Health is Wealth Indian Private Sector Investments in African Healthcare

Africa Diary By Tanoubi Ngangom and Urvashi Aneja

With efficient use of natural and human resources at its disposal, doing away with unnecessary controls and restrictions, removing corruption and red tape, better style of governance and sustenance of such factors, India’s success is certain. In a country with vast demographics and diversity, the requirement is that of a holistic approach that utilises all available potential with an aim to improve life of a common citizen.

Health efforts can no longer be restricted to national jurisdictions, and the increasing range of transnational health-related concerns calls for a more collaborative approach to addressing these challenges. For one, the spread of infectious diseases has global implications; the recent outbreak of the Zika virus, for example, has caused widespread panic especially as global mobility has increased and the risks of a contagion have become starker. The absence of an effective treatment and—particularly for new mutations such as Zika — the lack of knowledge on even the modes of transmission, highlight the need for collective action on both prevention and cure. In addition to inter-governmental bodies such as the World Health Organization (WHO), various philanthropic and non-state actors have also developed multi-country strategies to arrest the spread of these ‘global epidemics’.

Low costs, coupled with high-quality services offered in developing economies such as India and Thailand, have transformed these countries into popular destinations for what has come to be known as ‘medical tourism’. Increasing cross-border movement of health professionals has also expanded the scope and complexity of international trade in health services. While this trend has the potential to streamline the international health labour market, the unidirectional large-scale migration of health workers from developing countries to more lucrative destinations has caused significant health-workforce crises in the former.

Global and regional agreements on trade and intellectual property also have considerable implications for the provision of health services, especially regarding access to essential drugs. Mandatory patenting of medicines for all World Trade Organization (WTO) members, under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), has left several countries with no choice but to restructure their respective intellectual property rights (IPR) policies.

Health also figures prominently in India-Africa development partnership. The Pan Africa e-Network Project, for example, was set up to provide tele-medicine and tele-education in 53 African countries, and the project has already been commissioned in 48 countries. At the third India-Africa Summit 2015, the Indian prime minister announced a grant of $10 million specifically for the India-Africa Health Fund; many African countries also sought closer cooperation with India for setting up primary healthcare centres and other healthcare infrastructure, and training paramedics and technicians.

The private sector is increasingly being viewed as a key development partner. The Sustainable Development Goals, for example, accord a central role to private sector investments and public-private partnerships, in meeting the agreed-upon goals and targets. There is also a growing consensus that foreign aid is an inadequate driver of global development; rather, it should be used as a catalyst for improving the developmental outcomes of trade, private sector investments, philanthropy, and migration.

In the Indian context, New Delhi has been steadily increasing its development partnership investments since the mid-2000s. Its development partnership programs blend commercial interests and development instruments. Indian lines of credit, for example, provide concessional loans for development projects to other developing states, but these are tied to the use of Indian companies for goods and services. The very nature of Indian development partnership is, thus, built around active private sector participation. As the private sector is increasingly being considered a critical development partner, both globally and in India, it is necessary to examine the exact nature and implications of its contributions. Private sector investments have tremendous potential to improve the provision of health services, both through trade and investments as well as partnerships with African governments. Indian companies have been a steady source of low-cost pharmaceuticals for African patients, and social gains from the Pan African e-Network Project would have been extremely limited without the participation of large Indian private hospitals such as Apollo Hospitals, Fortis, and Moolchand Hospital.

However, considering private sector investments from a development effectiveness perspective also flags three areas of concern. First, privatisation can raise the cost of healthcare and create a fragmented health market that mainly caters to elite interests; drawing on India’s example, the high cost of private healthcare is a critical factor in driving the poor further into poverty. Issues of equity in access and care, thus, have to be given high priority when considering private sector investments. Secondly, the privatisation of healthcare is better attuned to providing secondary and tertiary health services, and not the broader creation of health systems based on prevention through, for example, investments in sanitation and education. Thirdly, from the perspective of India’s development partnerships, the challenge is to create the conditions and opportunities through which the private sector can contribute to mutually beneficial gains, for India and its partners, in healthcare.

India and Africa: Shared Challenges

The African continent ranks among the most health-poor regions in the world. On average, Africans live much shorter lives than others around the world; 13 years less than the average world citizen, and a decade less than the average Southeast Asian. A closer look at the mortality profile shows that traditional communicable diseases remain the leading cause of death in the region, accounting for almost 60 percent of total deaths. Chronic non-communicable diseases (NCDs) are also emerging as a major killer — the WHO estimates that, by 2030, NCDs will be responsible for almost half of all deaths in Africa.

Access continues to remain a primary challenge. The current in-patient bed density stands at nine per 10,000 individuals, against the 15 global average of 27; availability of essential drugs remains limited in both public ($42) 16 and private ($58) healthcare units; and, despite large external funding, only 37 percent of HIV patients receive Antiretroviral (ARV) treatment.

Africa is witnessing its longest period of economic growth, averaging at five percent per annum for the last decade, but 47 percent of the Sub-Saharan African population still lives on less than $1.25 a day. Often poor individuals with serious ailments have no recourse other than to borrow beyond their means and seek treatment in the ‘upper-tier’ facilities, which in turn leads to a medical poverty trap. The second main challenge for Africa is the shortage of trained medical personnel. Combined with a lack of education and training, large-scale migration of health personnels to better paying countries has led to severe shortages, and today there are only 2 doctors and 11 nurses for every 10,000 Africans.

