Hospital Market in India

March 2014

Executive Summary
Market
Overview

Drivers &
Challenges

Key Trends

Competitive
Landscape

 The hospital market in India was valued at INR X1 units in 20-- and is expected to reach INR X7
units by 20- The sector is divided primarily into public and private hospitals, along with NGO operated
hospitals
 Constantly rising population results in perennial shortage of hospital beds in India

Drivers:

Challenges:

 Shortage in Number of Hospital Beds
 Increasing Lifestyle Diseases
 Surge in Medical Tourism
 Government Initiatives Propelling
Investment
 Growing Target Hospitalization Population
Group
 Growing Health Insurance Market
 Rising Disposable Income

 Shortage of Medical Professionals
 Lack of Investment in IT Infrastructure
 Shortage of FDI Inflow in Indian
Hospitals

 Specialty Clinics
 Glocal Healthcare Systems

 Hospital Mobile Applications
 Hospital Information Centre

 Luxury Offerings
 Diversified Business Approach

Key Players
Player A

Player B

Player C

Player D

Player E

Player F

HOSPITAL MARKET IN INDIA 2014.PPT

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•Economic Indicators •Indian Healthcare Scenario •Introduction •Market Overview •Drivers & Challenges •IT Adoption •Role of Government •Key Trends •Key Initiatives •Competitive Landscape •Trade Fairs & Events •Recent Transactions •Strategic Insights •Appendix HOSPITAL MARKET IN INDIA 2014.PPT 3 .

Jul 2013 Jul 2013 .5 1.-- Q3 20-.SAMPLE Economic Indicators (1/3) GDP at Factor Cost: Quarterly INR tn 15 13 p1 o1 n1 12 m1 14 14.26 0.83 0.Oct 2013 MEDICAL DEVICES MARKET IN INDIA 2014.-- Q1 20-.PPT Oct 2013 ..-- 20-.0 Jun 2013 .Nov 2013 4 .-- Q4 Inflation Rate: Monthly % 2.0 0.0 1.85 1.73 1..5 0..71 n4 m4 o3 n3 m3 p2 o2 n2 m2 11 Q2 20-.42 0.Sep 2013 Sep 2013 .Aug 2013 Aug 2013 ..

2% of India’s GDP in 2008  Public and private expenditure on healthcare as percentage of GDP was 1. is benefiting Indian medical tourism which has. health insurance and diagnostics • Gradual penetration of health insurance is making health services more affordable through increased demand for preventive and curative healthcare services • Superior quality healthcare. coupled with low treatment costs in comparison to other countries. increase in awareness levels and better medical care are some of the driving factors behind the healthcare sector in India • Hospitals form the largest segment of overall healthcare market.4% and 2. enhanced the prospects of the Indian healthcare market  Treatment for major surgeries in India costs approximately 20% of that in developed countries INR units 15 H% 10 5 h1 h2 h3 2012 2013e 2014e h4 2015e h5 h6 h7 0 2016e 2017e 2018e Healthcare Market Segmentation: Overview F% D% E% C% A% B% A C E B D F Note: ‘Others’ include healthcare IT and allied activities in healthcare space MEDICAL DEVICES MARKET IN INDIA 2014. India”. followed by pharmaceuticals. healthcare comprised 4.8% respectively • Favorable demographics. in turn.Healthcare system in India requires a larger public outlay due to huge population base Healthcare Industry Overview Healthcare Sector – Market Size & Growth • According to “World Health Statistics 2011 Report. medical devices.PPT 5 .

