HOSPITAL INDUSTRY

INDUSTRY COMPOSITION
HOSPITALS

HEALTHCARE

PHARMA
DIAGONOSTICS MEDICAL EQUIPMENTS MEDICAL INSURANCE

MEDICAL MEDICAL DIAGNOS TICS EQUIPME INSURAC 3% NT & E SUPPLIES 4% 9%

PHARMA CEUTICAL S 13%

HOSPITAL S 71%

CURRENT SCENARIO
Valued to be worth USD 40 Billion Highly fragment and dominated by top players Growing old age population, increasing lifestyle diseases combined with rising Income & affordability Expected to grow at 24.1% p.a. till 2020

Consistently growing GDP(%) 10 8 6 4 2 0 2000-01

Growth of Healthcare Industry

40 35 30 25
CAGR 9.3%

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

20
15 10 5 0 2000 2005 2008

Spending as % of gdp (2008)

16.0% 14.0% 12.0% 10.0% GDP 8.0% 6.0% 4.0% 2.0% 0.0%

15.2% 8.4% 8.7% 4.3%

USA Brazil UK China Country

8.3% 4.2%
India Global

Population Growth
India is the worlds second most populous country With a billion plus population the need for healthcare is universal for both Urban and Rural India. With an increasing incidence of life style diseases (approx. 33 percent of the total pie) and a growing geriatric and pediatric population, there is an emphasis on the need for specialty care

Total Population Growth

Indian Population Count (mn) 1,500 1,000
Significant population growth between 1970 - 2000

500
0
6

Break up
Neuro/ CNS 6% Derma 6% AntiDiabetic 5% Antiinfectives 21% 60 yrs & above

6 yrs & below

Gynaec 6%

Vitamins/ minerals/ Nutrients 10%

Gastrointestinal 13%
Pain/ Analgesic 10% Respirato ry 11% Cardiac 12% 15 - 59 yrs

7 - 14 yrs

Global comparison

 There has been a significant increase in public infrastructure over the years.
While in 1947 the number of hospital beds was 3.2 per 10,000, the present number of 9 per 10,000 is commendable, but still far behind that of other developing countries The governments share in the healthcare delivery market is only 20 percent. The current NHP aims to increase the government contribution to healthcare to touch 2 percent of the GDP by the end of the five year tenure, an increase from the present contribution of 0.9 percent. Government Initiatives like NRHM, NUHM and RSBY are working towards better healthcare for the poor.

Public Healthcare

Investment Policy Updates

Government initiatives in the public health sector have recorded some noteworthy successes over time with focus on investments related to better medical infrastructure, rural health facilities etc. 100 per cent FDI is permitted for health and medical services under the automatic route. The National Rural Health Mission (NHRM)s allocation has been proposed to be increased to US$ 3.72 billion in 2012-13 from US$ 3.23 billion in 2011-12. Source: Consolidated FDI Policy, DIPP

Private Healthcare
India has one of the highest private spending in healthcare as compared to other countries. Nearly 80% of the total spend. In India, Out of pocket spending is one of the highest, constituting 94% of the total spend in the private health industry.

Extensive landscape of private players with multi & super specialty hospitals, innovative rural models, and MediCities.
Increasing Private Equity investment into the sector, with an affinity towards innovative rural models and super specialty care. With Infrastructure status, 100% FDI under the automatic route, Service Tax exemption and Rural and Tier II hospitals exempt from Income Tax for 5 yrs, Private healthcare is on a high growth path.

