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Healthcare may soon get 'generic' - Views on News from Equitymaster
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  • Feb 4, 2009

    Healthcare may soon get 'generic'

    Affordable healthcare on the cards
    In recent years developed countries have laid special emphasis on making healthcare and medicines available at reasonable prices. This trend gave birth to the 'pharma research outsourcing' and 'contract manufacturing' bandwagon, of which select Indian companies are the leaders today. In India, however, little has been done to this effect. For instance, the Indian government funds merely 25% of the nation's healthcare expenditure as against 86% in the UK, 46% in the US and 36% in China.

    The government is now planning to set up generic drug stores in all the districts across the country to provide quality generic medicines at affordable prices. As per a leading daily, the Department of Pharmaceuticals, under the aegis of Chemical and Fertilizer Ministry, has been entrusted with the task of setting up these outlets across the country that would sell medicines at a fraction of the prevailing market prices. While the same may also be seen as a pre-election welfare programme, the results may nonetheless be praiseworthy, if implemented diligently.

    Big may not be 'better' in banking
    Weighed down by the enormous losses in the aftermath of the subprime crisis, the profits of the global banking industry have hit an 18-year low, and early trends in 2009 do not look very promising as well. What has borne well out of this catastrophe is that the smaller sized entities have stopped getting ignored. With the likes of Citibank and Bank of America at the government's mercy for survival, smaller and healthier banks are looking at amassing a larger share of client base.

    While big banks across the world have remained in spotlight, in the US in particular, the growth trend for the nation's banks over the last twenty years shows that only the big got bigger. To put things in perspective, as per CNN, over the past decade and a half, banks with more than US$ 10 bn in assets more than doubled their share of the nation's deposits, from 32% in 1992 to 71% in 2008. At the same time, market share of deposits at the smallest institutions - those with less than US$ 100 m in assets - dropped by more than half.

    Consolidation in the banking industry so far has been driven by increasing capital requirements and technical challenges, such as the use of internet banking, online bill payment as well as various compliance regimes. However, unless such consolidation helps banks sustain efficiency in operations, in terms of cost and quality, the purpose of the same gets defeated.

    BoJ's version of bailout
    Meanwhile, the Bank of Japan has decided to follow its US counterpart in terms of bailing out the banks in the economy. It will do so by purchasing 1 trillion yen (US$ 11 bn) worth of shares in other companies owned by the financial institutions to shore up the latter's capital. This will free the banks' balance sheets of unnecessary burden and help them focus on their core business of assessing credit risks rather than riding the fortunes of the stock market. The central bank has decided to purchase the shares until April 2010 and hold them until at least March 2012.

    Chinese premier gets 'Bush' treatment
    A month back an Iraqi reporter threw his shoes at the then US President George Bush during Bush's farewell trip to the country. This 'Bush' treatment came to be heavily condemned despite the President's disgraceful exit from the nation's leadership. But what is shocking to note is that this treatment has not lost its favour amongst protestors and was recently meted out to the Chinese Premier Wen Jiabao as well. Mr. Jiabao had a shoe hurled at him as he gave a speech at Britain's Cambridge University. Although the local Chinese media made no mention of the incident in reports on his visit, the opposition to the Chinese leader's communist policies are palpable. The Chinese media had recently also censored the inaugural address of US President Barack Obama and published Chinese versions of the speech that removed reference to fighting communism and a paragraph about leaders who keep power by silencing dissent.



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