of treatment is around $84
o Urban areas: 10,000 rupees for total treatment
o Rural areas: 6,250 rupees for total treatment
• Doesn’t include information about spending in terms of treating the associated
complications of diabetes

10
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4319201/
11
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4279984/
12
https://www.sciencedirect.com/science/article/pii/S2214999616000035
13
https://www.gobyme.com/cost-of-diabetes-in-india-age-gender-spend-of-patients-statistics/

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4. Diabetic Specialty Centers
4.1 MV Hospital for Diabetes
• MV Hospital for Diabetes, specialty center for diabetes treatment in Chennai, founded by
the leading diabetes researcher in India
• 100 beds, 3 million total patients treated
• Offers “Doppler and Biothesiometry studies” for the early diagnosis of diabetic foot
complications
o Imaging of the blood vessels and vibrations to test for circulation and sensation
• Offers hyperbaric oxygen therapy to speed healing of chronic wounds by exposing them
to 100% oxygen
• Facilities include a Preventive Diabetes Foot Care department, with wound care
specialists and in-house production of diabetic footwear
o They appear to make and distribute their own products - footwear and “pharmacy
products” including wound care kits and bandages

4.2 ARH
• Diabetes specialty hospital chain with four locations in Southern India, also
• Foot care division “primarily focuses on prevention of minor and major amputations”
• Screen patients for risk of foot complications and offer custom-made indoor and
outdoor footwear, as well as compression socks and stockings

4.3 Apollo Sugar Clinics

• Apollo Sugar Clinics - a branch of Apollo Hospital Group focused on diabetes care with
14 locations around India
• Site features a statistic saying families spend 15-25% of household income on treatment
• Offers a line of “home care kits” including products for treating foot issues
o Diabetes socks and “Diastride” line of footwear

4.4 Conclusions & Implications

Diabetes specialty clinics offer a variety of services for foot care, primarily through
preventative measures like cleanliness and testing for the risk of future complications.
Standard practice appears to be categorizing patients’ risk on a scale from 0-3, and planning
regularity and intensity of care based on that risk assessment. Foot care in particular seems
to be an important part of these centers’ business - foot care kits, diabetic footwear, and
diabetic socks are offered for sale on almost every website. However, while these specialists
offer their own lines of footwear, I found none that sell their own bandages for chronic
wound care. This could be an opportunity for InMedBio - the company could partner with
specialty clinics like these with the aim of including Phoenix-Aid in the wound care kits and
lines of foot products they promote.

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5. Remissions and Recurrence
5.1 Key Studies
1. Study One14
• By reviewing 19 compatible studies on incidence rates for ulcer recurrence, they estimate
that roughly 40% of patients have a recurrence within 1 year after ulcer healing, almost
60% within 3 years, and 65% within 5 years.
• It may be more useful to think of patients who have achieved wound closure as being in
remission rather than being healed.
• The number of patients in remission is, by definition, far greater than the number of
patients who have active diabetes-related foot complications.
• The reasons that ulcer recurrence rates are so high appear to be biologic or behavioral or
both.
2. Study Two15
• Of the initially presenting ulcers, 71.6% healed, 12.3% were not healed at the end of the
follow-up period, and 16.0% had led to a lower-extremity amputation. The median
duration of follow-up was 31.5 months ([mean ± SD] 27.1 ± 9.2).
• Of the total population, 60.5% of the patients developed an ulcer in the follow-up period.
The incidence of ulceration was 26.8 per 100 patients per year.
• If multiple ulcers were counted as separate events, the incidence rose to 56.3 per 100 per
year

14
http://www.nejm.org/doi/full/10.1056/NEJMra1615439
15 http://care.diabetesjournals.org/content/30/8/2077

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6. Policies & Overview of the Pharmaceutical Market
6.1 Classification
The main policies governing the import, manufacture, distribution and sale of drugs and
cosmetics are Drugs and Cosmetics Act, 1940 and Drugs and Cosmetics Rules, 1945. It is
crucial to determine which category of drugs Phoenix-Aid falls into because of the
implications on selling and pricing. The following are common categories:
• Schedule H and X: prescription-only
• Schedule G: prescription not needed but mandatory warning text on the label
• Schedule K: mostly household remedies, non-pharmacists can sell in villages with fewer
than 1,000 subjects
• Ayurvedic Medicines: contain plant-based natural active ingredients, drug sale license
not required

6.2 Approval of Manufacturing & Selling

It is worth noting that each individual State Government has the power to issue the
manufacturing license and the selling license for a new drug through the State’s Food and
Drugs Administrations. The direct implication is that if Phoenix-Aid wants to make itself
available in multiple states, it may have go through multiple applications of the selling
licenses.

