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Foreword
D. S. Rawat
Secretary General
ASSOCHAM
June 2015
Foreword
Milan Sheth
India Technology Leader
EY
Contents
1. Introduction ................................................................... 08
2. Medical process outsourcing market overview................... 10
2.1 Service offerings by end market segment .................. 11
2.2 Global healthcare BPO market................................... 16
3. MPO market in India ........................................................ 18
3.1 Payer market ........................................................... 20
3.1.1 Drivers in the payer market ............................. 21
3.1.2 Challenges in the payer market ........................ 22
3.2 Provider market ....................................................... 22
3.2.1 Drivers in the provider market ......................... 23
3.2.2 Challenges in the provider market .................... 24
3.3 Pharmaceutical market ............................................. 24
3.3.1 Drivers in the pharmaceutical market ............... 26
3.3.2 Challenges in the pharmaceutical market.......... 27
4. Policy framework for MPO in India .................................... 28
4.1 Challenges in policy framework in India...................... 30
4.2 Measures to drive healthcare BPO in India.................. 31
5. Outlook.......................................................................... 32
Executive summary
Health care is one of the prominent sectors, which touch every individual and government,
and consumes more than 10% of GDP of some of the most developed countries globally.
In terms of outsourcing, health care has been relatively late to the party. However, in the last
two decades or so, there has been an ample push from health care payers, providers and
pharmaceutical companies to move non-core processes to third-party service providers, and
India has been one of the leading destinations for outsourcing in this space, which is led by
the US, both as a source and a destination.
The global medical process outsourcing market is estimated to be worth more than US$100
billion1, of which pharmaceutical outsourcing is a key segment.
L`akj]hgjldggckYlhYq]j$hjgna\]jYf\h`YjeY[]mla[Yd ]p[]hl[gfljY[leYfm^Y[lmjaf_!
markets and provided insights into processes and services, which are typically outsourced
to BPO players by each of these segments of players and how the global market is placed in
each of these segments.
When we look at the Indian market from a health care outsourcing perspective, it deserves
mention that Indias overall IT-BPM market is nearly US$150 billion2 currently and is growing
Zql`]\Yq&9kAf\aY%ZYk]\:HGn]f\gjk[gflafm]lgY[imaj][YhYZadala]kafnYjagmkn]jla[Ydk&
This report assesses how far they have reached in the health care vertical.
The report also highlights various trends, drivers and challenges in each of the three end
market segments payer, provider and pharmaceutical along with some of the inherent
advantages and disadvantages of the Indian BPO market, which affect the industry.
Primary and secondary sources estimate the size of the medical process outsourcing
industry in India to be US$3.34.2 billion industry, including estimates by end market
segments in this report. The report also provides insights into services, which are gaining
traction in each of the segments, and where the industry would most likely see a robust
double-digit growth in the coming years.
Lastly, the report provides the policy framework for the health care BPO industry, special
af[]flan]kYnYadYZd]^gjl`]k][lgjYf\kh][a[[`Ydd]f_]k^Y[]\Zql`]Af\aYfe]\a[Yd:HG
sector. It also covers some of the regulatory measures which could help provide a boost to
this sector.
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g^l`]k]jna[]kgmlkgmj[]\af]Y[`k]_e]fl$\qfYea[kg^gmlkgmj[af_lgAf\aYYf\kh][a[
drivers and challenges from an India perspective.
Introduction
Outsourcing in health care has become more of a compulsion than a strategic choice as
players associated with the health care ecosystem look to reduce costs while providing
effective health care services.
The BPO players help health care vendors to reduce administrative costs, reduce costs
of delivering health care, manage electronic medical records, clinical transformation and
consumer engagement. Furthermore, outsourcing reduces errors in medical billing, reduces
support staff training costs and provides access to trained professionals; all of which enable
health care players to improve their bottom line.
K]n]jYdfgf%[jala[Yd^mf[lagfkkm[`YkfYf[]Yf\Y[[gmflaf_ >9!$hYqjgddk]jna[]k$
customer care services and HR services are also outsourced to ensure improved processing
lae]$]daeafYlagfg^]jjgjkYf\klY^f_kYnaf_k&
F&A outsourcingak\gf]afl`]`]Ydl`[Yj]k][lgjlgklYf\Yj\ar]fYf[aYdk]jna[]
processes, improve billing and collection process, manage accounts receivable and
Y[[gmflkhYqYZd]$aehjgn][YhalYdZm\_]laf_Yf\fYf[aYdkljYl]_ql`jgm_`hja[af_Yf\[gkl
YfYdqkak&>mjl`]jegj]$l`]]pl]jfYdY[[gmflYflkmf\]jklYf\l`]Y[[gmflaf_klYf\Yj\kYf\
fYf[aYdj]hgjlaf_Z]ll]jYf\]fYZd]l`]gj_YfarYlagflg[gehdqoal`[gfklYfldq[`Yf_af_
j]_mdYlagfkYf\j]imaj]e]flk&
L`]k`gjlY_]g^imYda]\ogjc]jkakgf]g^l`]eYbgjhjgZd]ekafl`]e]\a[Ydaf\mkljq&
@]f[]$@Jgmlkgmj[af_]fYZd]kl`aj\%hYjlqk]jna[]hjgna\]jklgkh]]\mhl`]lae]lgdd
nY[Yf[a]k$aehjgn]imYdalqg^l`][Yf\a\Yl]Yf\aehjgn]j]l]flagfjYl]k&>mjl`]jegj]$l`]q
can perform background check of workers, track schedule of temporary workers, manage
payroll services and training of workers.
The health care IT outsourcing market is also growing at a rapid pace because health care
vendors need information technology infrastructure and devices such as servers, desktops,
networks, personal digital assistants (PDAs), and laptops to electronically manage medical
j][gj\k$Zaddaf_[g\]kYf\egfalgjaf_kqkl]ek&@go]n]j$l`]qdY[cj]imaj]\kcaddkYf\AL
\geYaf]ph]jlak]lgeYaflYafl`]af^jYkljm[lmj]Yf\k]jna[]k&L`ak`Ykj]kmdl]\af\]eYf\
for IT infrastructure and services outsourcing so that health care providers can focus on
their core services.
