Professional Documents
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Healthcare Sector in India
Healthcare Sector in India
PGDM (RM) K. J. Somaiya Institute of Management & Studies Vidyanagar, Mumbai- 400077
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Group Members 1) Divya Kumar(21) 2) Ansu Grover(12) 3) Honey(28) 4) Nishant Chhabra(6) 5) Sushant Kumar Suman(46) 6) Alok Kumar (20)
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Index
Introduction 1. Overview of the Indian Healthcare Sector 2. Segments in Healthcare Sector 3. Medical Infrastructurea. Current state b. Special Economic Zone c. Manpower Statistics d. Medical Education 4. Policy Initiative 5. Key trends and Drivers a. Shift to lifestyle related disease to drive higher healthcare spends b. Growing Middle class and Patient Preferences c. Awareness towards Preventive healthcare d. Increased life expectancy and an aging population e. Overburdened health infrastructure & high costs in the west f. Indias value proposition goes far beyond cost; quality second to none 6. Holistic well being -Blend of Modern and Traditional Medicine a. Wellness centers-As centre of Holistic well being b. Services Offered in Wellness Centers 7. Quality Driven approach: Accreditations a. International Accreditation Bodies Present in India b. Accreditation bodies of India- NABH 8. Health Cities: The Evolving Concept of Healthcare in India
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9. Hospotels-An Emerging Novel Concept 10. Health Insurance: Current and Future Scenario 11. Path labs 12. Impelling Technology 13. Biotechnology 14. Reverse in Brain Drain 15. Mergers and Acquisitions 16. Key Players in the Sector 17. New Entrants/Key Foreign Players 18. Medical Infrastructure Development 19. Status of Private Investment in Indias Healthcare Sector 20. Telemedicine 21. Medical equipment 22. Insurance 23. Medical value Travel 24. Hospitals Planning and Controlling 25. Medical Textiles and Clinical Trials 26. Healthcare Outsourcing 27. Challenges to Private Investors 28. Challenges 29. Concluding Thoughts
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Introduction
Objective: - To analyze the business potential and study the major brands in the health-care sector in India. Research Design: - Descriptive research Sampling Design: - convenience sampling Data collection technique: - Internet, Journals, Newspaper and associations
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Given the growing demand, the emergence of reputed private players, and the huge investment needs in the healthcare sector, in recent years, there has been growing interest among foreign players and non resident Indians to enter the Indian healthcare market. There is also growing interest among domestic and international financial institutions, private equity funds, venture capitalists, and banks to explore investment opportunities across a wide range of segments. This study examines the status and the major brands in the key segments of the healthcare sector, i.e., in hospitals. It also analyses the implications for the overall healthcare system.
2012 100%=$78.6 bn Infrastructure Medical Equipment Bed Revenues Pharmaceuticals Health Insurance Health Outsourcing Medical Value Travel Independent Path Laboratories 14% 5% 36% 16% 5% 9% 2% 3%
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1% 3% 1% 6%
1% 3% 1% 5%
Source: The Business World, Ernst & Young Survey; June 2007
Share of tertiary care in the total healthcare market is around 1520%. Market for tertiary care expected to grow at a faster rate, due to rise in complex in-patient ailments such as heart diseases and cancer.
3. Medical infrastructure
A. Current state
Current Hospital beds per 1000 population stands at 1.11 Most private hospitals operate as a proprietorship or partnership business Corporate Hospitals account for approximately 10% of the total private ownership
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Use of technologically advanced diagnostic equipments and excellent infrastructure are making India a medical value travel hub
C. Manpower Statistics
Number of Doctors - 660,801 Number of Nurses - 1,371,121
D. Medical Education
229 recognized medical colleges of which 106 were established through the private route 25,000 medical graduates pass out each year 136 medical schools admit more than 6,000 PG trainees in their programs
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4. Policy Initiative
National Health Policy-2002 The National Health Policy 2002 focuses on the need for enhanced funding and organisational restructuring of the national public health initiatives in order to facilitate more equitable access to health facilities. The focus is on those diseases that are principally contributing to the disease burden - TB, Malaria and Blindness from the category of historical diseases and HIV/AIDS from the category of newly emerging diseases. Identification of specific programmes targeted at womens health and strengthening of food and drug administration, in terms of both laboratory facilities and technical expertise. Greater contribution from the Central Budget for the delivery of public health services at the state level.
