Lalith had to make a tough choice when his mother was diagnosed with breast cancer two years ago. Along with the diagnosis, the Pune oncologist he’d met had handed him a business card that led him to a representative of the pharma major Pfizer. Since some of the prescribed medicines were not available in the hospital pharmacy, the doctor had offered a convenient solution—call the pharma representative and get the medicine delivered in just 24 hours. This seemed easy, but Lalith had to decide between buying just the medicine and a free cancer care service in the comfort of his home. Both options came with the same price tag. About Rs 12,000 ($188) per week—the retail price of the drug.

When it comes to chronic therapies, like chemotherapy, immunosuppressive therapy and dialysis that rely on specialty drugs, the expense is a major concern for Indian patients. But it is the margins in these high-value and low-volume drugs that make free at-home healthcare services possible. The markup could be as high as 1000%, but even if the profit margin is the usual 7%, the home healthcare provider, doubling up as a specialty drug distributor, can provide a few free services. Specialty drugs are priced at over Rs 10,000 ($156) per dose and may go up to a few crores for complete therapy, said a specialty drug distributor.

When these margins are combined with the potential margins in distribution, from manufacturer to distributor to end user, they can expand the market for home healthcare as well as specialty drug manufacturers, said Vivek Srivastava, the CEO of India’s oldest home healthcare company—Healthcare at Home (HCAH). “At HCAH, depending on the drug price, you could have some part of the services funded through the drug margin itself.”

Specialty therapies are growing much faster than regular pharmaceuticals. Even though there are just about 1500 brands, they account for more than one-third of the $36.7-billion Indian market today, and they are expected to make up about half of the market in next two years.

An evolving disease profile in the country—from communicable to non-communicable diseases such as hypertension, diabetes and cancers—is spurring this. Along with growing affordability, better diagnosis, specialty hospitals treating and insurers reimbursing such therapies. On the supply side, high margins, few brands and fewer prescriptions have cracked open the segment for home healthcare to double up as a specialist pharmacy to get the drug to where the patient is.

Though Lalith eventually chose to treat his 55-year-old mother in a hospital because she needed a few rounds of chemotherapy and not long-term care, he sees home healthcare as a more affordable option, especially for those who are prescribed such drugs for a long duration.

Noida-based HCAH is one of the larger players selling home healthcare with specialty drugs since it acquired the drug delivery company Health Impetus in mid-2016.

AUTHOR

Ruhi Kandhari

Ruhi writes on the impact of healthcare policies, trends in the healthcare sector and developments on the implementation of Electronic Health Records in India. She has an M. Sc. in Development Studies from the London School of Economics.

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