Contact center or customer care outsourcing is done by health care organizations to
]^[a]fldq`Yf\d][mklge]j[gehdYaflk*,"/$Yfko]jim]ja]kj]dYl]\lg[dYaehjg[]kkaf_$
medical services and provide virtual receptionist services among others.
Health care market segments
The health care market is broadly divided into three segments, i.e., the payer, provider and
pharmaceutical markets.
p
p
gy
For each of these market segments, there are specialized
processes, which are increasingly
getting outsourced. The report covers some of these processes and services outsourced in
detail in the coming section.
Medical process
outsourcing market
overview
Healthcare payer
BPO value chain
Product
development &
business acquisition
(PDBA)
Plan
development
Channel
management
Risk assessment
Underwriting
Member
management
Enrolment
Handling of
endorsements
and renewals
Records
management
Billing
Collections
Provider
management
Provider network
management
Provider
credentialing
Provider
contract
management
Records
management
Care
management
Disease
management
Utilization
management
Claims
management
Initial claims
processing
Claims review
and investigation
(adjudication)
Claims
disbursements
Fraud detection
& management
Claims litigation,
recovery/
subrogation
50%
58%
Claim management
Member management
Provider management
Care management
PDBA
Others
38%
33%
58%
PDBA
Care
management
11%
Claim
management
15%
38%
Provider
management
7%
Member
management
2%
4%
Providers (hospitals)
The health care providers such as hospitals and health
systems have been outsourcing non-core functions
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j]aeZmjk]e]flkYf\af[j]Yk][Yk`go&>mjl`]jegj]$:HG
players enable the health care providers to strike a balance
between rising health care costs and limited revenue from
payers by deploying digital information system that ensures
transparent and accurate data analysis. Furthermore,
through outsourcing, providers can comply with industry
j]_mdYlagfk$gh]jYl]egj]]^[a]fldq$j]\m[]Y\eafakljYlan]
costs and can readily access skillful resources.
Enrollment
Patient base analysis
Patient care
Medical transcription
Medical imaging
Device monitoring
Medical billing
Medical coding
Collection
;dYaedaf_
Source: EY Analysis
Pharmaceutical outsourcing
?dgZYddq$eYfqh`YjeY[]mla[YdhdYq]jkgmlkgmj[]Yka_fa[Yfl
portion of their research (for drugs and medical devices) and
manufacturing activity to low-cost countries such as China and
India, to save costs and time.
The pharmaceutical outsourcing market is segmented into
contract research outsourcing (CRO), contract manufacturing
outsourcing (CMO) and business support functions. The scope
of the report is limited only to CRO, since the purpose of the
report is to look at outsourcing from an IT-BPM perspective.
L`]_dgZYd;JGeYjc]lak]ph][l]\lg_jgoYlY;9?Jg^
6% from US$25 billion in 2011 to US$30.6 billion in 20155.
9hYjl^jge[dafa[YdljaYdk$o`a[`^gjel`]eYbgjhgjlagfg^l`]
CRO, the other clinical research services that are outsourced
include bio-statistical data management services, regulatory
submissions, medical writing and pharmacovigilance services.
Clinical operations
Drug
discovery
Preclinical
Data
management
and Biostats
Pharmacovigilance
Clinical research
Non-IT activities
IT/ITES activities
Medical
writing
Phase 0:H`Yk](ljaYdkYj]]phdgjYlgjq$jkl%af%`meYf
trials are conducted to establish, at an early stage,
whether the behavior of the drug or agent in human
kmZb][lkakafY[[gj\Yf[]oal`l`]]ph][lYlagfkg^
preclinical studies.
188.9
113.2
US
Rest of world
26%
74%
2013
2018E
Source: MarketsandMarkets
Source: MarketsandMarkets
The US healthcare accounted for the largest share (73.8%) of the worldwide healthcare BPO market at US$83.5 billion in 2013. It is
]ph][l]\lg_jgoYlY;9?Jg^))&*lgj]Y[`MK),)&/Zaddagfaf*()07.
141.7
8%
83.5
Pharmaceuticals
Prayer
Provider
79%
2013
Source: MarketsandMarkets
2018E
Source: MarketsandMarkets
Healthcare
market in 2013
Major
differentiators
India
Philippines
Source: EY analysis
Medical Process Outsourcing in India | 17
MPO market
in India
India has been and continues to be one of the important markets for outsourcing. It has a
proven track record of being a global hub for IT-BPO services. With capabilities of Indian BPO
vendors growing day by day, they now offer specialized services across different verticals,
thereby enabling growth in targeted BPO services. The global sourcing (includes IT and
business process sourcing) market is estimated to be in the range of US$148154 billion
in 2014. Indias market share in global sourcing is estimated to be ~55% (US$81.484.2
billion)10 in 2014. However, there are other emerging BPO destinations in Eastern Europe,
Asia and Latin America. Out of all the delivery centers opened in 2014, an estimated 27%11
(41 delivery centers) were in India, closely followed by Eastern Europe, Rest of Asia and
Latin America.
Outsourcing in health care has been late to the party globally. However, outsourcing in this
industry is picking up well and India too stands to gain from the same. In this domain, India
akhgkalagf]\o]ddafkge]k]_e]flkZmlafkge]gl`]jk$alkladddY_kZ]`af\\m]lgkh][a[
challenges.
Primary and secondary sources estimate the overall size of health care outsourcing in India
to be in the range of US$3.34.2 billion. Of this, around US$700900 million would be the
payer outsourcing market, US$100200 million would be the provider market and
US$2.53.1 billion will be the overall size of the pharmaceutical outsourcing market
]p[dm\af_[gfljY[leYfm^Y[lmjaf_k]jna[]k!&
India, as a destination for outsourcing in health care, has a few inherent advantages,
o`a[`af[dm\]2
Leading global hub for outsourcing: India is regarded as one of the lead
destinations for outsourcing due to factors such as large English speaking
population, low cost base, large talent pool of graduates and post-graduates in
nYjagmkl][`fa[YdYf\fgf%l][`fa[Yd]d\kYf\eYlmjalqg^l`]af\mkljqoal`egj]
l`Yf-((jek]f_Y_]\afhjgna\af_:HGk]jna[]k&
Mature BPO vendors: Diverse set of mature BPO providers including local BPO
vendors, MNC BPO companies and captives of global companies.