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average realisation per inpatient for cardiac related treatment is much higher than for other disease segments. Hospitalisation Cases, 2006
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F. Indias value proposition goes far beyond cost; quality second to none
Cost is not the only factor weighing in Indias favour. Escorts Hospital, for instance, is one of the only handful treatment facilities worldwide that specialise in robotic surgery. The death rate of coronary bypass patients at Escorts is 0.8 per cent. By contrast, the 1999 death rate for the same procedure at New York-Presbyterian Hospital was 2.35 per cent, according to a 2002 study by the New York State Health Department. The overall success rate of cardiac bypasses is 98.7 per cent in India, as opposed to only 97.5 per cent in the United States.
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The
Evolving
Concept
of
Major corporate hospital groups in India are making significant investments in setting up state-of-the-art Health Cities in major Indian cities. Around 15-20 Health Cities are expected to come up in India in the next 5 years. Health Cities are looking at catering to larger populations by offering facilities such as hotels, residential facilities, and recreational facilities of spa, gym and even golf courses. Greater emphasis is on education, research and development.
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Health City Dr Naresh Trehans MediCity, Gurgaon Fortis MediCity, Gurgaon Fortis MediCity, Lucknow Apollo Health City, Hyderabad Nagpur Health City, Nagpur Chennai Health City, (Global Group) Bangal Health city, Durgapur Narayana Health City, Bangalore
No of Beds 1,600
Area(acre) 93
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restaurant chains are actively getting into opening food outlets at hospitals Food Majors Looking at Hospitals for their Outlets Hospital Indraprastha Apollo Hospital, Delhi Max Healthcare, Gurgaon Max Heart And Institute, Delhi Ganga Ram Hospital, Delhi Food major in Campus Nathu's Caf Coffee Day outlet Subway Outlet Chopsticks Express Outlet
Insurance:
Current
and
Future
Revenue attributable to insurance or Third Party Administrators (TPAs) has grown from 2% in 2001-02 to 16% in 2005-06. Total credit billing has increased to 32% in 2005-06 and it is further likely to increase to 50% by 2011-2012. Domestic health policy premiums have shown a 47% increase in the first quarter of 2006. The number of policies issued as Mediclaims, ESIS, and CGHS are 4,631,534; 8,400,000 and 1,040,000 respectively. Voluntary health insurance market, estimated at US$ 86.3 million currently, is growing fast. Total medical insurance premium income to grow to US$ 3.8 billion by 2012. Over 80 % of private health insurance is concentrated with four leading players ICICI Lombard, Bajaj Allianz, Royal Sundaram and Iffco Tokio
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process of developing national networks - such as Dr. Lals Pathlabs, Metropolis, SRL Ranbaxy, Thyrocare, and Nicholas Piramal. Most renowned path labs are expanding regionally and foraying into the international markets as well. For instance, SRL Ranbaxy Ltd has signed outsourcing contracts with several UK hospitals to provide pathological services. The Group with 17 labs, 550 collection centres distributed in 350 towns across the country and seven franchisee labs is looking for both franchisees and acquisitions in all the major cities of the country. Metropolis Health Services too plans to increase its collection centres and franchisee systems. It currently has 13 laboratories in India and plan to open at least another 9 labs by the end of next year.
13. Biotechnology
Indian companies are driven to innovative research and are establishing their own niche areas: Reliance Life Sciences is planning to launch genetically engineered skin; Avesthagen has won a US patent for multiple use genetic modification technology; GlaxoSmithKline Biologicals has plans to launch a number of vaccines like new-generation DTP, rotavirus and cervical cancer for its global portfolio. Similarly, Xcyton, a small biotech diagnostic kit-maker has made its presence felt in the global and domestic diagnostics market. Several biotech medicines are due to come off patent in the next few years, and pharmacy majors are looking at India for contracting research and manufacturing of biologic generics. India is becoming a talented and cost- competitive destination for biotechnology research, product development, toxicity studies and clinical
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trials and has positioned itself to take advantage of moves by governments in the US and Europe to create a regulatory framework for approving generic medicine.
