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Executive Summary – Healthcare Delivery Services in India 2015

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Executive Summary – Healthcare Delivery Services in India 2015 Your Partners in Growth Executive Summary – Healthcare Delivery Services In India 2015 1 Private & Confidential ClickExecutive to Summaryedit Master title style DIAGNOSTICS MEDICAL MEDICAL HEALTHCARE PHARMA HOSPITALS PHARMACY SERVICES EQUIPMENTS INSURANCE IT (HIT) Manufacture, Healthcare Businesses and Establishments Manufacturing Health insurance HIT provides the extraction, centers, laboratories that that sell medical that cover an framework to processing, dispensaries, offer analytic or medicines and equipment and individual’s manage health purification, and district hospitals, diagnostic provide drug supplies, such as hospitalization information across packaging of surgical, dental, expenses and systems and its Business chemical materials general hospitals, services information with medical Activities to be used as nursing homes, including body the help of orthopedic, secure exchange medications for mid-tier, and top- fluid analysis primary care ophthalmologic, reimbursement between consumers, humans or tier private professionals and laboratory facility incurred providers, quality animals hospitals instruments due to sickness entities, government, and insurers Market Global: $995 bn Global: $2.7 tn Global: $1.7 tn Global: $1.7 tn Global: $260 bn Global: $976 bn Global: $55 bn Size (2010) India: $13 bn India: $54 bn India: $2.4 bn India: $1.8 bn India: $7 bn India: $1.6 bn India: $0.2 bn CAGR Global: 5% Global: 5.2% Global: 5% Global: 4% Global: 4% Global: 4.5% Global: 10% (2010-2020) India: 18% India: 14% India: 27% India: 35% India: 15% India: 30% India: 30% . Pfizer . HCA Holdings . Quest . Walgreen / . Johnson & . Zurich . IMS Health . Novartis Inc. Diagnostics Alliance Boots Johnson Insurance . Agfa . Roche . Universal Health . LabCorp . CVS Health . Siemens AG Group Healthcare . Merck & Co Services, Inc. Sonic Corp . GE . Express . Carestream . Sanofi . Netcare Healthcare . Medco . Medtronic Inc. Scripts Health Inc. Global Players . Tenet Healthcare Health . Baxter . United . Cerner . Life Healthcare Solutions International Healthcare Corporation . IHH Healthcare . Omnicare Inc. Inc. Aviva . Emdeon . Fresenius . Axa Inc. Medical Care Scope of report: AG ‘Healthcare Delivery Services’ 2 ClickGlobal Healthcareto edit Master Industry title style Industry Overview – Market Sizing, USD Billion . Segment-wise break-up (USD billion) The market size of the global Healthcare Industry in 2010 was US 4611 $8.5 tn and is projected to be US $13.7 tn by 2020 2010 2020 . Hospitals contribute 34% of revenues followed by Diagnostics and 2826 Pharmacy at 20% each 2781 2575 1733 1740 . Health IT is the fastest growing segment 1648 1523 995 976 385 . Healthcare Delivery services – Hospitals, Diagnostics & Wellness will 260 55 143 grow at modest rate Pharma Hospitals Diagnostics Pharmacy Medical Medical Health IT Equipments Insurance Asia’s emerging market’s healthcare expenditure . Many companies plan to focus on Asia—a trend that is likely to continue, given the lure of large underserved and increasingly Asia's emerging markets' healthcare affluent populations expenditures are forecaste to grow two to . The OECD predicts, by 2020, the spending power of the global three times faster than the global average CAGR(0 CAGR(1 middle class will reach US$35 trillion a year, up from US$21 7-11) 1-20) trillion in 2009. More than 80% of this growth is expected to 12 7% 5% occur in the Asia Pacific 10 . Over the next five years there will be greater retail orientation in Other APAC 11% 2% 8 healthcare Japan 12% -1% 6 . Primary healthcare system will evolve due to its retail orientation Indonesia 4 17% 12% . Large corporates will invest in single specialty hospitals India . Technology will play a much larger role in day-to-day interacting 2 13% 15% with healthcare China 25% 12% 0 . Consumers will become more informed of care/cost options and EMEA 4% 3% will decide the healthcare spend themselves America 6% 5% . Focus on preventive healthcare; thus shift from sick care and reduce need for hospitalization/tertiary care to primary care and retail clinics Source: Bain & Co. 3 ClickIndian Healthcareto edit Master Industry title style Industry Overview Indian Healthcare Industry - Segments . Indian Healthcare is one of the largest sectors in the Indian Medical Health IT Pharmacy economy both in terms of revenues and employment. Insurance 0.2% 2% 2% . It contributes ~4% to the country’s Gross Domestic Product Medical (GDP) Equipment 9% . Hospitals are a dominant contributor to the Indian healthcare Pharma sector 16% Diagnostics . Diagnostics, Pharmacy, Medical Insurance and Healthcare IT Hospital & Wellness are growing at much faster rate (25 – 35 % CAGR) 68% 3% Indian Healthcare Segments – Market Sizing, USD billion Market size (USD billion) Segment-wise market size (USD billion) 2012 2020 200 Hospitals remain the largest segment