Provider
Pharmaceutical
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E]\a[YdljYfk[jahlagfk]jna[]k
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E]\a[Yd[g\af_
:ag]imanYd]f[]klm\a]k
E]eZ]jeYfY_]e]fl
:addaf_
;dafa[YdljaYdk$egklg^l`]
activity in India happens
around Phase 2 to 4
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<jm_\ak[gn]jq
MladarYlagfeYfY_]e]fl
<ak]Yk]eYfY_]e]fl
HYla]fl[Yj]Yf\egfalgjaf_
related services
F]ohjg\m[l\]n]dghe]flYf\
formulation
:mkaf]kkafl]dda_]f[]kgdmlagfk
related to fraud detection and
management
HYla]fl]fjgde]fl
Hj]%[dafa[YdljaYdeYfY_]e]fl
HYla]flj]dYlagfk`ah
;dafa[Yd\YlYeYfY_]e]fl
E]\a[Ydojalaf_
H`YjeY[gna_adYf[]
:agklYlakla[k
E]\a[YdY[[]kk
O]ddf]kkeYfY_]e]fl
US
regulatory
changes
Margin
pressure
on payers
3
Demand for
niche services
Demand
from
new markets
5
Big data /
analytics
6
Demand
for
niche services
J]\m[]\Y\eafakljYlagf[gklkYf\]ph]f\almj]
9[[]kklgkcadd]\ogjc^gj[]lg\gkh][a[ljYfkY[lagf%
oriented tasks
With the recent regulatory changes in the US including PPACA, people are enrolling for health plans more
than ever before.
With a surge in volumes, payers are focussing on bringing out new healthcare plans to the market to attract
new customers. Hence, BPO vendors can help streamline the claims management processes and handle
excess volumes while reducing risks of fraud and abuse.
There is a pressure on margins of healthcare payers due to rise of health insurance exchanges (online
marketplace to obtain health insurance from competing providers) in the US. This enables the consumer to
obtain coverage from competing private healthcare providers that is likely to accelerate adoption of
outsourcing in order to rationalize costs.
Though the demand for claim processing and management related services has quite saturated, the demand
for other services is growing rapidly.
Services related to care management and healthcare plan development, channel management and risk
assessment among others are in demand and need relatively special capabilities by BPO companies.
<]eYf\^jgegl`]jeYjc]lkaf9kaYHY[a[$9mkljYdYkaYYf\=mjgh]o`a[`\gfgl`Yn]Y[]fljYddq^mf\]\
one-payer model is picking up and Indian IT-BPO companies are focusing on them.
The growing ability of the BPO vendors to discover hidden patterns and unknown correlations in data using big
data / analytics is also driving the payer BPO market.
L`]:HGn]f\gjk`Ynaf_klj]f_l`kY[jgkkALkgdmlagfk$YfYdqla[k$ZYka[e]\a[Ydhjg[]kk]kYj]dac]dqlgZ]f]l
the most.
Demand for outsourcing in healthcare is expected to rise in India as healthcare insurance penetration increases.
The government has also recently launched Rashtriya Swasthya Bima Yojana which provides hospitalization
coverage up to INR 30,000 at the registration fee of just INR 30. The scheme is targeted at the poor,
kh][a[Yddql`]h]ghd]Z]dgf_af_lgZ]dgol`]hgn]jlqdaf] :HD!^Yeada]kYf\Ykg^EYj[`*()-$gn]j+/eaddagf
people have been enrolled in the scheme.
This may, in the future, push the volume of claims, and some insurers may look to outsource services to BPO
vendors, where they do not rely too heavily on TPAs.
Source: EY analysis
Medical Process Outsourcing in India | 21
Increased regulatory scrutiny of payers as well as control of fraud, waste and abuse is likely to impact the
outsourcing levels in the BPO payer industry
Competition from global software, IT consultants and BPO vendors is increasing in the sector as technology
continues to play a pivotal role in streamlining the processes in this industry
The Indian BPO vendors have not been able to penetrate European and other developed markets for the
insurance outsourcing business due to stricter regulatory norms and data privacy laws.
Further, the European markets are structurally very different, with government agencies providing healthcare
services to people. Also, near-shoring maybe preferred in case the activities were to be outsourced.
2
Competition
from
global players
<a^[mdlqaf
expansion
beyond US
Loss of
revenue due
to billing error
Know-how
of minor
services
3
Margin
pressures
Healthcare
uptake
in India
Healthcare practitioners and hospitals are estimated to lose up to 10% of revenue due to billing errors, and on
lghg^alaf[j]Ykaf_[gehd]palqg^[g\af_Y\\kl`]jakcg^fgf%[gehdaYf[]Yf\f]k^jgej]_mdYlgjk&L`mk$
j]n]fm][q[d]k]jna[]kYj]Z][geaf_hghmdYj^gjgmlkgmj[af_&
DY[cg^]ph]jlak]gfeafgjk]jna[]kkm[`Yk@J$fYf[]Yf\Y[[gmflk$kYd]kYf\eYjc]laf_]l[&oadd[gflafm]
lg\jan]gmlkgmj[af_afl`]hjgna\]jeYjc]l&>mjl`]j$al]fYZd]kl`]e]\a[YdhjY[lalagf]jklg^g[mkgfl`]aj[gj]
bgZg^hYla]fl[Yj]&
Declining reimbursement from government healthcare plans and private insurance companies have made it
\a^[mdl^gj`gkhalYdklgeYaflYafl`]aj`aklgja[YdhjgleYj_afk^gj[]jlYaf[dafa[Ydk]jna[]k km[`YkaeY_af_
l]klaf_!&
As a result, hospitals have started to use third party services for interpretation of imaging results or
ljYfk[jahlagfg^h`qka[aYfk[Yk]fgl]k&
Oal`jakaf_ea\\d][dYkkhghmdYlagfYf\l`]\]eYf\^gjlgh%fgl[``]Ydl`[Yj]^Y[adala]k$afl`]dYkl^]oq]Yjk$dgl
g^emdla%kh][aYdlq`gkhalYdk[`Yafk`Yn][ge]mh$o`a[`Yj]\janaf_l`]f]]\^gjgmlkgmj[af_afl`akk][lgj
Aehd]e]flYlagfg^l`]A;<%)(e]\a[Yd[g\af_kqkl]eZql`];]fl]jk^gjE]\a[Yj]Yf\E]\a[Ya\K]jna[]k ;EK!