Similar to a number of African states, the Indian government spends woefully little on healthcare provision and in 2012-13, India allocated only 1.08 percent of its GDP on health, ranking it the lowest among BRICS countries. The current public health structure is thus unable to meet the demands of the population.

However, the gap created by the lack of public spending is being filled by the private sector, though it remains largely unaffordable to most, and high out-of-pocket costs drive millions back into poverty. Given the distinct lack of health infrastructure, along with the projected escalation of healthcare demands, health is high on the agendas of India and Africa. India, for example, has recently introduced an updated national health governance framework — the National Health Policy 2015.

Medical Tourism

According to the KPMG-FICCI joint study on medical value travel, India is ranked as the second-largest recipient of medical tourists in Asia. Most of these patients come from the Global South (Africa, Latin America, and developing Asia including the Middle East). The Apollo group, for example, with one of the largest international clientele, receives 30 percent of its patients from South Asia, 30-32 percent from Africa, 10 percent from the Commonwealth of Independent States (CIS), Oceania and Europe, and the remaining from West Asia.

Structural adjustment programmes in the 1980s led to significant cuts in the public health budgets of several African countries. India emerged as a chief candidate for treatment options abroad, owing to the relatively economical treatment options and high-quality services offered in its private hospitals. For example, a heart bypass surgery in India costs $7,000, which is a measly 0.054 percent of the cost of the same procedure in the United States ($29,130,000). In fact, curative healthcare services in India are much cheaper than even those which are offered by its competitors such as Thailand, Malaysia and Singapore. For instance, the Aga Khan group of hospitals organises regular visits of their medical team to hospitals in Kenya and Tanzania to establish initial contact.

The Pharmaceutical Industry

An essential component of any health system is the availability of affordable pharmaceutical drugs. Due to the exemption of medical patents prior to India’s economic liberalisation, the country was able to develop a large generic drug industry and carve a niche in the global pharmaceutical market. For instance, as early as 2001, Cipla – one of India’s largest generic drug manufacturers – supplied the ARV treatment for less-than-a-dollar-a-day to ‘Doctors without Borders’ for distribution in Africa: a price that was .025 to .03 percent of what was being charged by Big Pharma companies at the time. The export of low-cost drugs presents a mutually beneficial opportunity for both Indian pharmaceutical companies and African patients. India, however, is under growing pressure, particularly from the US through the US International Trade Commission (USITC) and US Trade Representative (USTR), to strengthen its IPR protection framework. In fact, India is currently developing a national IPR policy despite the existence of a fully effective and TRIPS compliant patent law – which may perhaps be a consequence of the mounting external pressure. Following this trend, African leaders at the Third India-Africa Summit expressed concerns regarding the large health implications in the region of an alteration in India’s IPR regime.

While India tries to address the mounting pressure from developed countries, it is important that it retains policy space to determine its own IPR laws, from both profit and social justice perspectives. In the long run, however, it is not in African interests to rely heavily on pharmaceutical imports: Africa currently imports about 70 percent of its total drugs demand. A few countries have started developing indigenous manufacturing capacity, such as South Africa, Nigeria and Ghana, and the African Union has developed a Pharmaceutical Manufacturing Plan for Africa (PMPA) aimed at promoting local production. Individual governments such as Algeria, Nigeria and South Africa are also offering a range of incentives to domestic pharmaceutical manufacturers such as tax exemptions and reduced land prices. A number of the big Indian generic manufacturers such as Cipla, Ranbaxy and Cadilla have now set up manufacturing units in Africa (South Africa, Nigeria, and Egypt respectively). However, varying regulatory patterns in different countries means that Indian companies must review viability options on a country-by-country basis. For instance, Anglophone countries in West Africa tend to have much more developed regulatory frameworks as opposed to Francophone ones.

Another area for potential India-Africa collaboration relates to pharmaceutical R&D. In addition, the rich common culture in traditional medicine can be leveraged for this endeavour. After all, modern drugs have long been derived from traditional medicines. For example, the most effective malaria-treatment base, Artemisinin, is derived from Chinese sweet wormwood. The extensive traditional knowledge and practice in medicine would, thus, be an excellent starting point in the search for modern-day solutions. India already has an operational platform for technology sharing in this area – the Open Source Drug Discovery (OSDD) is an India-led global aggregator platform, where researchers can share information and conduct collaborative research. Given the OSDD’s focus on neglected diseases, it would be an appropriate avenue for an India-Africa partnership on pharmaceutical research.

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Tanoubi Ngangom holds an MSc in Development Studies from the London School of Economics and Political Science. She studied development theory, the informal economy and non-state governance, and the assessment and formulation of development policies on topics like education, credit markets, health and corruption.

Urvashi Aneja is a Fellow at ORF, working on ORF’s Global Governance and Climate & Development Initiatives. Her research focuses on southern partnerships for humanitarian and development assistance, India’s role in global development processes, the politics of refugees and forced migration, and normative contestation in global governance institutions. 

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