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Old Cures, New Business

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When S. Sajikumar graduated from the Thiruvanathapuram Ayurveda College in 1993, his goal in life was simple — to start an Ayurveda hospital in his home town of Kayamkulam in Kerala. Hailing from a family of traditional Ayurveda vaidyas, his Warrier’s Hospital and Panchakarma Centre soon became a roaring success. The puritanical Ayurvedic community in Kerala was, however, uncomfortable with his strategy of advertising his treatment specialities. Most Ayurvedic units in Kerala are run by family trusts which see the practice as a not-for-profit venture, one they regard as a time-honoured tradition.

Undeterred, Sajikumar had, by 2003,  introduced a basket of Ayurvedic haircare and skincare fast-moving consumer goods (FMCG), under a new company called Dhathri Ayurveda that competed with the likes of Hindustan Lever (now Hindustan Unilever), Marico and Himalaya.

Today, the Dhathri brand consists of 30 over-the-counter products, 100 patented products and 200 classical Ayurveda formulations, sold via 500 distributors across the country. Their hair oil and shampoos alone sell between 3-4 lakh bottles each a month.

“We are the second largest Ayurvedic firm in Kerala after Kottakkal Arya Vaidya Sala in terms of revenues, and sell the leading haircare product in the state,” claims Sajikumar, though he is reluctant to share details of the group’s revenues and profits.

Sajikumar’s model is reflective of the transformation sweeping through Indian Systems of Medicine (ISM), comprising Ayurveda, yoga, naturopathy, Unani, Siddha and homeopathy — also collectively called Ayush. Tweaking traditional sciences to suit modern day needs is not only changing centuries-old healing practices but also raking in money. Angel investors and corporate houses are no longer shy of investing in Ayush. The result: hospital chains and standalone luxury hospitals matching the infrastructure of leading corporate hospitals; Ayush medicines that are on a par with those made by MNCs in terms of packaging and quality; and, a distribution network to match. Even public funds have started flowing in for research and development and for creating quality infrastructure. According to industry estimates, the size of the ISM treatment and medicine market is close to Rs 8,000 crore and growing at 15-20 per cent a year. Add to that a huge wellness market comprising beauty services and cosmetics — fitness, slimming, nutrition and rejuvenation products and alternative therapies — worth Rs 49,000 crore, growing at a compound annual growth rate (CAGR) of 20 per cent to reach Rs 87,500 crore by 2015, according to PricewaterhouseCoopers, and you begin to understand why ISM is big business.

Philipe Haydon, CEO of Himalaya Healthcare (BW pic by Bivash Banerjee)

Corporate Stimulus
Realising the potential of the ISM sector, corporates are attempting to integrate Ayurveda with modern medicine. Take, for instance, the Institute of Ayurveda and Integrative Medicine (IAIM) at Yelahanka in Bangalore. The 100-bed hospital on a 12-acre campus is equipped with modern diagnostic tools and offers Ayurveda with allopathy, besides offering yoga, physiotherapy and acupressure treatments. The hospital has a mix of senior allopathic and Ayurveda doctors. Modern bio-medical investigation reports generated at the hospital are relayed to doctors at the Ramaiah Medical College for their expert opinion. “We get about 1,500-2,000 patients a month and a majority of the cases are related to paralysis, skin disease, gastro, arthritis and related diseases,” says G. G. Gangadharan, medical director of IAIM.

The hospital, which has nine specialities in Ayurveda, is the brainchild of the Foundation for Revitalisation of Local Health Traditions — a not-for-profit organisation. The entire investment of Rs 35 crore in IAIM came from three Tata Group trusts. The hospital was inaugurated two years ago by then Tata Group chairman Ratan Tata.
7.85 lakh: Registered practitioners
3,277: Hospitals
24,289: Dispensaries
350: Medical colleges for the Ayush sector

62,649: Beds in government and government-aided facilities
One million: Village-based, traditional Ayush community
10,000: ISM units in the country
Rs 8,000 Crore: The size of the Indian Ayush industry
6,198: Types of medicinal plants in India, the largest in the world
Rs 6,000 crore: Planned allocation to the sector under the 12th Plan
2,400: Plant species in codified ISM texts
Rs 4,446.50 crore:
Earmarked by the government for R&D work under the 12th Plan
A similar initiative in Bangalore is Soukya, promoted by holistic health healer and homeopathic expert Issac Mathai. The centre claims to be the only one of its kind in the world, integrating homeopathy, Ayurveda, naturopathy, yoga and other wellness domains. The hospital — spread across a 36-acre campus in Whitefield — claims to have the Duchess of Cornwall, Camilla, among its patients. The hospital says people from more than 36 countries have sought treatment.

