Challenges & Opportunities Healthcare in India

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HEALTHCARE SECTOR IN INDIAChallenges and Opportunities

OUTLINEHealthcare Sector in India Current Scenario Growth Drivers Public vs Private sector Healthcare Value Chain Government Policies and Incentives Major Players Future Growth Challenges Business Opportunities

HEALTHCARE SECTOR IN INDIAHealth administration in India is governed by the Ministry of Health and Family Welfare The central administration provides co-ordination and direction to a network of state health ministries for actual i l implementation l i The healthcare sector constitutesMedical care providers Diagnostic service centres and pathological labs Medical equipment manufacturers Contract research organizations Pharmaceutical manufacturers Third party support service providers

HEALTH INFRASTRUCTURE A COMPARISONCountriesBeds Per P 000 population l ti Physicians Per P 000 population l ti Nurses Per 000 population 000

India Low income (e.g., subSaharan Africa) Middle income (e.g., China, Brazil)

1.5 15

1.2

0.9 09

1.5

1.0

1.6

4.3

1.8

1.9

High income (e.g., US, Western Europe) World average3.3

7.4

1.8

7.5 3.3

1.5

HEALTHCARE - INFRASTRUCTUREInvestment in Major States

200 150 U S D M illion

189 157 111

100 50 0 Maharashtra Delhi States Karnataka

94

Meghalaya

HEALTHCAREREGISTERED DOCTORSAvailability of Doctors in Major States

120,000 100,000 N o. of D octo registered ors d 80,000 60,000 40,000 40 000 20,000 0 Maharashtra Tamil Nadu States Karnataka West Bengal 95,299 72,725 64,492 53,456

OUTLINEHealthcare Sector in India Current Scenario Growth Drivers Public vs Private sector Healthcare Value Chain Government Policies and Incentives Major Players Future Growth Challenges Business Opportunities

CURRENT SCENARIO

The healthcare industry is estimated at USD 22 billion Estimated growth at 13 per cent annually assures a return of 15 20 per cent f t f 15-20 t for th the healthcare providers Healthcare sector at present employs 4 million people directly and indirectly Private healthcare market currently estimated at Rs 690 billion (USD 14.8 billion)

CURRENT SCENARIO

85 per cent private sector establishments have less than 25 beds Speciality and super speciality hospitals account for 2 per cent of total institutes Corporate hospitals constitute less than 1 per cent of all institutes Private sector accounts for 82 per cent of all out-patient out patient visits Private sector accounts for 52 per cent of all hospitalization h it li ti

CURRENT SCENARIOCurrent Healthcare InfrastructureHealthcare Indicators: India Vs WorldIndia at 1951 1990 India Today Developing Countries Developed Countries

Hospitals Public

15,393 4,049 11,344 875,000 592,215 737,000 80,000 170 350,000 18,000

Life expectancy at birth 63 37 65

78

Private Hospital beds Doctors

Infant mortality 146 70

56 6

Nurses Dentists Medical Colleges Retail chemist outlets New doctors every year

There i a big scope for improvement, h Th is bi f i t hence vast investment opportunities ti t t t iti

STATUS OF HEALTHCARE SECTORSector Direct employment Million, 2000-2001 Revenues/GDP Per cent, 2000-2001

Healthcare

4.0 5.3 1.0 1.2 1.6 16 0.8 1.7 17 0.4 1.8 18 1.4 0.9 09 1.7 3.5 3.0

5.2 4.8Healthcare is the largest service industry in terms of revenues and the second largest after education in terms of employment

Education

Retail banking Power

Railways R il

Telecom

, Hotels, restaurants

IT

By 2012, the sector could account for 6 to 8 per cent of GDP and provide direct and indirect employment of 8 million

HEALTHCARE ISSUES & CONCERNS

Small hospitals 80 per cent < 25 beds b d Specialised services available in only 2 per cent hospitals Good healthcare available only in metros Lack of infrastructure Mismanaged Public hospitals Inadequate remuneration f I d t ti for public bli hospital staff Lack of commitment

OUTLINEHealthcare Sector in India Current Scenario Growth Drivers Public vs Private sector Healthcare Value Chain Government Policies and Incentives Major Players Future Growth Challenges Business Opportunities

GROWTH DRIVERSPhysicians, Nurses, Medical Technicians and Other Scientific Occupations will Become Growth Industries to Rival the IT Sector within the Next Decade - India Vision 2020 Report

GROWTH DRIVERSPrivate Healthcare Spending

45 40 35 30 25 20 15 10 5 0

42if health insurance cover is available to the rich and the middle class it would rise to this level

USD Billion n

8.4 8 4 bn

14.8

33.6 bn

2007 Year

2012

Private healthcare expected to grow to Rs 1,560 billion (USD 33.6 billion) in 2012