afl`]MK$o`a[`_gl\]dYq]\ZqYq]YjYf\ak]ph][l]\lgZ]aehd]e]fl]\ZqG[l*()-$oadd\jan]gmlkgmj[af_
afl`]hjgna\]jkeYjc]l&
Gmlkgmj[af_d]Y\klgkljm[lmj]\hjg[]kk]k$\g[me]flYlagfYf\aehjgn]kl`]gn]jYdde]\a[Ydj][gj\
eYfY_]e]fl$o`a[`eYqfgl`Yn]Z]]fafhdY[]o`ad]l`]af%`gmk]eg\]d3l`mk\janaf_gmlkgmj[af_
;gfkgda\YlagfZ]lo]]fhjgna\]jkakYc]qlj]f\o`a[`\jan]kk[Yd]Yf\gmlkgmj[af_afnYjagmkYj]Yk
5
ICD-10
coding standards
adoption
6
Structured
documentation
7
Consolidation
in market
Source: EY analysis
Lack of
knowledge on
Western standards
and policies
DY[cg^]ph]jlak]gf_dgZYde]\a[Yd[g\af_klYf\Yj\k$dYokYf\hgda[a]kh]jlYafaf_lg`]Ydl`[Yj]Z]f]lkafl`]
source country, inadequate skillset for documentation and medical record management are some challenges
faced by the industry in India
The provider market is very fragmented with very few hospital chains having the scale to turn to outsourcing
Near-shoring
preferred
A far-off offshoring location of Indian vendors for the providers in the West is another dampener since most of
the providers prefer outsourcing near-shore, due to the nuances involved in the processes being outsourced
and the comfort level of the providers
Skilled
doctors
Providers outsourcing medical imaging or similar services which require doctors to review or write reports,
prefer properly trained doctors to conform to western standards
It may require expat doctors to move to India to train the team of doctors or base permanently there
Competition
from hospital
management
companies
Hospitals have a very diverse of activities to be outsourced including housekeeping, procurement, safety,
billing, supplies, patient care, customer care, claims management etc.; which are very diverse for BPO
companies to capture. In the developed countries, specialist hospital management companies have come up
which take care of the overall running of the hospitals with lower scope of further outsourcing
Concern on
Z]f]lkg^
outsourcing
FgleYfqhjgna\]jkj]Ydar]l`]Z]f]lkg^gmlkgmj[af_afYj]Ykgn]jYf\YZgn]@JYf\>9$Yf\l`mkl`]j]
`YkZ]]fYlj]f\g^gmlkgmj[af_l`]^mf[lagfjklYf\l`]fegnaf_alZY[caf%`gmk]&
Fragmented
source and
destination
market
Source: EY analysis
Therefore, over the last two years, the Indian contract research
industry has been adversely affected by regulatory hurdles and
clinical trials have reduced from 2012 levels.
@go]n]j$j][]flhgda[qY[lagfkYf\fgla[Ylagfkgfkge]g^l`]
concern areas have improved the overall outlook for the clinical
trial industry. These include guidelines on compensation for
patients; push for IT-enabled systems for clinical trial approval,
enforcement and monitoring; mandatory audio and video
recording of the entire process for organizations conducting
drug trials and awareness of the patient of all of the side effects
of the trial before giving a written consent. Introduction of the
Drugs and Cosmetics (Amendment) Bill to amend the Drugs and
Cosmetics Act, 1940 for upgrade and introduction of provisions
for clinical trials and regulation of medical devices is under plan
for 2015, which shall further provide a clear policy framework.
Kaf[]l`]h`YjeY[]mla[Ydgmlkgmj[af_eYjc]lj]imaj]k]ph]jlak]
in the pharmaceutical space, none of the leading IT and BPO
companies have strong capabilities in the pharmaceutical
outsourcing market. Most of the players who are present in this
domain are specialist players and largely MNCs who lead this
space with few domestic companies providing these services.
391
321
262
107
65
150
15
2008
3
2007
L`]ljY\alagfYdAL':HGn]f\gjk`Yn]\]n]dgh]\[YhYZadala]k
around pharmacovigilance, clinical trial reporting and
disclosure, medical access etc., and they directly serve pharma
companies on these services without themselves running any
clinical trials or providing any biological studies. Any impact on
conducting clinical trials in India does not affect their business,
and in fact their business continues to grow with even more
opportunities of outsourcing seen in the market.
