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Long waiting for critical equipment for pharma companies caused by supply-shortage: Infomerics Ratings

Yash Ved, Mumbai
Saturday, September 18, 2021, 08:00 Hrs  [IST]

Supply-shortage is one of the major reasons for the long waiting period for critical equipment for pharmaceutical companies ordered abroad, stated Dr. Manoranjan Sharma, chief economist, Infomerics Ratings.

Dr Sharma stated, “Even if supply is restored, the country first tries to meet its domestic demand rather than the foreign demand. Other reasons include lack of special conditions required by certain critical components, insufficient health personnel and inadequate stress on proper planning and scheduling.”

The rating agency stated that healthcare industry is likely to surge ahead post-pandemic resulting in increased healthcare base along with greater accessibility options.

In India, around 31 per cent of the patients use digital tools to search and schedule appointments and 27 per cent use online booking for diagnostic services. And more than 80 per cent of the doctors in India claim that patients value convenience highly and expect the doctors to answer queries through mobile.

With the pandemic receding, the healthcare sector is likely to gain traction on a stronger base and investments in various health domains are expected in the near term. The recovery in acute therapies like gastro, anti-infectives, antibiotics and chronic therapies are expected to help pharma firms post robust growth.

“India has a low-cost of production, low R&D costs, innovative scientific manpower, and elaborate network of national laboratories. These and other factors would help steer the industry to a higher level,” stated rating agency.

There is also a need for the government to increase expenditure on the health sector especially at a juncture (referring to the pandemic) like this.

“Currently, India spends less than 2% of its GDP on healthcare as compared to counterparts like China (about 6%), Bangladesh (about 2.5%), Vietnam (about 6%), Brazil (about 10%) and others. Hence, there is a manifest need to increase the healthcare expenditure to achieve the vowed goals of economic growth and distributive equity,” says Dr Sharma, chief economist, Infomerics.

As per industry analysts, the cost of manufacturing in India is approximately 33 per cent lower than that of the US.

Dr Sharma added, “The recent surge in e-pharmacy has radically changed the pharmaceutical landscape with a range of flexible options available with households, including ordering online medicines, taking online consultation from practitioners, booking online tests among others. This segment is growing rapidly, and the market size at $0.5 billion in 2019 is expected to grow at a compounded rate of 44 per cent to reach $4.5 billion by 2025.”

Further, the overall global digital tech spend (which includes e-pharma and allied services) in healthcare is expected to exceed $534 billion by 2025, from a $180 billion in 2017. But the realization of the humongous potential of this increasingly important sector requires continued government support, enabling eco-system and a conducive policy and operational framework.

The rating agency said that the PLI scheme for the promotion of domestic manufacturing of KSM and other government initiatives intends to boost domestic manufacturing of critical KSMs/drug intermediates and APIs by attracting large investments in the sector to ensure their sustainable domestic supply and thereby reduce India's import dependence on other countries for critical KSMs/drug intermediates and APIs like China which currently caters more than 70% of the API needs of India.

Infomerics Valuation and Rating Private Limited is a SEBI registered and RBI accredited credit rating agency.  Run by a pool of industry experts, Infomerics does a free & fair analysis and evaluation of credit worthiness & ratings of banks, NBFCs, large corporates and small and medium scale units (SMUs) while providing deep insights to investors & financial institutions. Infomerics plays a key role in serving the financial market by minimizing information asymmetry amongst lenders & investors and facilitating borrowers/issuers to various fund-raising opportunities/avenues.

 

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