6.3 Patent Information

Rule 96 of the DCR requires the following information to be put on the label of all medicines
other than ISM medicines (ayurveda, siddha, unani):
• proper (generic) and trade (brand) name
• net contents and content of active ingredients
• name and address of manufacturer including manufacturing license number
• distinctive batch number, manufacturing and expiry date
• Maximum Retail Price (inclusive of all taxes)

6.4 Trade Names for Foreign Companies

Trade names are regulated by the Trade and Merchandise Marks Act (TMMA). The Indian
Copyright Act, 1957 also provides protection for unique logos and designs on packaging. A
foreign trade mark can be used without any restriction. Foreign companies can license their
trade marks to the local subsidiaries or joint ventures. The Indian courts are known to
provide quick and corrective action against counterfeit products, though the burden of
proof falls on the individual affected company.

6.5 Distribution of Pharmacies & Products

The retail of drugs is dominated by small independent shops with no strong presence of
national chains of drugstores. Examples of national chains of drugstores include Apollo
Pharmacy, Medicine Shoppe and Good Health. More will be elaborated on pharmacy chains
in later sections. Also, the trade body All Indian Origin Chemists & Distributors (AIOCD) has
corporatized itself and become AIOCD Ltd., with all chemists in India as its members.

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However, as of 2006, less than 5% of the Fast-moving Consumer Goods sales go through
organized retailors. An elementary search on the online inventories of Apollo Pharmacy and
AIOCD shows no direct competitor to Phoenix-Aid but traditional bandages and ointment.
To avoid the 2% Central Sales Tax for interstate sales, manufacturers or contracted
independent Clearing and Forwarding (C&F) agents typically operate a warehouse or
stockist in each state and further distribute within each state. The pharmaceutical products
typically go from manufactures to C&F agents and then to warehouses or stockists and
finally to whole sellers or retailers. This chain of distribution plays a major role in pricing,
as we will see later in this report.

6.6 Distance Selling

As of 2010, distance selling and teleshopping is not permitted in India for non-prescription
medicines, since the sale of drugs can only take place in licensed stores. However, the
regulations may have changed since there are clearly operational online drugstores in India,
even though they seem to be heavily regulated.

6.7 Pricing & Pricing Build-up

As of 2010, there were 74 bulk drugs and their formulations, known as scheduled drugs,
which cover a significant portion of the Indian pharmaceutical market, subjected to price
control. The price of scheduled drugs is reviewed by National Pharmaceutical Pricing
Authority (NPPA) from time to time. The prices of non-scheduled drugs are fixed by the
manufacturer subjected to a maximum 10% increase in a 12-month period. Ayurvedic
Medicines are not subjected to price control. For pricing build-up, as we have discussed in
section 1.5, the drugs pass through several independent parties before finally reaching the
consumers. Therefore, there is unavoidable build up on the price at each stage. A typical
pricing build-up would look like the following:

6.8 Restrictions of Imported Drugs

Import of formulations into India are negligible given the heavy tariffs resulting in
disadvantaged pricing and the cost advantage resulting from local manufacturing. Foreign
manufacturers have to apply for a registration certificate for manufacturing premises and
the individual drugs. The validity of registration certificates is three years from the date
they are issued.

6.9 Likelihood of Receiving Recommendations from Doctors

• 72% of doctors were willing to give an opinion on the over-the-counter medicine
• 21% of doctors were willing to recommend or prescribe an alternative

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• Only 7% of doctors found it against their medical ethics to give advice on advertised
brands

6.10 Link to Hospitals and Pharmacies

A 2010 report prepared by Organization of Pharmaceutical Producers in India gives us the
following data regarding consumer behavior when suffering from an ailment:
• 45% of consumers go to the pharmacist
• 24% of consumers go to the doctor
• 23% of consumers self-medicate
• 9% of consumers do nothing

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7. Hospitals and Pharmacies
7.1 Overview
The market of drugstores is largely dominated by small independent shops, which will
present challenging issues in accessibility. Therefore, it may be wise to focus a little more on
hospitals than pharmacies at the early stages. Furthermore, researches have shown that
prevalence of diabetes in rural population is 25% that of in urban population, thus it may be
a good idea to start with hospitals in the urban regions. We can further break down
hospitals into three general categories, which are public hospitals, private hospitals and
specialized diabetes treatment facilities. There are data on the numbers and locations of
these hospitals are readily available, especially in the urban regions, either through
compiled lists or simply through Google Map searches. Generally, there are much more
private hospitals as compared to public hospitals.