500
Till Mar
2015
L`][gklZ]f]lkg^[gf\m[laf_[dafa[YdljaYdkafAf\aYYj]l`]
key growth driver for the Indian CRO industry. India offers
Yka_fa[Yfl[gklY\nYflY_]afl`][dafa[YdljaYdk\geYaf$Yk
compared to western countries. A multinational company
egnaf_J<lgAf\aY[gmd\kYn]mhlg-(g^gn]jYdd[gklk&
2014
AfAf\aY$k]n]jYd;JGkYj]]f_Y_]\afhjgna\af_:9':=k]jna[]k$
o`ad]gl`]jkhjgna\][dafa[YdJ<k]jna[]k&Lqha[Yddq$[dafa[YdJ<
akmf\]jlYc]fZqY^daYl]kgj\anakagfkg^_dgZYd;JGkgh]jYlaf_
afAf\aY&Af\aYf;JGkYj]eYafdq]f_Y_]\af:9':=klm\a]k&
Hjglj]YdarYlagfak`a_`]jaf[dafa[YdJ<$Yf\aloaddZ]YZggkl
for India CRO players if they start providing clinical services,
Ydgf_oal`:9':=klm\a]k&
2013
;dafa[YdJ<j]k]Yj[`2;dafa[YdljaYdkYj]mk]\lg\]l]jeaf]
whether new drugs or treatments are safe and effective
L`][dafa[YdljaYdaf\mkljqafAf\aY^Y[]\YeYbgj\jYoZY[c
in 2013 when the Supreme Court revoked the right of the
Central Drugs Standard Control Organization (CDSCO), national
regulatory body for Indian pharmaceuticals and medical
devices, to approve clinical trials in the country. This was done,
since there was increasing number of patient deaths during
clinical trials in India. Around 2,644 individuals who had signed
up for the trials of 475 new drugs died between 2005 and
201218 .
2012
2011
:9':=k]jna[]k2Klm\a]kYj][gf\m[l]\lgYkk]kkl`]
]imanYd]f[]g^Y\jm_oal`Yf]paklaf_\jm_lgd]^gj
Abbreviated New Drug Application (ANDA).
2010
2009
:jgY\;JGY[lanala]kafAf\aY2
With a large number of blockbuster drugs expected to go off patent, there will be more competition in the
_]f]ja[kk]_e]flYf\l`]hjglYZadalqg^affgnYlgj[gehYfa]koaddZ]Y^^][l]\Y\n]jk]dq&L`]j]^gj]$affgnYlgj
companies are being compelled to curtail their operational cost, which has resulted in their resorting to
gmlkgmj[af_&
Afl`]hYkl+(q]Yjk$l`][gklg^\]n]dghaf_f]oegd][mdYj]flala]k FE=k!`Yk_jgofeYfa^gd\$eYafdq\m]lg
jakaf_j]_mdYlgjqhj]kkmj]k$_an]fl`]af[j]Yk]afl`]kar]Yf\\mjYlagfg^kYehd][dafa[Ydklm\a]k
<jm_\]n]dghe]fl[gklkaf\]n]dgh]\][gfgea]kYj]dac]dqlgaf[j]Yk]^mjl`]jgfl`]ZY[cg^_jgoaf_
j]_mdYlgjqk[jmlafq&L`]j]^gj]$gmlkgmj[af_hjg\m[lagflgdgo%[gklj]_agfkkm[`YkAf\aY]fYZd]k_dgZYd
affgnYlgj[gehYfa]klgj]\m[]l`]aj[gklkoal`gml[gehjgeakaf_gfaffgnYlagf
L`]j]akY\][daf]aff]o\jm_YhhjgnYdk^gjl`]h`YjeY[gehYfa]ko`ad]l`][gklg^\jm_\]n]dghe]fl`Yk
shown a marked rise
Gmlkgmj[af_g^\jm_j]k]Yj[``]dhklgj]\m[]l`]jakcZmj\]fg^^Yadmj]gfYfaffgnYlgj[gehYfq$kaf[]
gmlkgmj[af_akj]dYlan]dq[gkl%]^^][lan]
L`]j]akhja[af_hj]kkmj]kgfZjYf\]\hj]k[jahlagf\jm_kYk_gn]jfe]flkk]]clg[gfljgd`]Ydl`[Yj][gklk
?gn]jfe]flkaf\]n]dgh]\[gmflja]kYj]aehgkaf_j]_mdYlagfl`Ylj]imaj]kZjYf\]\\jm_klgZ]kmZklalml]\Zq
l`]aj_]f]ja[n]jkagfklgj]\m[]`]Ydl`[Yj][gklk
Focus on core
?dgZYdh`YjeY[]mla[Yd[gehYfa]kYj]^g[mkaf_gfeYjc]laf_Yf\\ak[gn]jq$o`ad]gmlkgmj[af_\jm_
\]n]dghe]fl$[dafa[YdljaYdkYf\eYfm^Y[lmjaf_&L`ak]fYZd]kl`]elg^g[mkgfl`]aj[gj][YhYZadala]k
Medical and
bio infrastructure
in India
Af\aYk]klYZdak`]\e]\a[Yd$Zage]lja[Yf\[]fljYddYZaf^jYkljm[lmj]Yf\ljYafaf_[]flj]kYj]\janaf__jgol`&
>mjl`]j$dYj_]fmeZ]jkg^]klYZdak`]\`]Ydl`[Yj]hdYq]jkYj]]phYf\af_l`]ajj]Y[`lgla]j%AAlgofko`a[`oadd
_an]l`]eY[[]kklgYdYj_]hggdg^f]oljaYdhYla]flk
>gj[dafa[YdljaYdk$`a_`jYl]g^hYla]fl]fjgde]flYf\l`]dgo[gklg^[gf\m[laf_ljaYdkY[l]\Ykkljgf_\jan]jk&
Egj]gn]j$Af\aYkdYj_]hghmdYlagfZYk]hjgna\]kY\an]jk]_]f]la[hggdg^h]ghd]YnYadYZd]^gj[dafa[YdljaYdk&
L`]j]Yj]gn]j)eaddagf`gkhalYdZ]\kafl`][gmfljq$o`a[`[YfZ]mladar]\^gj[dafa[YdljaYdk
Patent cliff
Increasing
R&D costs
and strict
regulations
3
Decline in
R&D
productivity
Pricing
pressures due
to increased
generic drug usage
7
Availability of
patients for
clinical trials
Kgmj[]2=QYfYdqkak
Strict
regulations on
conducting
clinical trials
For Clinical Research outsourcing, stricter regulations around approval process, patient compensation and
penalties lead to high risks in case of lack of therapeutic effect of the under-trial drug or adverse medical
reactions from the drug. This has affected the outsourcing of clinical trials to India
=Ykl]jf=mjgh]Yf[gmflja]kg^^]jkmh]jagjAHJhjgl][lagfl`Yf9kaYf[gmflja]k&L`gm_`Af\aY`Yk]f^gj[]\
patent laws, there are still uncertainties in working with Indian partners
L`]lae]lYc]f^gjl`]YhhjgnYdg^Y[dafa[YdljaYdakka_fa[Yfldqdgf_]jafAf\aY[gehYj]\lgl`Ylafgl`]j9kaYf
countries
Competition from global CROs is another challenge for the local vendors, though most of the large global
CROs have operations in India and contribute to outsourcing
9dkg$[geh]lalagf^jgeKgml`]Ykl9kaYf[gmflja]k$eYafdq;`afY$akYeYbgj[`Ydd]f_]
India does not have adequate infrastructure for pre-clinical studies, especially in terms of animal testing
laboratories
9faeYdl]klaf_akYc]qhj]daeafYjqkl]hafl`]\jm_\ak[gn]jqhjg[]kk
IT and BPO vendors have not focused on this business since it requires very different capabilities and talent
pool than their traditional business
Now, they have started focusing on some areas within pharma outsourcing which are independent of running
clinical trials or drug discovery
2
IPR protection
Lengthy
approval time
for clinical trials
Competition
from
global CROs
Lack of
pre-clinical
infrastructure
Lack of
capabilities
for traditional
IT/BPO vendors
Source: EY analysis
Indian regulatory framework has evolved over a period of time to provide more conducive
environment for the promotion of the outsourcing industry.