GROWTH DRIVERSTotal Healthcare SectorThis would account for around 6.2 to 8.5% of GDP by 201280 70 60 USD Billion 50 40 30 20 10 0 2007 Year 2012

52-69

Currently 5.2% of GDP22.2 22 2

Total Healthcare market including Pharma to account for 6.2 to 8.5% of GDP in 2012

GROWTH DRIVERSCorporates are sensing a huge untapped opportunity in delivery of quality healthcare to the Indian masses Policies and budgetary considerations towards pharmaceutical as well as biotech organizations are now favorable f bl De-regulation of health insurance has paved the way for the entry of foreign health insurance companies Medical equipment industry too being opened to foreign collaboration for manufacturing high and middle-level middle level technology medical equipment Global Private Equity players and Venture Capital companies also actively exploring opportunities

GROWTH DRIVERSINDIA COST ADVANTAGEPROCEDUREUS US Heart Surgery Bone Marrow Transplant Liver Transplant Knee Replacement Cosmetic Surgery 40,000 2,50,000 3,00,000 20,000 20,000 THAILAND THAILAND 7,500 ------------8,000 3,500

COST (US$)INDIA UK

6,000 26,000 69,000 6,000 2,000

23,000 1,50,000 2,00,000 12,000 10,000

GROWTH DRIVERSHEALTHCARE SNAPSHOTS 0.5 million major surgeries carried out Over a million surgical procedures carried out Cardiac bypass success rate 98.7 per cent Bone marrow t B transplant 80 per cent success rate l t t t Renal transplant 95 per cent success rate

INTERNATIONAL RECOGNITIONAs per NHS of UK - India is a favored destination for surgeries British Standards Institute has accredited Delhi-based Escorts Hospital Wockhardt Hospital has an exclusive association with Harvard Medical International, global arm of Harvard Medical School US-based Joint Commission on Accreditation of Healthcare Organisations has certified:Indraprastha Apollo Hospital (New Delhi) Apollo Hospital (Chennai) Apollo Hospital (Hyderabad) Wockhardt Hospital (Mumbai) Shroff Eye Hospital (Mumbai)

OUTLINE Healthcare Sector in India Current Scenario Growth Drivers Public & Private Sector Healthcare Value Chain Government Policies and Incentives Major Players Future Growth Challenges Business Opportunities

HEALTHCARE - PRIVATE & PUBLIC

Private sector offers tertiary-level, preventive and diagnostic y , p g healthcarePublic/Private share of Non Hospitalization Public/Private share of Hospitalization90 70 60 40 30 10 0 Rural Public Private Urban

70 80 60

78

81

58

62

50 50 40

4222

3819

30 20 20 10 0 0 Rural Public Private

Urban

ROLE OF PUBLIC SECTOR

Public sector focus is on prevention and elimination of infectious diseases and accessibility of basic healthcare facilities to the rural and urban masses

PRIVATE SECTOR INITIATIVES

At Rs 690 billion, private spending accounts for 80 per cent of the health care market 61 per cent is spent on outpatient care Over 50 per cent of outpatient spend is on acute infectious diseases

Over 80 per cent of inpatient spend is in five areas: cardio, cancer, accidents, acute infections d d f and maternity Urban Indians and rich account for a disproportionate spend

HEALTHCARE EXPENDITUREPublic & Private Sector Initiatives138 bn

552 bnPrivate Spending Govt Spending

Out of Rs 690 billion, (USD17 billion) the private sector accounts for 80 per cent or Rs 552 billion of the spending

PRIVATE EQUITY IN HEALTHCAREPrivate equity deals in Healthcare in India, 2006 (USD Million)

Hospitals, 82.33

Diagnostic chains, 8

Pharmaceutic Ph ti als, 377.56

PRIVATE EQUITY IN HEALTHCARE

MAJOR HEALTHCARE DEALS George Soros fund Quantum and Blue Ridge bought 10 p per cent in Fortis Healthcare Manipal Health Systems Private Limited raised over USD 20 million of equity from IDFC Private Equity Fund Bangalore based Bangalore-based HealthCare Global Enterprises Limited (HCG) raised over USD 10 million in equity from IDFC Private Equity Fund Metropolis Health Services Ltd. Indias leading India s Corporate Diagnostics Chain raised over USD 8 million in equity from India Advantage Fund-I managed by ICICI Ventures

OUTLINEHealthcare Sector in India Current Scenario Growth Drivers Public vs Private sector Healthcare Value Chain Government Policies and Incentives Major Players Future Growth Challenges Business Opportunities

HEALTHCARE VALUE CHAIN

Business Objectives us ess Object es

Expected Changes ChChanging diseases pattern

Business Opportunities O t iti

Patient

Quality services Value for money Minimum co-pay Minimization of the cost Wealth maximization Increase value per patient Operational efficiency Wealth maximization Minimum annual pay put

Changing socio economic profile Changing life s