PPT 6 .Hospitals can be classified on grounds of ownership and clinical operation Classification of Hospitals Ownership Basis Public Hospitals Clinical Basis Run by Central Government. State Government and local bodies Private Hospitals Run by Central Government. State Government and local bodies Corporate Hospitals Public limited companies formed under Companies Act run commercially and are likely to operate chain of hospitals Voluntary Hospitals Functions with public or private funds on a non-commercial basis General Hospitals Hospitals staffed by at least two medical officers that provide in-patient accommodation and medical care for more than one category of medical discipline Specialized Hospitals Provide medical attention for one discipline and are administratively attached to a general hospital Isolation Hospitals Hospitals dedicated to the care of persons suffering from infectious diseases Tertiary Hospitals State and Central government hospitals established in respective state capitals Teaching Hospitals A hospital to which a college is attached for medical/dental education Rural Hospitals Located in rural areas permanently staffed by at least one physician that provides in-patient accommodation and medical care for more than one category of medical discipline HOSPITAL MARKET IN INDIA 2014.

constantly developing to provide world class services Market Overview (1/2) Market Size and Growth – Private Hospitals • Hospitals are a major component of the Indian healthcare industry generating more than 50% of total healthcare sector’s revenue • Hospital sector can be classified into two types.PPT 7 . namely public and private  There are ~a private hospitals and ~b public hospitals across the country • Potential growth prospect of Indian healthcare industry is attracting many foreign companies that are willing to invest or establish base in India  There is a growing trend to tap the high potential tier II and tier III cities INR units X7 6 5 X% 4 X4 3 2 X5 X2 X1  Indian healthcare scenario is dominated by the private sector catering to almost 80% of overall patient population  Hospital beds are segmented in 60:40 ratio between private and public hospitals X3 1 0 20-- 20--e 20--e 20--e 20--e 20--e 20--e Healthcare Delivery Distribution  A trend of growth in specialty and multi specialty hospitals in the country has also been observed • Indian healthcare delivery distribution network exhibits a skewed pattern with private sector ruling the roost X6 Urban Most concentrated healthcare facilities Presence of mostly unorganized Semi Urban players providing sub-optimal care at higher cost to patients • Almost 70% of population reside in areas that have a 15% share of healthcare Rural resources • Limited healthcare facilities eventually lead to rural urban migration for treatment HOSPITAL MARKET IN INDIA 2014.Hospitals comprise the most crucial aspect of healthcare sector.

PPT 8 .Drivers & Challenges – Summary Drivers Shortage in Number of Hospital Beds Increasing Lifestyle Diseases Challenges Surge in Medical Tourism Healthcare Infrastructure Gaps Government Initiatives Propelling Investment Lack of Investment in IT Infrastructure Growing Target Hospitalization Population Group Shortage of FDI Inflow in Indian Hospitals Growing Health Insurance Market Rising Disposable Income HOSPITAL MARKET IN INDIA 2014.

Slow progression of IT adoption in hospitals with only high end corporate hospitals… IT Adoption in Indian Healthcare IT Adoption – Market Size & Growth • Emergence of new corporate hospitals is popularizing IT adoption with integrated enterprise resource planning (ERP) and hospital information systems (HIS) • Indian Health IT market is fragmented with offerings from small to medium players and a few enterprise players • Huge cost involvement has led to hospitals adopting only hospital management modules and not venturing into clinical aspects of hospital automation INR units 40 a6 35 A% 30 a4 25 20 15 a5 a2 a1 a3 10 5 0 20-- Strengths of Indian Healthcare IT 20--e 20--e 20--e 20--e 20--e Weaknesses of Indian Healthcare IT • Business streamlining and patient administration are the biggest benefits of IT adoption in hospitals • IT leveraging and sharing data on cloud helps in saving infrastructure and manpower to a great extent • High growth opportunity of IT services in healthcare sector with majority of hospitals awaiting IT adoption • Growing number of corporate hospitals and their number of branches • Corporate entities setting up state-of-the-art hospitals • Poor IT budget and cost pressures de-motivate large scale IT adoption • Lack of adequate regulatory controls for automation of Indian hospitals • Lack of awareness also adversely impacts IT adoption in hospitals • Unavailability of any full time IT personnel in hospitals results in absence of initiatives towards IT adoption HOSPITAL MARKET IN INDIA 2014.PPT 9 .

