Pre- Session Note Submission - 2

Business, Government & Society

Submitted to:
Prof. M S Sriram

Submitted by:
Samarth Yadav (2011144)
Section – B
Novartis, with its Arogya Parivar program, created its network of professionals that not only
guided the unaware rural population about the most commonly prevalent diseases but also
leveraged it for making the drugs available for this section of society. However, the poor urban
section was not made a part for various reasons. Firstly, the urban poor lacked time to visit any
consultation as most were daily wage workers, and any session with a physiologist meant losing
on that. Second, making provision for health facilities was costlier in urban centres than in rural
centres. And lastly, an infrastructure already existed in urban areas, whereas the same was
lacking in rural areas. So for a business, it only made sense to tap an untapped market.

As Novartis assumes that the government has the infrastructure and the budget for the
healthcare needs of the urban poor, the interests of the government and Novartis converge to
serve the needy with healthcare services. The benefits to the business not only include more
sales in lesser time(that lets them recover their R&D costs much faster) but also entitles it to
an image of a company that cares(through its CSR and other initiatives, profit maximisation
takes a back seat). However, the assumption taken may prove to be a fatal one. From the
government’s point of view, such programs are a blessing in disguise given that GoI’s spending
on public health care has always been low (In 2018-19, India’s spending on the health sector
was 1.5% of GDP)1. With their on-going programs such as Ayushman Bharat, Anganwadi’s
and several others that focus on a single disease, Arogya Parivar not only solves the problem
of awareness but also establishes a network of the supply chain. If the two can integrate to work
together, it can form a win-win situation for both. With not so favourable patent laws, this can
prove to be an opportunity to attract more and more pharma companies to invest in India

For the urban poor, the combination of the above two can work in great favour. As Novartis
handles the supply chain and awareness campaigns, the procurement and distribution
costs(purchase cost, making them available free of charge) can now be managed through
government expenditure without increasing their total allocation from the budget. The public
only has benefits. However, the issue can persist as Novartis finds problems with smaller and
repackaging drugs into smaller doses and its negotiation with the government. This poses a
problem and creates a marketplace for the competition where every pharma company would
want to collaborate with the government to expand its sales, as they have nothing to lose, and
the whole essence of public service by a private entity would be lost.

The larger implication for the government is the loss of trust by the people and also a road
towards privatisation of public healthcare services. This just goes on to infer acceptance of
inefficiency crippling the public healthcare system, although the convergence most likely
seems to be beneficial to the public. However, this also means that the qualified or trained on
the job health care workers say Anganwadi or district primary health centres start to lose out
on their job. The existing awareness infrastructure would require a comprehensive merger with
that of the private entity.

As such, it is assumed for a socialist government to provide essential public health services,
and collaboration with a pharmaceutical company may not be a bad idea if it proves to be
efficient. But a proper check needs to be kept in place as to where the firm changes its strategy
of public service to profit maximisation (as it having its vested interest in providing it). The
government can also create a system of checks and balances and not make a monopoly of one
firm by utilising many firms based on different geographies to ensure competitiveness. These

1https://www.thehindu.com/news/national/indias-overall-spending-on-health-sector-low-says-niti-aayog-
member/article33132569.ece
contracts can be short-termed and approved for the next terms based on improvements in public
health figures. Another check that would be required is the prevention from lobbying and
corruption in these mergers. With its own set of complications, if planned and executed
correctly, the convergence seems to be fruitful in future.