Then, there is Dr Batra’s — a chain of homeopathic clinics (close to 90) in India and abroad.

Another prominent corporate investor is the Yash Birla Group. In 2008, the group entered into a 50:50 joint venture with Kozhikode-based traditional firm Kerala Vaidyasala to form Birla Kerala Vaidyasala and, three years later, bought out the entire firm. Focusing mainly on the wellness business, the Birla Kerala Vaidyasala now has more than 25 therapy centres, including Ayurveda health resorts and day-care treatment facilities in Mumbai, Bangalore, Chennai, Pune and Jaipur, among others.

Even individuals are jumping onto the bandwagon. Take the case of Rajiv Vasudevan — the poster boy of Kerala’s IT revolution. Vasudevan, a mechanical engineer and an IIM Calcutta alumnus, was the chief executive officer of the state government-owned Technopark, Kerala’s first IT park. Later, the state government made him the director of the Kerala State Information Technology Mission. Vasudevan was attracted by Ayurveda’s huge potential and today runs AyurVaid, a chain of Ayurveda hospitals in Bangalore, Chennai and Kochi.

“More than a passion for Ayurveda and its heritage, what attracted me was its business potential. There is a huge demand for quality treatment if it is offered in the way an allopathic corporate hospital does. Moreover, there are many diseases which Ayurveda can cure or control, but allopathy can’t,” says Vasudevan. While Vasudevan started the first hospital in 2005 by investing around Rs 1 crore from his own pocket, expansion was funded by Acumen Fund, which has put in Rs 4.5 crore. In October 2010, AyurVaid’s Bangalore hospital became the first Ayurveda hospital to be accredited by the National Accreditation Board for Hospitals & Healthcare Providers (NABH) — a gold standard for hospital administration. A second hospital in Bangalore with surgical theatres has completed audit and is awaiting NABH accreditation.

Ramesh Vangal, former PepsiCo India chief and a serial entrepreneur, bought Kerala Ayurveda, a listed company confined to Kerala for more than a century, nine years ago. In FY12, it notched up revenues of nearly Rs 27 crore and a net profit of Rs 8 lakh. Its subsidiary, wellness and treatment resort AyurvedaGram in Bangalore, receives more than 60 patients a month from different parts of the world.  “Most of our patients are repeat customers or referred patients, mainly for the treatment of joint pain, obesity and metabolic disorders in addition to stress and lifestyle-related diseases,” says Nibin John, deputy medical superintendent of AyurvedaGram.

Herbal Growth
“Globally, there is a momentum towards complementary and alternative medicine (CAM) and a National Institute of Health (NIH) report had said 40 per cent of the US population is now using CAMs rather than depending on modern medicine,” says Gangadharan. He also cites a World Health Organisation estimate that says that the global herbal medicine market is about $50 billion and will grow to $3 trillion by 2020 and $5 trillion by 2050.

India’s share of this market is not even 1 per cent, despite it being the second-largest exporter of herbal products in the world. The country’s exports were to the tune of Rs 1,318.69 crore in FY11 according to Pharmaceutical Export Promotion Council (Pharmexcil) data.

Ayurveda hospitals are also more economical to run. “If an allopathic hospital in a metro requires an investment of Rs 5-8 crore per bed, an Ayurveda hospital offering treatment for the same diseases and of a similar standard will require between Rs 80 lakh to Rs 1.5 crore. The break-even is less than two years, compared to 6-7 years in the case of allopathic hospitals,” explains Vasudevan.

He also expects demand to increase in the future, considering that of the 40,000 patients treated by AyurVaid, a majority are below 35 years of age. Dhathri’s Sajikumar, who also runs a chain of ABS (Ayurveda, beauty and slimming) clinics apart from hospitals, agrees: “The profile of our customers is mainly young, and they prefer us because of the holistic ecosystem provided under Ayurveda when compared to the side-effects of drugs or surgical procedures in modern medicine.”