SAMPLE Role of Government: Summary Budgetary Allocation Role of Government Public Private Partnerships (PPPs) Financial Incentives HOSPITAL MARKET IN INDIA 2014.PPT 10 .

PPT 11 .SAMPLE Key Trends – Summary Specialty Clinics Diversified Business Approach Glocal Healthcare Systems Key Trends Luxury Offerings Hospital Mobile Applications Hospital Information Centre HOSPITAL MARKET IN INDIA 2014.

SAMPLE Key Initiatives – Summary Health Cities Key Initiatives Telemedicine Mobile Hospitals HOSPITAL MARKET IN INDIA 2014.PPT 12 .

Competitive Benchmarking (2/5) Key Ratios of 3 Major Companies – Operational Basis (FY 20-----) (1/4) Gross Margin (%) % 60 Operating Margin Net Margin a2 a1 40 20 b1 a3 b2 c1 c2 0 Player A Player B b3 c3 Player C • Player A recorded gross margin of a1% higher than both Player B and Player C which recorded gross margins of b1% and c1% respectively • Player A recorded operating margin of a2%.PPT 13 . higher than both Player B and Player C which recorded operating margins of b2% and c2% respectively • Player A recorded net margin of a3% higher than both Player B and Player C which recorded net margin. of b3% and c3% respectively Note: Calculation on basis of figures for latest available financial years MEDICAL DEVICES MARKET IN INDIA 2014.

xx Website xx Year of Incorporation xx Ticker Symbol xx Stock Exchange xx Offices and Centres – India Thane Products and Services Head Office Category Products/Services Healthcare Equipment and Supplies Manufactures and sells sterile needled sutures such as absorbable . disposable skin stapler.PPT Designation 14 . non absorbable sutures. female urinary incontinency set. cardiovascular vessel knife Key People Name MEDICAL DEVICES MARKET IN INDIA 2014. xx Fax No.SAMPLE Public: Domestic Company – Player A (1/4) Company Information Corporate Address xx Tel No. surgical mesh.

93 24.25% -0.45% 74.22 1.32% 25.66 0. an increase of 10.87 4.62 1.PPT Decline 15 .87 0 20 0 -20 2010 2011 Financial Summary 2013 2012 • The company earned a net profit of INR 15.80 2.66% 2.94% -0. registering an increase of 3.72 0.58% 0.38 502.75% 42.81% -0.27 1.87% 28.32 1.39 1.69% 9.40 -8.21 -8.26% 84.43 92.52% 0.20 8.09 524.48% 7.52 1.02% 37.41 0.48% 11.40 0. a decrease of 0.87% 1.08 10.76 9.46 7.87% 4.15% 8.55% 0.00% 21.94% 9.69% 40.98 83.30% 1.03 0.14% 3.06 per cent over FY 20-• The company earned an operating margin of 7.30% 1.77 Efficiency Ratios Fixed Asset Turnover Asset Turnover Current Asset Turnover Working Capital Turnover Capital Employed Turnover 4.72 in FY 20--.48 9.85% 91.77% 4.99 Improved MEDICAL DEVICES MARKET IN INDIA 2014.94 41.80 15.99% 1.59% 1.45% 12.01 0.26 4.45 INR mn 15.09 mn in FY 20-• The company reported total income of INR 540.12 0.46 percentage points over FY 20-• The company reported debt to equity ratio of 0.70 0.82 Particulars y-o-y change (2011-10) 2013 2012 2011 2010 -0.02 Cost Ratios Operating costs (% of Sales) Administration costs (% of Sales) Interest costs (% of Sales) Liquidity Ratios Current Ratio Cash Ratio Leverage Ratios Debt to Equity Ratio Debt to Capital Ratio Interest Coverage Ratio 10.80% 6.09% Profitability Ratios Operating Margin Net Margin Profit Before Tax Margin Return on Equity Return on Capital Employed Return on Working Capital Return on Assets Return on Fixed Assets 0.63% 0.49% 14.74 mn in FY 20--.80% 35.08% 1.71% 10.58 per cent over FY 20-- Financial Summary Indicators Value (22/01/2014) Market Capitalization (INR) 167.05% -1.60 10.03 4.SAMPLE Public: Domestic Company – Player A (2/4) Financial Snapshot Total Income INR mn 600 400 200 Key Ratios Net Profit / Loss 40 20.21 -7.42 247.01% 9.24 5.89% 2. as compared to net profit of INR 15.74 540.43 2.06 1.47% 25.13 1.79 15.41% 38.52% 9.62 1.62 3.49 -23.71% 3.39% 4.32 19.70 -9.19% -3.00% 3.87 in FY 20--.42 0.00 2.14% 0.51 2.92% 0.02 2.60% -2.48% 92.91% 0.24% 98.50 476.31 3.06% 90.95 6.17 1.48 per cent in FY 20-.

