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Wait and watch will not reap much while future threats are percolating faster than short-term business gains. It is a matter of when instead of why and what. Rather it is a matter of now.

Sheer growth in top-line is not the ultimate goal for any business. It also needs a balanced growth in the bottom-line to remain viable. Despite all the optimistic projections of Indian healthcare industry, cost pressures are mounting up. And it is becoming imperative to undertake concerted efforts to rationalize and reduce costs stemming from the inefficiencies and challenges of the Indian market/ ecosystem. With margins eroding due to cut-throat price competition, gaining market share also tends to become meaningless beyond a point. With rising inflation, the cost of servicing the market is steadily threatening the sustainability of margins.

A hospital owner intending to buy hospital beds starts his search for options mainly by asking peers, searching online and inquiring with some local resellers. What one invariably ends-up with is a list which by no means is comprehensive. When making choices to buy, there is no single point of reference to know all options for any particular product or service. Mirror this and the same challenge is true for suppliers who want their product to be considered by every potential buyer in the country.

Continuing costs of market access/reach and exploration are under the scanner. Be it a new entrant into the market or a new launch by an established business, the cost of market awareness and customer reach are so high; that despite pricing it low for the Indian customer, companies encounter delays in achieving a breakeven for their product or may even miss it altogether.

Many products fail despite being good and affordable, as their business struggles to find economical access to the hospitals and other buyers across the country. Hence they do not churn the sales volumes needed to keep their business afloat. Likewise, the degree of the challenge is higher in the tier 3, tier 4 towns where healthcare providers have to compromise choice in comparison to the metros and bigger cities where more products are available. These issues are anyhow compounded by the disintegrated healthcare structures in India leading to higher sales and distribution overheads; making it virtually impossible to build the much needed economies of scale.

Collaboration is not new to the world. Industry players and competitors have come together in many fields to create mutual upside. For instance, Airtel, Idea and Vodafone, three of the largest Indian telecom companies joined together to build and maintain passive infrastructure services for all operators in the country on a non-discriminatory basis. By involving strategically, they have cut down their expenses and have achieved greater market share and penetration. This joint venture in 2007 led to the largest telecom tower company in the world with over 110,000 towers and 200,000 tenancies. Similarly, in 2008, Jet Airways and Kingfisher Airlines formed the biggest operational alliance in India?s aviation sector with a combined fleet of over 189 aircraft constituting more than 58% market share. The objective was to rationalize and reduce costs after Kingfisher Airlines and Jet Airways made a loss of Rs 1000 crores and 806 crores respectively in 2007-08. The alliance brought benefits like joint fuel management, common ground staff, common technical resources and training. There are many more of such examples the world over where competitors have collaborated to create a collective upside for business efficiency.

Unlike telecom and aviation where there is an entry barrier and few large players met to create consensus on a workable collaboration; healthcare is heavily disintegrated and complex. Independent coordination will be needed to carve the logical way forward with a mutual upside and win-win for everyone. When and where to start may seem like a catch-22. But the crossroads are earnestly heading in only one direction. Wait and watch will not reap much while the future threats are percolating faster than short-term business gains. For sure, it is a matter of when instead of why and what. And for all it looks like it is a matter of "now" - after all, we have got to start somewhere!

INHX: Independently coordinated nationwide collaboration is founded on well-studied business experience and fundamentals to produce reciprocal synergies for all participants. Moreover, it is continually evolving with the refinements and suggestions from business leaders across the Indian healthcare ecosystem.

Come forward and pledge support. Write to us at inhx@inhx.com.

Last edited: October 26, 2017