Why this decade may finally be the age of consumerization for Indian healthcare

February 4, 2021
Long prophesised and awaited, the consumerization of Indian health has been a well-studied phenomenon. While it has been steadily growing, the segment has not seen a breakout moment. Will this decade bring about change?

Consumer health describes health products and services where the customer makes the crucial decisions about their purchase and usage. Covering over-the-counter drugs and vitamins to Ayurvedic and herbal products to health supplements, the segment has also been expanded by the arrival of new-age tech wearables and fitness and wellness services.

The expected growth can primarily be attributed to three key factors.

1. Increasing digital penetration

With the democratisation of telecom, Indian consumers have seen a dramatic shift in their ability to access healthcare products and services. Smartphone penetration in rural India rose from 9% in 2015 to 25% in 2018, and it is expected that internet users in India will increase by 64% by 2023.

Today, a semi-rural consumer can access health information through a vernacular platform like myUpchar and order feminine hygiene products online. They can track their fitness levels through a mobile app and get one-on-one coaching or manage their ovulation cycles through a digital monitor like Inito. Further, the advent of digital has allowed innovative start-ups to reach their customers online and not depend on traditional channels like pharmacies and doctors.

2. Growing health awareness

The Indian health consumer has become steadily more aware of one’s healthcare needs. This is a factor of both increasing education levels as well as the availability of credible medical content through digital channels.

Armed with this knowledge, consumers have been trying to take an active role in their medical decision-making alongside their doctors. Additionally, they have been focusing more and more on preventive health – by seeking healthcare and lifestyle advice.

3. Increasing affordability

As India moves closer to its target of becoming a middle-income country by 2030, the average per capita income grew by 30% between 2015 and 2019. This has also led to an increase in disposable income of almost 50% in the same period. While the former is crucial for critical health expenditures, the latter is the key driver for discretionary purchases like consumer health. As India’s middle class sees its purchasing ability increase, it will provide a boost to consumer health.

Will COVID-19 be a driving force for Indian consumer health?

Despite all these factors and being a predominantly out-of-pocket expenditure driven market, consumer healthcare in India has grown relatively slowly. However, COVID-19 may be that watershed moment that propels Indian consumer health forward. The pandemic has already had a significant impact on how, what, and where people consume healthcare. For example, industry sources indicate that the sale of vitamin C and such preventive drugs have almost doubled in 2020. While this should normally come down, it may not reach the baseline. This points to a further increased focus on preventive care.

Further, consumers are now more open to purchasing healthcare services online. While telemedicine has been the broadly quoted example, the same phenomenon has played out in other areas including fitness and weight loss services. Customers who previously needed an in-person sale for a weight loss product regime are now comfortable buying them online. This instantly brings down the cost of acquiring a customer. The company does not need to rely on cost-intensive direct sales personnel anymore.

Consumers have also become more conscious of what they ingest, be it food or medicines, with a trend to go organic/natural. Home-made remedies for preventing COVID-19 are very prevalent, and even Government hospitals include herbal medicines as part of their treatment regime. This affinity to natural and perceived ‘nontoxic’ products will continue and can create a significant product opportunity.

The challenge of consumer health

While the sector promises a tremendous opportunity, it also demands a nuanced understanding and playbook to win. A consumer seeking healthcare products may do so due to a variety of value propositions: Ayurvedic vs natural vs organic. While they may be served by a single product, different consumers are seeking different benefits out of these products. A clear consumer segmentation and product differentiation, therefore, are crucial for success in the consumer health market.

Additionally, too many start-ups in the space have burnt too much cash in their zeal to grow fast. In general, healthcare businesses are going to take a longer time to grow than other consumer businesses. Therefore, patience is key for building a sustainable business without suffering too much equity dilution.


About the author

Dr. Prabu Thiruppathy is a Principal at KOIS

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