mlq^j]]aehgjl'\ge]kla[hjg[mj]e]flg^_gg\k^gj\]n]dghe]fl$gh]jYlagfYf\
<
maintenance of SEZ units
((Af[ge]LYp]p]ehlagfgf]phgjlaf[ge]^gjK=Rmfalkmf\]jK][lagf)(99g^l`]
)
Af[ge]LYp9[l^gjjkln]q]Yjk$-(^gjf]pln]q]Yjkl`]j]Y^l]jYf\-(g^l`]
hdgm_`]\ZY[c]phgjlhjgl^gjf]pln]q]Yjk&
=p]ehlagf^jge;]fljYdKYd]kLYp&
=p]ehlagf^jgeK]jna[]LYp&
p]ehlagf^jgeKlYl]kYd]klYpYf\gl`]jd]na]kYk]pl]f\]\Zql`]j]kh][lan]klYl]
=
governments.
>mjl`]jegj]$l`]?gAafljg\m[]\K]jna[]k=phgjlk^jgeAf\aYK[`]e] K=AK!mf\]j
>gj]a_fLjY\]Hgda[q*()-*(*(lg]f[gmjY_]]phgjlg^fgla]\k]jna[]k^jgeAf\aY&L`]
K=AKk[`]e]j]hdY[]\l`]]Yjda]j]paklaf_K]jn]\^jgeAf\aYK[`]e] K>AK!$o`a[`oYk
Yhhda[YZd]gfdqlgAf\aYk]jna[]hjgna\]jk&@go]n]j$l`]f]ok[`]e]akdac]dqlg]pl]f\l`]
rewards under the scheme to all the service providers located in India, regardless of their
constitution23.
L`]fYf[aYd[geh]fkYlagf^gjemdY^gj[geh]fkYlaf_hYla]flk
is devised in such a way that younger participants get more
compensation as compared to older participants. The CDGI
[gehad]kl`]fYdgj\]jj]_Yj\af_l`][geh]fkYlagfoal`af+(
days. For calculating the compensation, the SAEs are divided
into four categories permanent disability; congenital anomaly
or birth defect, chronic life-threatening disease; or reversible
SAE in case it is resolved. The compensation for all these
categories is calculated differently25.
Hence, the Government has taken several measures to
promote the health care outsourcing in India. However, several
j]_mdYlgjq[`Ydd]f_]kkladd]pakl$o`a[`f]]\lgZ]Y\\j]kk]\&
L`]AHJL`afcLYfc$[gehgk]\g^Af\aYfbm\_]k$dYoq]jk
and academics, drafted the National IPR Policy (which is yet
to be approved), listing various new laws and amendments on
trademark, patent, copyright and designs, to strengthen Indias
IP rights40.
Af%hdY[]j]_mdYlgjq^jYe]ogjc^gj[dafa[YdljaYdk2;<K;G
proposed the creation of IT-enabled system to monitor all
steps of clinical trial to ensure increased transparency. The
online submission of clinical trial related information, online
approval and online monitoring of clinical trials will ensure data
authenticity and the protection of rights of the trial
kmZb][lk41. Furthermore, it has also come up with a draft
formula to determine the compensation for patients in case of
afbmjqaf[dafa[YdljaYdk42.
In addition, CDSCO has made it mandatory for the
organizations conducting clinical trials to obtain written consent
as well as audio-visual recording of the consent process of each
ljaYdkmZb][l43. Moreover, it mandated that clinical trials must be
conducted only at accredited centers and the ethics committee
(which ensures that clinical trial is conducted in ethical manner)
should also be accredited44.
Furthermore, the Department of Health and Family Welfare
plans to propose the Drug and Cosmetics (Amendment) Bill
*()-$afl`]:m\_]lK]kkagfg^l`]HYjdaYe]fllg\]f][d]Yjdq
the rules for conducting safe and secure clinical trials in India45.
However, clinical trial approval rate is slow in India. Hence,
measures can be taken to initiate a fast-track process and
single-window clearance for regulatory approval of clinical
trials46. Furthermore, the Government can take steps to provide
J<af[]flan]k km[`Yko]a_`l]\lYp\]\m[lagfgfJ<
]ph]fk]k!lgl`];JGkafAf\aY&
Hence, it is important for the Government to conduct due
diligence of the above mentioned bills and proposals and
convert them into laws, so that the regulatory environment
in India can be strengthened. The improved regulatory
environment with reduced uncertainty is likely to boost the
growth of health care BPO in India while maintaining highest
imYdalqYf\k][mjalq'hjanY[qklYf\Yj\k&
Outlook
In the preceding sections, the report focused on the health care sector from an outsourcing
h]jkh][lan]Yf\Ydkgkh][a[YddqYfYdqr]\l`]_jgol`\jan]jkYf\[`Ydd]f_]k^gjAf\aY
as a destination for providing these services in each of the market segments. Clearly,
outsourcing in this sector is picking up and India is a key destination for these kinds of
services.