7.2 List of Hospitals

a. https://data.gov.in/catalog/number-government-hospitals-and-beds-rural-and-urban-areas
b. https://www.mapsofindia.com/chennai/hospitals-in-chennai.html
c. http://tamilelibrary.org/teli/hospitals1.html
d. http://www.chennai.org.uk/travel-tips/hospitals.html
e. https://www.medifee.com/hospitals-in-bangalore
f. http://bestofhealthindia.com/best-hospitals/bangalore
g. http://www.acsce.edu.in/list-of-hospitals-in-bangalore/
• Number of hospitals in India is 35,416
• Number of hospitals in Tamil Nadu is 1,995
• Number of hospitals in Bangalore is more than 100
• Number of public hospitals in Chennai is around 12 – 14
• Number of private hospitals in Chennai is around 160

7.3 Another Look into Leading Diabetes Treatment Facilities

1. Study One16
• This case study Investigates of one of the leading diabetes treatment facilities in
Chennai, Dr. Mohan’s Diabetes Specialty Center
• There are seven facilities in southern India, treating 100,000 patients in total
• Since being established in 1992, the center has seen growth in new patients and
surgeries almost every year - they claim 15-20% yearly growth and have expanded to
five new locations in addition to the original center in Chennai
• The facilities in total treat about 100,000 diabetics yearly

7.4 More on Spending Patterns

• On average, patients spend 3.6% of monthly income on direct treatment costs, 1.4% on
indirect costs
• Direct costs: 52% on medicines, 12.6% on surgeries, 11.6% on investigations, 10.4% on
clinician fees. Indirect costs: Almost entirely attributed to lost wages and productivity
• Actual costs of treatment were relatively stable across income groups, but poorer
income groups spend much higher percentages of income on treatment

16
http://healthmarketinnovations.org/sites/default/files/Case_study_on_DMDSC.pdf

16
• Very few people in India have health insurance, so most expenditures are out-of-pocket

7.5 Some Implications

Based on the available listings, it appears each Chennai and Bangalore has 100-200
hospitals, and each has several diabetes-specific specialty clinics. Information on specific
treatments and patient numbers, though, is much harder to find. It appears most hospitals
and diabetes clinics are using gauze bandages to wrap diabetic foot wounds, and some
locations may use biosynthetic materials as well. Another NCBI study offers some insights
into the spending habits of diabetic patients in these regions - most notably the breakdown
of expenditures on treatment by category. Dr. Mohan’s diabetes clinic appears to be one of
the leading specialist clinics for diabetics, and has locations open in several of the areas our
client has asked us to examine. They also offered more specific data in terms of patient
numbers - they treat 100,000 diabetics yearly across seven locations and claim 4 million
total registered patients. Their website’s foot care section lists options for foot care and
proper footwear, but nothing regarding wound bandaging or treatment specifically. I
recommend we look further into Dr. Mohan’s and any other well-respected specialists we
can find in order to learn more about the best standards for care in this market. Not only are
such locations examples of the highest-quality care Indian patients seek, they also have
more publicly available data on consumers and revenue.

7.6 Number of Pharmacies in Chennai & Bangalore

• Statistics from Sulekha, India’s Largest digital platform for local services
o 4060+ pharmacies in Bangalore
o 5110+ pharmacies in Chennai
• Estimates from Pharmacies per Capita
o 550,000 pharmacies in India
o 1,349,105,839 Population of India
o 0.0004076 pharmacies per person
o 11,171,000 people in Bangalore
o 10,705,000 people in Chennai
o 4554 estimated pharmacies in Bangalore
o 4364 estimated pharmacies in Chennai

7.7 Relevant Revenue

Most information regarding the Indian pharmacy market had to do with pharmaceuticals.
The current size of the Indian pharmacy market is about Rs 80,000 Crores and is expected
to cross Rs 160,000 Crores by year 2020
• 80,000 Crore = 800 billion rupees = 12.3 billion dollars
• 160,000 Crore = 1.6 trillion rupees = 24.6 billion dollars
There are a lot of Indian bandage manufacturers. Comfort Meditex is an example. They
produce 600,000 bandages per month. 11 At an average price of $4.66 per roll, they
generate $2,796,000 worth of bandages per month.

