Is India still shining?

A recent report by the Centennial Group,  highlighted in a FT columnist articlediscusses “What India must do if it is to be an affluent country”. Findings in the report, and my own observations from recent trips, have three quite significant implications for the life sciences and healthcare sectors. Before highlighting these implications, let’s take a quick look at the FT article discussing the report and what is causing the basis for future growth and prosperity.

Encouraging progress has already occurred in the last 30 years (even when compared to China’s blistering rate of growth) which forms the basis for future growth:

“Since 1980 the average living standards of Chinese and Indians have, for the first time in the histories of these two ancient civilisations, experienced a sustained and rapid rise. In one generation, India’s gross domestic product per head rose by 230 per cent – a trend rate of 4 per cent a year. This would seem a fine accomplishment if China’s had not increased by 1,090 per cent – a trend rate of 8.7 per cent. Yet even if India has lagged behind, the change has been large enough for aspiration to replace resignation as the ethos of a large and rising proportion of Indians.

The recent past offers at least four further reasons for optimism. First, the rate of growth has been accelerating: over the five years up to and including 2008, the average annual rate of economic growth was 8.7 per cent, up from 6.5 per cent at the previous peak in 1999. Second, vastly higher savings and investment underpin this acceleration, with gross domestic savings up to 38 per cent of GDP in the financial year 2007-08. Third, India’s economy has globalised, with the ratio of trade in goods and services up to 51 per cent of GDP in the last quarter of 2008, up from 24 per cent a decade before. This was not far behind China’s 59 per cent of GDP.”

Challenges which would need to be overcome to achieve this would include the “seven intergenerational issues”:

“…first, tackling disparities, not least among social groupings, but without further entrenching group-based entitlements and group-based politics; second, improving the environment, including the global environment; third, eliminating India’s pervasive infrastructure bottlenecks; fourth, transforming the delivery of public services, particularly in India’s ill-served cities; fifth, renewing education, technological development and innovation; sixth, revolutionising energy production and consumption; and, finally, fostering a prosperous south Asia and becoming a responsible global power.”

And although these are very real challenges to achieve such affluence, the world has changed:

“What I take for the world is that India, for all the huge challenges it confronts, is likely to continue its rise, if more slowly than the report assumes. The job of adjusting the familiar western ways of thinking about the world to the new realities has hardly begun. Within a decade a world in which the UK is on the United Nations Security Council and India is not will seem beyond laughable. The old order passes. The sooner the world adjusts, the better.


Turning to personal experience, I have recently witnessed the local population’s growing aspiration on two trips to India in 2008 and 2009. In 2008, I travelled through some of the public railways systems from Delhi to Rajasthan. The railway systems in India are true mass transport, serving some 18 million passengers and 2 million tonnes of freight daily. And getting on and off the trains with all your luggage and traveling party in-tact, is an act of wonder and defiance in itself!

What was most surprising on these journeys was the grass roots level at which aspirations are growing.The railway kiosks and street vendors, as well as selling mango juice, fresh oranges and “kachori” (a spicy snack filled with lentils), were also selling copies of “Think and Grow Rich” by Napoleon Hill, “How to Win Friends and Influence People” by Dale Carnegie, and “The Magic of Thinking Big” by David Schwartz. Very American you may say, but exactly the type of “can-do” attitude and ambition that has long supported growth in the US.

And earlier this year, on a trip to Punjab and Delhi, again I was struck by the local wealth and progress being made by local entrepreneurs. Thinking of somewhat crude but indicative barometers, while traveling as a child some 25 years ago, I noticed most cars were the “Hindustan Ambassador”, a local remake of the Morris Oxford III and in production since 1957. Now, when traveling through Delhi and affluent suburbs of Mohali and Chandigarh, I found that top of the range Mercedes, $1+ million new homes, and very smart world class hotels were not unusual. Admittedly, some of this wealth is ex-pats returning home after building successful careers and businesses in the West, but increasingly it is home grown and re-invested locally.

Interestingly, I also found the ethos of investing in local (Indian company) equities to be growing. This can partly be evidenced by the rapidly growing availability of websites assisting private investors with in depth information, and from anecdotal conversations with local investors. I will be visiting again later in 2009 and look forward to observing other changes and signs of progress.

Turning to our opening statement, what are the three significant implications for the life sciences and healthcare industries?

Firstly, as affluence within India grows and the associated middle class, there is a growing market for healthcare provision, with massive potential. This is for both local provision of healthcare services (e.g. private hospitals, clinics) but also a growing market who demand the best of worldwide available pharmaceuticals, and who as private payors will be willing and able to purchase such.

Secondly, the entrepreneurial spirit has been unleashed and has positively leaped out of the box. This is exactly the kind of leadership that is required to help build new and world class companies – developing new drugs, new medtech solutions, new healthcare service provision and advancement into higher tech of the existing mainstay of service companies and generics businesses.

Thirdly, growing interest in an equity and investor culture is healthy for all tech based industries. Ultimately, retail and generalist institutional investor support is necessary to build support for companies as they develop and move out of private holdings into the public realm. Again, this model seems to take more from the US than anywhere else, and has been essential in fostering a market where dollars (or rupees!) can be recycled into new investment.

So, is India still shining? Well, the sheen may have come off over the last couple of years as markets worldwide have suffered. But the race has just begun.



This article was written by Raman Minhas. He is CEO of ATPBio, a consultancy firm providing strategic insight and transaction support to the life sciences industry.


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