Brand Name
Apollo hospitals
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Over 60 -
Retail Pharmacy- Direct access to Patients, low capital requirement for hospital pharmacies, higher bargaining power with pharmacy companies. Access to huge medical network; helps expand reach and achieve growth Access to patients, medical network, and claim processing
Caters to health Information needs of U.S. based Physician groups and hospitals
Fortis Healthcare
Has a chain of hospitals with an installed bed capacity of about 1,790 beds Operations across North India - Delhi, Noida, Mohali, Amritsar, Faridabad, Raipur and Srinagar Expansion plans through mergers and acquisitions Has a joint venture with Real Estate player DLF to set up hospitals across the country with an investment of about US$ 1.5 billion
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Owns a pharmacy chain by the name of Fortis Health world and plans to open 250 outlets with an investment of US$ 195 million all over India Has announced the signing of a definitive agreement (the pre-IPO) for allotment of 670,000 equity shares to VASCO Inc. for an investment amount of US$ 2.6 million
Wockhardt Hospitals
8 hospitals across India, of which 5 are owned Total bed size of the group is 1,390. Has tie-ups and association with Harvard Medical International: USA, Blue Cross and Blue Shield: USA, Bupa: U.K., AEA International: Singapore and others. Plans to build 15 new multi speciality hospitals in Tier-II cities in the country. Public-Private Partnership with the Government of Gujarat to manage the 275-bed Palanpur Civil General Hospital in Gujarat Company plans an IPO by the end of this year
Narayana Hrudayalaya
First-of-its-kind cardiac care hospital in Bangalore, set up by the Asia Heart Foundation (AHF)
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Capability to perform 25 major heart surgeries and over 20 cardiac catheterisations a day Hub for telecardiology networks with a Joint Venture between the Governments of seven hill states and West Bengal, Karnataka Health Systems and ISRO A 5,000-bed Health City is coming up at, Bangalore, which will comprise of 10 hospitals
Max Healthcare
MHC operates 8 healthcare centres in the National Capital Region (NCR) Bed capacity of around 765 beds and is expected to increase to 1,500 -1,600 beds in the next few years Collaborated with Singapore General Hospital in the areas of medical practices, nursing, paramedical research and training Plans to raise US$ 85.36 - 97.56 million to expand its hospital chain
Columbia Asia
First healthcare provider to enter through the FDI route Opened the first community healthcare multi-specialty facility at Bangalore Planning to invest US$ 15. 85 million to set up more hospitals in Bangalore Tied-up with GE, to collaborate on a number of initiatives for creating a medical Institute of world-class standards
Global Hospitals
The US$ 9.75 million facility functions from 2 locations in Hyderabad Invested US$ 36.58 million to set up BGS Global Hospital in Bangalore Tied up with the Sureka Group, to set up a 300-bed transplantation and tertiary care centre in Kolkata Planning to establish a US$ 240 million health city in Chennai on the 46-acre hospital site
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Foreign Players
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Harvard Medical International and Cleveland Clinic have entered the country through joint ventures Pacific Healthcare Holding has opened their first hospital in Hyderabad Parkway Group from Singapore, Emaar from the Middle East and Prexeus Health Partners from the US have announced plans
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Investment
in
Indias
Growth in private investment in various forms Private equity, acquisitions, FDI, FII, NRI investment, joint ventures, tieups, Venture Capital, IPOs Segments attracting private investment include diagnostic chains, medical device manufactures, and hospital chains Significant growth in Private Equity (PE) investments in Indias healthcare sector Over $448 million in PE investment in 2008. Expected investments of $5 billion between 2008 and 2011
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Recent PE Funding Deals in Healthcare Warburg Pincus total investment in Max Healthcare stands at US$ 34.15 million George Soros fund Quantum and Blue Ridge bought 10 % in Fortis Healthcare Manipal Health Systems Private Limited has risen over US$ 20 million of equity from IDFC Private Equity Fund Bangalore-based HealthCare Global Enterprises Limited (HCG) has risen over US$ 10 million in equity from IDFC Private Equity Fund Metropolis Health Services Ltd. (Metropolis), Indias leading corporate diagnostics chain, raised over US$ 8 million in equity from India Advantage Fund-I managed by ICICI Venture Capital.