After providing services such as claim processing for payers, medical billing for providers
and later stage clinical trials for pharmaceutical companies, Indian BPO vendors are now
slowly moving into other areas as they build strong capabilities in this sector.
@go]n]j$l`]hjgd]g^n]f\gjkk]jnaf_l`]k]eYjc]lkakn]jqnYja]\Yf\j]imaj]kn]jq
kh][a[[YhYZadala]k3fgf]g^l`]n]f\gjk`Yn]l`]k[Yd]Yf\[YhYZadala]klgY\\j]kk]Y[`
opportunity, which health care outsourcing provides. Therefore, the vendors are focused on
]phYf\af_l`]ajjYf_]g^k]jna[]kYko]ddYkl`]_dgZYdeYjc]lkl`]qk]jn]$lg\]jan]egj]
business in the health care sector.
The use of technology in providing platform-enabled health care solutions and using big
\YlY'YfYdqla[klghjgna\]nYdm]%Y\\]\k]jna[]kakk`Yhaf_l`]^mlmj]g^gmlkgmj[af_afl`ak
sector.
India continues to be one of the most preferred destinations for payer outsourcing, and
will continue to be so. With the regulatory push from the US government, this segment is
registering growth and the Indian BPO companies are looking to grab a big chunk of the pie.
Gn]jYdd$l`]_dgZYdhYq]j:HGeYjc]lak]ph][l]\lg_jgoYlYjgmf\)(q]Yj%gf%q]Yjafl`]
f]pll`j]]lg^gmjq]YjkYf\Af\aYfhYq]j:HGeYjc]lk`gmd\oalf]kkYkaeadYj_jgol`lj]f\&
Afl`]hjgna\]jeYjc]l$l`]^g[mkakgf]phYf\af_l`]jYf_]g^k]jna[]kg^^]j]\&O`ad]
some services such as medical transcription are becoming less popular, others involving
patient care, medical imaging, patient enrolment etc., are on the rise. Moreover, the
A;<%)(klYf\Yj\kaehd]e]flYlagf$YkYf\o`]ffYddqaehd]e]fl]\afl`]MK$oadd\jan]
medical coding and billing outsourcing in this industry. Industry sources estimate provider
outsourcing to be growing at more than 30% from 20112016 and the Indian players would
also be looking to build strong capabilities in this market47.
Within the CRO market, challenges include regulatory changes, which have adversely
affected the number of clinical trials run in India. This has impacted the companies running
clinical trials in India and providing various other related services. However, the ones
^g[mkaf_gf:9':=klm\a]kgjljY\alagfYd:HG[gehYfa]kafAf\aY$o`a[`o]j]hjgna\af_
k]jna[]kYjgmf\l`][dafa[YdljaYdk`Yn]fglZ]]fY^^][l]\ka_fa[Yfldq&Gn]jYddl`];JG
eYjc]lak]ph][l]\lg_jgoYlY`]Ydl`qjYl]g^)0*(afl`][geaf_q]Yjk&
Overall, the Indian BPO industry stands to gain from the growing demand in health care
gmlkgmj[af_3Yf\l`]j]f]]\klgZ]Ykljgf_^g[mkgfZmad\af_[YhYZadala]kafkh][a[k]jna[]k
Yf\[gehd]phjg[]kk]k$o`a[``]dhl`]elYhl`]_jgoaf_\]eYf\Yf\\a^^]j]flaYl]l`]e
from the rest.
About ASSOCHAM
Vision
Empower Indian enterprise by inculcating knowledge that will be the catalyst of growth in the barrierless technology driven global
market and help them upscale, align and emerge as formidable player in respective business segments.
Mission
As a representative organ of Corporate India, ASSOCHAM articulates the genuine, legitimate needs and interests of its members. Its
mission is to impact the policy and legislative environment so as to foster balanced economic, industrial and social development. We
believe education, IT, BT, Health, Corporate Social responsibility and environment to be the critical success factors.
D. S. Rawat
Secretary General
d.s.rawat@assocham.com
References
1.
@]Ydl`[Yj]:HGEYjc]lHYq]j$Hjgna\]jH`YjeY[]mla[Yd%Lj]f\k>gj][Yklk *()+%%*()0!$EYjc]lkYf\EYjc]lko]Zkal]$`llh2''ooo&
eYjc]lkYf\eYjc]lk&[ge'EYjc]l%J]hgjlk'`]Ydl`[Yj]%gmlkgmj[af_%Zhg%eYjc]l%,/*&`led$Y[[]kk]\*)9hjad*()-
2.
Af\aYAL%:HEGn]jna]o$F9KK;GEo]Zkal]$`llh2''ooo&fYkk[ge&af'af\aYf%alZhg%af\mkljq$Y[[]kk]\*)9hjad*()-
3.
@]Ydl`[Yj]Af\mkljqJ]^gjeoadd\jan]ka_fa[YflGmlkgmj[af_Y\ghlagfYegf_HYqgjk$;g_farYflo]Zkal]$`llh2''ooo&[g_farYfl&[ge'
afka_`lko`al]hYh]jk'j]^gje%oadd%\jan]%hYq]j%gmlkgmj[af_&h\^$Y[[]kk]\*/9hjad*()-
4.
MladarYlagfEYfY_]e]fl$M`[jan]jnYdd]qo]Zkal]$`llhk2''ooo&m`[jan]jnYdd]q&[ge'MladarYlagfWEYfY_]e]fl'$Y[[]kk]\*/9hjad*()-&
5.
H`YjeY;dafa[YdLjaYdK]jna[]k2Ogjd\EYjc]l*()+%*(*+$Nakagf?Yaf
6.