titanium haemostatic clip for cardiovascular surgery. procedure and production environment control and staff training • Product profile includes absorbable sutures . surgical mesh.0% 40% 20% 0% Player A has been operating solely in the medical devices & surgical sutures segment over the last five years 2013 India 100% 80% 60% 40% 20% 0% 100. recall system.including natural sutures and synthetic sutures • Offers non absorbable sutures .0% Player A has been operating solely in India over the last five years 2013 Business Highlights Description Overview Details • Is an ISO 9001:2008 certified company • Introduced Good Manufacturing Practice in production and quality control areas .PPT 16 .including needles for cardiovascular surgery. skin stapler.Public: Domestic Company – Player A (3/4) Key Business Segments Key Geographic Segments Manufacturing and Selling of Medical Devices 100% 80% 60% 100.including detailed batch record maintenance. needle suture combinations Medical Equipment and Supplies Recent Activities and temporary pacemaker electrode • Provides medical devices such as female urinary incontinency set. disposable aortic punch for cardiovascular anastomosis and cardiovascular vessel knife • It has consolidated its position in cardiovascular sutures segment and expects to carry out further consolidation during 2013-14 MEDICAL DEVICES MARKET IN INDIA 2014.

PPT 17 .SAMPLE Public: Domestic Company – Player A – SWOT Analysis (4/4) •X •X S W O T •X •X MEDICAL DEVICES MARKET IN INDIA 2014.

Private: Domestic Company – Player B (1/5) Company Information Corporate Address xx Tel No. xx Website xx Year of Incorporation xx Head Office – India Products and Services Bengaluru Category Products/Services Healthcare Service s It offers treatment for a wide range of diseases through its latest medical services and technologies Head Office Key People Name HOSPITAL MARKET IN INDIA 2014. xx Fax No.PPT Designation 18 .

02% 2011 2012 Ownership structure corresponds to Date of AGM: xx/xx/20xx and xx/xx/20xx HOSPITAL MARKET IN INDIA 2014.98% 0. of Shares held Total X Ownership Structure Foreign holdings Directors or relatives of directors 99.98% 99.PPT 19 .Private: Domestic Company – Player B (2/5) Shareholders of the Company as on xx/xx/20xx Name No.02% 0.