7.8 Some Implications

The following are some of the largest pharmacy chains in India

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• Apollo Pharmacy – 1,500 countrywide (in Bangalore & Chennai)
• MedPlus – 1,400+ countrywide (in Bangalore & Chennai)
• Hetero – 285 countrywide
• Guardian – 200 countrywide (in Bangalore & Chennai)
MedPlus serves 250,000 customers per day or 179 people per store per day 14
Extrapolating this to the number of pharmacies gives us:
179*4060= 725,000 potential customers per day in Bangalore
179*5110= 912,500 potential customers per day in Channai

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8. Policies & Pharmaceutical Landscape Deep-Dive
8.1 India Pharmaceutical Policies 2017171819
Introduced in August 2017, the Draft Pharmaceutical Policies implements drastic changes to
the current landscape under two overarching themes – “ease of doing business” and “end-
to-end manufacturing” in India. Although the first theme would shorten the timeline for
Phoenix-Aid to be approved and licensed for manufacturing and selling, the second theme
would in many ways significantly hinder Phoenix-Aid’s cost advantages since InMedBio is a
U.S. based company and many key starting materials (KSM) and active pharmaceutical
ingredients (API) would be shipped to India from U.S. Phoenix-Aid can potentially be
impacted in the following ways:
• Formulations produced from indigenously produced API and its intermediates will be given
preference in government procurements
• The aforementioned formulations will be taken out of price control for five years and the
price control be linked to the indigenous content of the formulations
• To encourage R&D, the Government of India would allow a concessional rate of customs duty
of 0 to 5 percent on import of specified goods and services required for R&D in the
pharmaceutical industry
• Currently per the Drugs and Cosmetics Act and Rules, the registration fee for overseas
manufacturing sites is $1,500 per facility and $1,000 per drug/strength. Inspection/audit of
the facility, if necessary, carries an additional $5,000 fee. The policy intends to amend the fee
structure and states the fee structure would match international standards being followed by
larger pharmaceutical-producing countries, meaning the fees are likely to increase
significantly in the near future.
• The draft policy proposes to shorten the approval process to three months and to standardize
the process.
• Drugs should be prescribed per generic and not brand names, exemptions being fixed-dose
combinations and patented drugs, giving brand names to generic drugs hampers innovation
and should be discouraged.
• Per the policy, the Drugs (Prices Control) Order (DPCO), which is implemented by the NPPA,
will be modified on many counts. The Schedule I of the DPCO shall contain only the medicine’s
name in the NLEM, without referring to its strength and dosage forms. The DPCO will include
only off-patent medicines. In-patent medicines will not be subjected to price ceilings by the
NPPA, a move welcomed by foreign multinational drug firms. Prices for patented drugs would
be regulated through a compulsory license mechanism, provided under the WTO TRIPS
Agreement and Patents Act of India.

17
http://www.indiaenvironmentportal.org.in/files/file/draft%20pharmaceutical%20policy%202017.pdf
18
https://www.biosimilardevelopment.com/doc/india-s-draft-pharmaceutical-policy-a-game-changer-0001
19
https://www.linkedin.com/pulse/draft-pharmaceutical-policy-2017-ganesh-prasad-mishra/

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 8.2 CDSCO
8.2.1 Overview
Central Drugs Standard Control Organization has the following responsibilities:
• National regulatory body of India for pharmaceuticals and medical devices
• Approves new drugs and clinical trials
• Import registration and licensing
• License approving for medical devices
• Oversight and market surveillance above state authority
• Amends Drug and Cosmetics Act and changes rules

8.2.2 Key Updates

1. Update One20
• Takes precedence over D&C Act
• 9 month decisions on medical devices applications
• New risk based classification for medical devices
• Perpetual licenses with fee every 5 years
• Introduction of shelf life requirements (pg 11 of link)
• Medical devices still have strict price controls because they’re still considered drugs
2. Update Two21
• March 16, 2018
• Grouping guidelines for grouping medical devices
• Groups that could apply to Phoenix Aid: single and family
3. Update Three22
• FAQ on the grouping guidelines
• Minorly new/different info from the guidelines from the first link
4. Update Four23
• FAQ on rules on medical devices
• From the previous guidelines however it answers questions that still apply to the new
ones
• No import license is required for importing raw components for finishing a medical
device in India, provided that there is a license in place for the finished product
• There’s a list of countries that are permitted to import materials in for medical devices