The Bestseller List
Drugs of herbal origin are also selling well. The pioneers in this initiative are the 82-year-old Himalaya Healthcare of Bangalore and the 66-year-old Charak of Mumbai. Himalaya sells some 55 drugs and 250-plus consumer products through the same distribution channels and medical stores as allopathic drugs. It also has 120 exclusive retail outlets to sell its products.

“Our allopathic doctors are aware of the standardisation efforts, stringent quality and clinical trials we undertake to ensure safety and efficacy of our products, and they are not reluctant to prescribe our drugs,” says Philipe Haydon, CEO of Himalaya Healthcare.

Himalaya’s flagship brand — the hepato-protective drug Liv-52 — is now a Rs 170-crore brand and ranks as the seventh largest selling drug in India. Haydon says the drug is growing at a 20 per cent CAGR for the past five years. Himalaya, which has grown at a CAGR of 25 per cent over the same period, is also among the top 35 pharmaceutical companies in the country in terms of sales.

Traditional Ayurvedic firms are also looking at newer marketing avenues for growth. The 111-year-old Kottakkal Arya Vaidya Sala in Kerala recently tied up with the public sector company, HLL Lifecare, to sell some of its drugs and over-the-counter products through the latter’s distribution channels across India.

Statistics & Status
On paper, the Ayush ecosystem appears more impressive than its allopathic counterpart. A Planning Commission note says there are 7.85 lakh registered practitioners, 3,277 hospitals, 24,289 dispensaries and a bed strength of 62,649 in government and government-aided facilities. As against this, the Indian Medical Association has only 2.15 lakh doctors as its members.

S. Sajikumar, Founder and MD of Dhathri Ayurveda

Moreover, there are about 350 medical colleges for the Ayush sector — that’s higher than the number of modern medical colleges. However, all six Ayush systems only produce 2,400 postgraduates a year. Ditto for paramedical colleges. At present, there are only five independent universities and half a dozen health sciences universities across Ayush streams. Also, the Ayush market — at less than Rs 5,000 crore — is a minuscule part of the overall domestic drugs market estimated at Rs 72,000 crore.

Gangadharan notes that out of the 10,000 ISM units in the country, around 9,000 are from the Ayurveda sector. Of these, most are in the unorganised sector, with just 10-15 firms having a turnover of over Rs 100 crore. While Kerala has some 900 Ayurveda manufacturing units, the revenues of even its largest facility — the Kottakkal Arya Vaidya Sala — do not cross Rs 200-Rs 250 crore a year.

Another anomaly is in the usage of herbs, the key ingredient of all ISM medicines. India has the richest medicinal plant wealth in the world, with more than 6,000 varieties of medicinal plants (around 2,400 plant species are recognised by ISM practitioners; whereas, some 4,000 species are used in tribal traditions). The world herbal market (which in addition to the herbal medicine market also comprises raw herbs and roots) is estimated to be $62 billion, of which China’s share is $19 billion; India’s share is just $1 billion, according to Pharmexcil data. 

But the clinical validation and standardisation (the process of developing and implementing technical standards) of drugs using these herbs — which is very important to prove the safety and efficacy of these drugs to the world — is still in its nascent stages. In the past five years, India has published pharmacopeial standards and Standard Operating Procedures (SOP) for only 152 ayurvedic formulations, and pharmacopeial monographs of 101 single plant drugs and 21 minerals, according to government data.

Official Thrust
On Ayush, the government is putting its money where its mouth is. To ease the funds crunch in ISM, it has increased the approved outlay for the Department of Ayush from Rs 775 crore in the 10th Plan to over Rs 6,000 crore under the 12th Plan. Funds allocated for R&D in the sector have also been increased from Rs 800 crore in the previous plan to Rs 4,446.50 crore in the 12th Plan. There is also a proposal to provide common facilities for Ayush cluster units with an outlay of more than Rs 1,000 crore. Other suggestions include setting up of national institutes for various Ayush streams, setting up a separate national drug controller and mainstreaming the healing traditions through the AyurGram project and National Rural Health Mission. With ISM going mainstream, and with ever-increasing converts, its future appears bright.


(This story was published in BW | Businessworld Issue Dated 15-07-2013)

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