9 per cent from FY 2011 Leverage Ratios • Earned an operating margin of 97.94% 405.38% 2.93 per cent over FY 2011 Current Ratio Cash Ratio Debt to Equity Ratio Debt to Capital Ratio Interest Coverage Ratio Efficiency Ratios Fixed Asset Turnover Asset Turnover Current Asset Turnover Working Capital Turnover Capital Employed Turnover Improved HOSPITAL MARKET IN INDIA 2014.43% 135. N.00% -37.65 0.5 mn in FY 2012.43% 7667.93% 0.3 40 5.00% Interest costs (% of Sales) 0.SAMPLE Private: Domestic Company – Player B (3/5) Financial Snapshot Total Income INR mn 2.4 mn in FY 2012.97 per cent in FY 2012.41 2.095.13% 68.73% 1.89 196.38% 0.41 97.03% 0.40 4.97% 99.41 percentage points over FY 2011 • The company reported a debt to equity ratio of 0.29% 0. a decrease of 1.00 0.88 1.65 in FY 2012.29% 1.93% 0.47 131.89 -16.53 1.36 93.00 0.000 Key Ratios 2012 Financial Summary Profitability Ratios Operating Margin Net Margin Profit Before Tax Margin Return on Equity Return on Capital Employed Return on Working Capital Return on Assets Return on Fixed Assets Cost Ratios • Company earned a net profit of INR 76. 91.60% 62.48 1. a decrease of 26.18 -26.69 188.3 0 0 -20 2011 y-o-y change (2012-11) 2012 2011 -1.A.33% 96.69 1919.000 4.29% 3.A.97% 99.PPT Decline 20 .18% 2.34 8072. as compared to net profit of INR 25.00% 0.78% 1.34 0.47 N.01% Operating costs (% of Sales) 1.06 1.41 97.4 20 3.31 1.000 INR mn 80 60 25.50% 99.66% 119.82% -1.43 254.49% 4.60 1.39 0.84 Particulars Net Profit / Loss 76.05% 82.00% 0. registering an increase of 90.A.29% 0.5 6.908.908.79 4.62% Administration costs (% of Sales) 0. N.71 -54.08 80.3 mn in FY 2011 Liquidity Ratios • It reported total income of INR 5.

dental medicine. general surgery. eye surgeries and LASIK and several others • Other services include anaesthesiology. nine secondary care and three primary care clinics across Bengaluru. cardiology. diabetes and endocrinology. dermatology. dental implantology. bone marrow transplants.SAMPLE Private: Domestic Company – Player B (4/5) Business Highlights Description Overview News • It has a network of five tertiary care. Mangalore. accident and emergency critical care. gastroenterology. Vishakapatnam and Goa Facilities • Its services include plastic and cosmetic surgery. cancer care. bariatric surgeries. Vijayawada. Salem. ENT. medical and numerous other specialties Accreditations • Group’s flagship hospital in Bangalore is NABH accredited and ranks among the Top 10 multispecialty hospitals in India HOSPITAL MARKET IN INDIA 2014. general medicine. maxillofacial surgery.PPT 21 .

SAMPLE Private: Domestic Company – Player B (4/5) •X •X S W O T •X •X HOSPITAL MARKET IN INDIA 2014.PPT 22 .

Appendix SAMPLE Ratio Calculations Ratio Calculations Operating Margin (Operating Income/Revenues)*100 Current Ratio Current Assets / Current Liabilities Net Margin (Net Profit / Revenues) *100 Cash Ratio Profit Before Tax Margin (Income Before Tax / Revenues *100 {(Cash & Bank Balance + Marketable Securities) / Current Liabilities)} Debt to Equity Total Liabilities / Shareholders Equity Debt to Capital Ratio {Total Debt / (Shareholders Equity + Total Debt)} Interest Coverage Ratio EBIT / Interest Expense Fixed Asset Turnover Sales / Fixed Assets Asset Turnover Sales / Total Assets Return on Equity (ROE) (Net Income / Shareholders Equity)*100 Return on Capital (ROCE) EBIT / (Total Assets – Current Liabilities)*100 Return on Working Capital (Net Income / Working Capital) *100 Return on Assets (Net Income / Total Assets)*100 Return on Fixed Assets (Net Income / Fixed Assets) *100 Operating Costs (% of Sales) (Operating Expenses / Sales) *100 Current Asset Turnover Sales / Current Assets Administration Costs (% of Sales) (Administrative Expenses / Sales) *100 Working Capital Turnover Sales / Working Capital Interest Costs (% of Sales) (Interest Expenses / Sales) *100 Capital Employed Turnover Sales / Shareholders Equity MEDICAL DEVICES MARKET IN INDIA 2014.PPT 23 .

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