8.3 OPPI 51st Annual Report 2016-2017

8.3.1 The Pharmaceutical Landscape
• “Increasing incidence of non-communicable diseases to drive growth: Non-
communicable diseases such as cancer, cardiovascular disease, respiratory diseases and
diabetes” (10)
• “Promoting higher efficacy-driven treatments through value-based pricing: Considering

20
http://www.nishithdesai.com/fileadmin/user_upload/pdfs/NDA%20Hotline/Analysis_of_Medical_Devices_Rules-2017.pdf
21
http://www.cdsco.nic.in/writereaddata/Guidelines%20on%20Grouping%20of%20Medical%20Device%20and%20IVD_1.pdf
22
http://www.cdsco.nic.in/writereaddata/FAQ%20on%20Grouping%20Guidelines.pdf
23
http://www.cdsco.nic.in/writereaddata/Upda%20FAQ%20MDR_2017.pdf

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 that the new patient pool is well-informed about treatments they undergo and
medicines they are prescribed, a majority of payers are looking forward to inking
different healthcare plans with an outcome/value-based pricing model, especially for
high-priced and specialty drugs — oncology care drugs, hepatitis C treatment, etc.
Enhancing the patient experience via better efficacy of drugs is expected to drive value
based pricing instead of volume-based pricing.” (10)
The incidence of diabetes is expected to rise in Indian in the coming years and so is the
usage of value rather than volume-based treatments. There will be a greater demand for
higher quality bandages from the current market segment and the market segment as a
whole is expected to increase.

8.3.2 Challenges
• “Increase in regulatory scrutiny by the FDA” (11)
• “There are multiple regulatory bodies, which directly, or indirectly, frame rules and
guidelines for the pharmaceutical sector; this duplicity has caused inefficiencies and
delays in the drug approval process.” (11)
• Suboptimal alignment between the state and central governments: When a
biopharmaceutical company needs to take a new drug approval from the central
government, the manufacturing, and sales and distribution licenses are issued by the
state government. (11)
Expected challenges include stricter regulation, red tape in the Indian bureaucracy, and
multiple levels of government needed for licensing.

8.3.2 Policies
• “The central government is planning to introduce a new pharma pricing policy. The new
policy is expected to replace the existing National Pharmaceutical Pricing Policy, 2012,
which forms the core of the Drugs Price Control Order, 2013.” (11)
• “The government is working towards drafting a new Drugs and Cosmetics Act to
improve the ease of doing business (EoDB) for the pharmaceutical industry. The new
rules are expected to streamline the regulatory requirements related to safety,
efficacy and quality of drugs.” (11)
• “The government has notified Medical Devices Rules 2017 under the Drugs and
Cosmetics Act, 1940. These are expected to ease the regulation of medical devices. The
new rules are expected to come into effect from 1 January 2018.” (11)
• “The government is working with stakeholders towards drafting a new clinical trials
policy to facilitate faster approvals without compromising on patient safety.” (12)
• “The Goods and Services Tax (GST) has been implemented from 1 July 2017, and is
expected to eliminate the cascading effect of taxes and other anomalies of the current
indirect tax structure. With the advent of the GST, the supply chain of the pharmaceutical
industry could get impacted with the availability of input tax credit of interstate trade
GST (IGST) on inter-state transactions, eliminating the need for Carrying and Forwarding
Agents (CFAs) in each state. Thus, it is expected to bring efficiencies in the supply chain.”
(12)
Future policies are expected to facilitate clinical trials, reduce regulation, reduce taxes, and
make pharmaceutical prices more transparent.

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8.4 India Pharma 2020 by McKinsey
• India’s pharma market is very much still developing - will become one of the leading
sources of growth in the coming years
• As a new market, there’s still lots of shuffling among the top companies, lots of space for
newcomers to grow
• By 2020, market in India will be comparable to that of China or even the U.S.
o Like the U.S. market, India currently produces a huge volume of healthcare at lower
quality than the developed world on average
• Hospitals will nearly double their market share by 2020, from 13% to 25%
• Market will shift toward more specialized therapies and specialty practices
• Expected case shows 14.5% growth by 2020, with optimistic projections up to 17%
• Expect income growth and expansion of insurance coverage, making drugs more affordable
o Private insurance coverage expected to expand by 15% annually through 2020
o Gov’t programs targeted at citizens below the poverty line will expand insurance
coverage to many previously too poor to afford it
• Access to drugs and care in rural areas will expand rapidly, closing gap between urban and
rural spending in the industry
• Lots of potential for patented products in “select therapeutic areas” - cite Januvia and
Galvus, two diabetes drugs, as exemplary cases

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