Healthcare Services Associated Industries

Diagnostics & Pathology
8.0 3.0 2.5 USD bn USD bn 2.0 1.5 1.0 0.5 0.0 6.0 4.0 2.0 0.0 2006 2008 2012

Medical Equipment & Devices

2006

2008

2012

-2.0

Medical Tourism
1.2 1.0 USD bn USD bn 0.8 0.6 0.4 0.2 0.0 2006 2008 2012

Private Health Insurance

3.5
3.0 2.5 2.0 1.5 1.0 0.5 0.0 2006 2008 2012

Healthcare Industry in India in 2012

80 70 60 Insurance Medical Tourism Hospitals Medical Equipment Diagnostics

50
USD Bn 40 30 20 10 0 Insurance Medical Equipment Medical Tourism Diagnostics Hospitals 2006 0.49 0.18 0.35 0.83 19.15 2008 1 0.4 0.5 1.2 27.4 2010 (P) 1.9 4.8 0.7 1.7 32.9 2012 (P) 3 6.7 1 2.5 54.5

HOSPITAL INDUSTRY
Hospitals Type of Services
Primary Care Secondary Care Tertiary Care Quaternary Care

Complexity of Ailment

Ownership

Growth Drivers
Economic Growth Availability of Insurance

Regulatory Support

GROWTH
Available Skilled Manpower Changing Population Demographics

Multiplicity of Disease Profile

flow
Growth
Rising Income

Policy Support
Initiatives Investments Inviting Custom Duty Reduction
Resulting in

Investments

Rising FDI

Elderly population
Lifestyle diseases

M&A Opportunities

Expected growth rate 12% to Rs 4.2 trillion by 2015-16

As healthcare coverage across the country increases, the industry is expected to register a CAGR of 12% The industry would reach Rs 4.2 trillion in 201516. As private investments have been skewed towards in-patient department (IPD) treatments, its share in the overall market is expected to increase from 64 per cent in 2010-11 to 66 per cent by 2015-16.

Unmet need

Source: KMPG, IMF, MEGStrat

India lags far behind global norms

India falls short on several global benchmarks for healthcare delivery in terms of manpower and infrastructure. In terms of number of physicians per 10,000 people, India has 6. Countries like Germany have 35, USA 27, UK 21 and China 14. In terms of hospital beds per 10,000 people, India has one of the least among the developing world. While Countries like Germany have 82, UK 34, USA 31, Sri Lanka 31, India has just 9 beds.

Investments of over Rs 5.6 trillion required

India lags behind several global benchmarks for healthcare delivery. In terms of both healthcare infrastructure and manpower, India ranks below even developing countries like China, Thailand, Sri Lanka and Vietnam in terms of both beds to population and physicians to population ratios. In order to meet the global median of 24 beds per 10,000 population, as per WHO statistics, investments of Rs 5.6 trillion would be required over the next 5 years.

Major Players

Source: IBEF

FORTIS HEALTHCARE
Fortis Hospitals, incorporated on June 18, 2001, is a 100 per cent subsidiary of Fortis Healthcare Revenues grew by 191% y-o-y and 10% q-o-q to Rs 14.1 bn. The significant y-o-y jump in revenues was due to consolidation of the international business in Q4FY12. Despite strong growth in revenues and stable EBITDA margin, the company reported a net loss of Rs 604 mn due to a significant increase in interest costs. The market capitalization is Rs. 41,037 Mn

10,307 beds

Apollo Hospitals Enterprise Limited

Apollo Hospitals Enterprise Limited (Apollo) is Indias leading private sector healthcare services provider, and is among Asiaslargest hospital networks. They have a total of 2700 para medical personnel, over 1350 network of standalone pharmacies across India in over 20 states and over 100 primary clinics offering consultation, diagnostics and preventive health check-ups. Revenues grew by 21.3% y-o-y and 4.4% q-o-q to Rs 7,774 mn. Market capitalization is Rs. 82,905 mn.

Growth strategies

Opportunities
Lack of adequate healthcare infrastructure Heavy burden of patients, with scarcity of man powers Lack of sophisticated equipments Accessibility and coverage in rural area is low

Challenges
Low Government funding & lack of efficient execution of schemes & initiatives Shortfall in Health care infrastructure Inadequate accessibility to affordable quality services

Financial constraints with respect to infrastructural needs

Shortage of quality workforce

The way forward

Step-up in Government funding and initiatives via a special task force Increased use of Public-Private Partnership Models

Addressing geographic accessibility through PPP and harnessing local resources

Creating a Global Source of Skill

Efficient dissemination of healthcare related information

Establishment of Industry Body representation from all stakeholders with adequate

Healthcare Education