CAGR 154 ~17% Fastest growing segments include Pharmacy, Medical Insurance, Health IT and Diagnostics 100 280 49 54 80 13 16 20 21 13 2.4 1.8 7 1.6 0.24 2 0 Healthcare Sector Pharma Hospitals Diagnostics Pharmacy Medical Medical Health IT Equipments Insurance Source: IBEF, FICCI, EY Study 4 ClickGrowth toDrivers edit Master title style Demographic Shift Working Demand / Supply Gap Growing Affluence Population (%) GDP Per Capita (USD) 0 - 14 yrs 15 - 29 yrs 30 - 44 yrs Hospital Beds per 4 1875 45 - 59 yrs 60+ yrs 1000 Population 1723 1583 100% 1455 7% 8% 8% 9% 11% 12% 1389 11% 12% 14% 80% 15% 16% 16% 20% 20% 20% 21% Implied gap 60% 23% 24% of 3.1 Beds 27% 28% 40% 29% 28% 26% 24% 0.9 20% 35% 32% 29% 27% 25% 23% 0% 2001 2007 2012P 2017P 2021P 2026P India WHO Recommendation 2011 2012 2013 2014 2015E % of population by age group Changing Disease Profile towards Non- Rising Penetration of Health Insurance Growing Medical Tourism Communicable and Lifestyle Diseases (INR Billion) (‘000 of medical tourists) (% of Hospitalization Cases) 520 CAGR of 14.0% 460 131 410 Lifestyle Lifestyle CAGR 115 360 Disease, Disease, of 34% 320 18.50% 24.00% 81 270 66 51 32 22 Other, 17 Other, 76.00% 81.50% 2001 2012 2010 2011 2012 2013 2014 2015E FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 Source: F&S Market Research report 2012 5 ClickTrends toin Indianedit Master Healthcare title Delivery style Services Health Two Tier Single Day Care Cities 1 Cities 2 Specialty 3 Surgery 4 Technology Unbundling Orientation 5 Real Estate 6 Medical Home Senior PPP 7 Tourism 8 Healthcare 9 Living 10 6 Click…Trends to in edit Indian Master Healthcare title Delivery style Services 1 Health Cities 2 Tier II Cities 10 . One-stop shop which offers healthcare services including wellness, 8.8 Cost of setting up hospitals per bed (Rs. Mn) education and training 7.2 6.9 . Economies of scale and scope enable collaboration of multiple specialists and improve the quality of clinical outcomes 4.7 4.5 4.2 3.8 . Resource sharing increases efficiency and allows cost reduction 3.4 3.3 3.3 Moving up the chain Project City USD # beds Name Invest ment Narayana Bengaluru 488 5,000 Health City Indian Population and Healthcare Infrastructure (2010) Health Cities Nagpur Nagpur NA 2,000 Health City Number of Hospitals 14% 19% 4% 18% 25% 20% Medanta Gurgaon 293 1,600 No. of hospital beds 18% 24% 8% 18% 22% 10% Tertiary Care MediCity Facilities Population Global Chennai 245 1,000 5% 6%3% 5% 9% 72% Hospitals 0% 20% 40% 60% 80% 100% Fortis Gurgaon 293 800 Super Specialty Metro Tier I Tier II Tier III Tier IV Rural Hospital MediCity . Rural households constitute 70% of the population. Therefore, despite Fortis Lucknow 122- 800 lower incomes, rural household accounts for 57% of the consumption. MediCity 195 But, doctor-to-patient ratio for rural India stands at 1:30,000, well Community below the WHO’s recommended 1:1,000 Hospital Apollo Hyderabad 243 700 . Middle tier and smaller cities are expected to emerge as attractive Health City markets due to population numbers, increasing middle class consumers and lack of adequate healthcare facilities Local Nursing Bengal Durgapur 487 500 . Growing need for improved healthcare infrastructure in tier II & III cities home Health City . Better access owing to development of new national/international airports . Cost of setting up hospitals per bed is almost 50% lower for Tier II cities 7 compare to those in Tier I cities Source: Grant Thornton report Click…Trends to in edit Indian Master Healthcare title Delivery style Services 3 Single Specialty 4 Day Care Surgery Day Care Surgery Market Break-up of Specialty wise market Total Surgery Volume Oncology, 9% Size (USD Mn) 100% Day CAGR: 20% 840 Women and Care 80% Children, 18% Surgery, 60% 40% Others, 53% 40% 330 Other, 20% 60% Cardiology, Opthalmology 17% 0% , 3% 1 2010 2015E Specialty hospitals with higher paybacks drive the investments: . Setup cost: 20-30% of full fledged 100-bed hospital . Single-specialty hospitals cater to ophthalmology, gynecological, diabetic care, eye care, cardiac care, and renal care specialties . Other factors: Customer convenience and scalability of operations . These hospitals are relatively easily scalable because of lower land . Day care units conduct procedures and patients are discharged on requirement which is a major hurdle for large tertiary-care the same day and not hospitalized hospitals, especially in Metros . Helps hospital chains in freeing up capacity at tertiary hospitals . Single-specialty hospitals, require a low initial investment of INR while retaining patients within the network 0.25mn per bed and can offer an EBITDA margin of 25-30% with a payback period of 2-3 years . Requires lower capex, making break-even periods shorter . Whereas, large multi-specialty hospitals require a substantial . A successful day care model for India is one wherein the center is investment of INR 4-10 mn per bed with a breakeven period of 3-5 established within the hospital and a floor can be dedicated for years operating rooms .
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