20. Telemedicine
Opportunities to integrate telemedicine into healthcare to increase patient base, productivity, and enable cost effective delivery Investment opportunities for setting up telemedicine centres within hospitals, create networks of hospitals and clinics in different parts of the country Medical education, training, research Opportunities due to shortage of trained personnel- doctors, nurses, technicians, healthcare administrators 1.27 doctors (all kinds) and 0.5 doctors (allopathic) per thousand persons in India compared to world average of 1.5 (2006) 0.9 nurses per thousand persons compared to world average of 1.2 (2006) Possible shortage of over 450,000 doctors by 2012 Private players could invest in establishment of medical colleges and training institutes
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4.97 billion (Rs 22,396 Cr) by 2012 Currently over 65% of the medical equipments are imported and thus is a key area for forging partnerships across borders. Engineering excellence, cost-effective labour, increasing emphasis on intellectual property rights and most importantly a fast growing domestic market makes India an ideal manufacturing base.
As bulk of medical equipment is currently imported in India, opportunities for: Foreign companies to set up manufacturing base (Philips, GE, and Siemens) Joint ventures and licensing agreements between Indian and foreign companies (Wipro-GE) Outsourcing engineering design and skilled services for medical equipment manufacturing and testing to Indian companies
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While the global orders will be placed through Siemens, it will be serviced out of India once the regulatory approvals are in place. The Goa plant will now operate as a global production hub. The facility will export products to about 30 countries and is targeting export growth of about 45-50 per cent. Siemens currently exports four models from India and will increase the product portfolio to 8-10 models by the end of next fiscal. The main focus will be on X-ray systems and it will also undertake all global R&D activities for this product segment in this unit. The companys medical solutions division currently generates sales of about US$ 111.1 million for it in India.
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The Ministry of Tourism (MOT), Government of India has further enhanced the Mvisa and MXvisa (Medical Visa) by extending it to three years from 6 months
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Major hospital chains are now hiring hospital planning consultancy firms for a better and faster scale up of their facilities Established firms provide services ranging from a one stop solution; new and emerging players prefer to work on few specialised areas Need for a statutory body to monitor hospital planning firms Key Hospital Planning Consulting Firms In India Hosmac, Mumbai Medicontrivers India Pvt. Ltd, Mumbai Ace Vision Health Consultant Pvt. Ltd, Jaipur Professional Health Planners, New Delhi Hospic, Mumbai H-PAMCO, New Delhi KSA Technopak, New Delhi NOUS Hospital Consultancy (P) Ltd, New Delhi Apollo Hospital Enterprise Ltd, Chennai Total Hospital Solutions, Jaipur Dr. Kamles Prescription
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National Centre for Clinical Trials has been established at Tata Memorial Hospital A Clinical Research in Cancer (TMC) is one of the avowed objectives of the Tata Memorial Centre and Department of Atomic Energy (DAE) funded cancer centres (DAEFCC)
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- Teleradiology - Medical Transcription - Patient Record Management and EMR (Electronic Medical Record)
Findings hospitals
on
foreign
investment
in
Indian
Regulatory environment very liberal for foreign investment in hospitals Since January 2000 up to 100 percent FDI allowed under automatic route in hospitals in India
Regulatory environment for other forms of foreign financing quite liberal FIIs and private equity funding permitted under FDI, with certain conditions FIIs and private equity funds can individually purchase up to 10% and collectively up to 24% of paid up share capital of company via open offers or private placement or through stock exchange Proprietary funds, foreign individuals, foreign corporate can register as sub account and invest via FII subject to 10% and 5% limits Foreign venture capital investments also allowed
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Non-debt based foreign financing present via: Private equity (funds) with stakes of 15-26% Development agencies Investment arms of foreign government Around 50% of financing via long term domestic borrowing
28. Challenges
External constraints
Healthcare undergoing reform and internal problems in overseas economies. Number of potential players who could invest is limited. Requirement of localized and in-depth knowledge of host country market. Difficulties in setting up individually as an overseas investor Difficulties in establishing and maintaining joint ventures Competing destinations Lower attractiveness of India as an investment destination due to perceptions of red-tape, lack of policy clarity, lack of transparency, and problems of efficiency
Domestic constraints
Initial and post establishment related operational issues adversely affect returns to investment in hospitals in India Features of investment make it unattractive for foreign investment High cost of setting up hospitals and capital intensity Land, equipment Long gestation period of such investment Relatively low returns on such investment Low asset turnover (below 1 or 2 for major hospitals)
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Profits of 13% or less after several years Depreciation of assets High interest costs of debt financing Margins squeezed by very high operating costs
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