@]Ydl`[Yj]:HGEYjc]logjl`)00$0-.&-EaddagfZq*()0$EYjc]lkYf\EYjc]lko]Zkal]$`llh2''ooo&eYjc]lkYf\eYjc]lk&[ge'
Hj]kkJ]d]Yk]k'`]Ydl`[Yj]%Zhg&Ykh$Y[[]kk]\*)9hjad*()-
7.
M&K&@]Ydl`[Yj]:HGEYjc]logjl`),)&/:addagf:q*()0$EYjc]lkYf\EYjc]lko]Zkal]$`llh2''ooo&eYjc]lkYf\eYjc]lk&[ge'
Hj]kkJ]d]Yk]k'mk%`]Ydl`[Yj]%Zhg&Ykh$Y[[]kk]\*)9hjad*()-
8.
H@`]Ydl`[Yj]:HGY`a\\]fb]o]d$kYqk[gfkmdlaf_je$f]okZql]ko]Zkal]$`llh2''f]okZql]k&h`'*()+'(*'*/'h`%`]Ydl`[Yj]%Zhg%Y%`a\\]f%
b]o]d%kYqk%[gfkmdlaf_%je'$Y[[]kk]\*)9hjad*()-
9.
@]Ydl`[Yj]:HGk]]flgjYc]af):afj]n]fm]kZq*().$?E9F]oko]Zkal]$`llh2''ooo&_eYf]logjc&[ge'f]ok'klgjq'*0*(/('][gfgeq'
Zmkaf]kk'`]Ydl`[Yj]%Zhg%k]]f%lg%jYc]%af%)Z%af%j]n]fm]k%Zq%*().$Y[[]kk]\+(9hjad*()-&
@]Ydl`[Yj]Af^gjeYlagfEYfY_]e]flGmlkgmj[af_9kkg[aYlagfg^l`]H`adahhaf]k$A;Lg^[]o]Zkal]$`llh2''a[lg&\gkl&_gn&h`'`]Ydl`[Yj]%
af^gjeYlagf%eYfY_]e]fl%gmlkgmj[af_%Ykkg[aYlagf%g^%l`]%h`adahhaf]k'$Y[[]kk]\+(9hjad*()-&
H`adahhaf]k@]Ydl`[Yj]:HGAf\mkljq2)(($(((=ehdgqe]flGhhgjlmfala]kYf\):addagfJ]n]fm]k:q*().$Affal`]Ydl`[Yj]o]Zkal]$`llh2''
ooo&affal`]Ydl`[Yj]&[ge'j]kgmj[]%[]fl]j'h`adahhaf]k%`]Ydl`[Yj]%Zhg%af\mkljq%Zq%*().'$Y[[]kk]\+(9hjad*()Af\aY%@]Ydl`[Yj]j]hgjl2@]Ydl`[Yj]kh]f\af_$*,9hjad*()-$naYAKA=e]j_af_eYjc]l
H`adahhaf]%@]Ydl`[Yj]j]hgjl2@]Ydl`[Yj]kh]f\af_$*1<][]eZ]j*()-$naYAKA=e]j_af_eYjc]l
The EY team
Milan Sheth
Partner and Technology Industry Leader
#1)**.)1*(+/(
milan.sheth@in.ey.com
Vijay Shankar
Director, Advisory Services
#1)0(./*/-(()
ZnabYq&k`YfcYj8af&]q&[ge
Satyakam Chakravarty
Senior Manager, Technology,
E]\aYL]d][ge
#1))*,%,.,,(((
satyakam.chakravarty@in.ey.com
Nishant Bansal
Manager, Strategic Market Intelligence Technology
#1))*,.//1../
nishant.bansal3@in.ey.com
Saiby Gupta
Analyst, Strategic Market Intelligence Technology
#1))*,.)1*/+saiby.gupta@in.ey.com
=Qg^[]k
Ahmedabad
2ndggj$K`anYdacAk`YYf
Near C.N. Vidhyalaya
Ambawadi
Ahmedabad - 380 015
L]d2 #1)/1..(0+0((
>Yp2 #1)/1..(0+1((
Bengaluru
12th)+thggj
UB City, Canberra Block
No.24 Vittal Mallya Road
Bengaluru - 560 001
L]d2 #1)0(,(*/-(((
#1)0(./*/-(((
>Yp2 #1)0(**)(.((( )*thggj!
>Yp2 #1)0(***,(.1- )+thggj!
1st Floor, Prestige Emerald
No. 4, Madras Bank Road
Lavelle Road Junction
Bengaluru - 560 001
L]d2 #1)0(./*/-(((
>Yp2 #1)0(****,))*
Chandigarh
1st>dggj$K;G2)..%)./
Sector 9-C, Madhya Marg
Chandigarh - 160 009
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Chennai
Tidel Park, 6th/th Floor
A Block (Module 601,701-702)
Fg&,$JYban?Yf\`aKYdYa$LYjYeYfa
Chennai - 600113
L]d2 #1),,..-,0)((
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Hyderabad
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Hitech City, Madhapur
Hyderabad - 500081
L]d2 #1),(./+.*(((
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NCR
Golf View Corporate Tower B
Near DLF Golf Course
Sector 42
Gurgaon - 122002
L]d2 #1))*,,.,,(((
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Kochi
9th Floor, ABAD Nucleus
NH-49, Maradu PO
Kochi - 682304
L]d2 #1),0,+(,,(((
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6thggj$@L@gmk]
18-20 Kasturba Gandhi Marg
New Delhi - 110 001
L]d2 #1))),+.++(((
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Kolkata
22 Camac Street
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Kolkata - 700 016
L]d2 #1)++..)-+,((
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Mumbai
14th Floor, The Ruby
29 Senapati Bapat Marg
Dadar (W), Mumbai - 400028
L]d2 #1)(**.)1*((((
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Pune
C-401, 4thggj
Panchshil Tech Park
Yerwada
(Near Don Bosco School)
Pune - 411 006
L]d2 #1)*(..(+.(((
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