“Investment Opportunities in
Healthcare”
Gaurav Malhotra
Flow of Presentation
Indian Healthcare Landscape
Key Challenges
Enablers and Growth Drivers
Investment Opportunities
Summary
2
INDIAN HEALTHCARE LANDSCAPE
Market Size, Growth and Infrastructure Needs
Growing at about 15% CAGR, healthcare market is expected to reach about $120 Billion by 2015
and should continue to double every 5 years for the next 10 Years
Indian Healthcare Market -US$ Bn
$5Bn
480
$9Bn
240
$46Bn
120
60
2010
2015
2020
2025
Healthcare Delivery
Pharmaceutical
Medical Equipment
Existing (Million)
Addition Required Today
(Mn)
Needed By 2020 (Mn)
Beds
1.3
1.2
3.6
No. of Doctors
0.7
0.9
1.9
No. of Nurses
1.5
1.8
3.7
Source: National Health Account Latest Publication 2004-05, World health organization Statistics 2010,
4
Indian Healthcare – Transition Phase
5
Conventional hospital
State of the art corporate hospitals
Long stays at hospitals
Short stay and outpatient surgical centers
Unorganized sector
Organized sector
Curative
Preventive
Out of pocket payments
Insurer or employer paid
Travel to urban areas for treatment
Availability of facilities in tier II & III cities
Lack of system and accountability
Working towards standardization
Driven by supply
Driven by demand
No quality check on service
Quality services & accreditation
Zonal Healthcare Characteristics
North and East are witnessing change:
Increased investment in North and East
India.
In West, Maharashtra and
Gujarat have relatively good
healthcare infrastructure.
Madhya Pradesh has scarce
healthcare infrastructure similar
to North and East
East falls way behind all the zones
in healthcare. But the utilization of
private nursing homes is one of
the highest, as it has very few
larger private hospitals.
South scores better in
almost all the healthcare
indicators than North and
East India.
Beds/ ‘000 Population
This can be attributed to
higher concentration and
larger average size of
hospitals
6
Avg. Size of Providers
Doctors/ Beds
Occupancy
Private Sector Takes The Lead
Public-Private Share of Hospitalization
Percentage
Public
Private
65
62
60
60
60
58
57
56
43
42
40
40 44
40
38
35
~ 60% of the population
today prefer to undergo
hospitalization at
private hospitals
Non- Hospitalization Treatment
81
Percentage
74
26
80
72
28
Rural Urban
1986-87
19
20
Rural Urban
1995-96
22
19
Rural Urban
2004
Source: NSSO 60th Round Round Morbidity and Healthcare Survey
7
85
82
81
78
18
15
Expected
Trend 2014
~80% use the private
sector for outpatient
curative services as a
first line of treatment in
both urban and rural
areas
8
Key Issues in Investing in Healthcare
1
9
Real Estate
2
Workforce
3
Quality Accreditation
Clinical Outcomes
4
Data for Comparables
5
Regulatory
Compliances
High cost impacting viability
Non availability in dense population pockets
Adherence to Statutory Guidelines
Medical, Nursing and Allied
Professional Managers
Inadequate skill sets
Inadequate focus
NABH/ JCI/NABL
Protocols
No Central Repository
Non Disclosure of Sentinel Events
Lack of Enforcement
Antiquated legislation
GROWTH DRIVERS
Growth Drivers
3%
1%
15%
8%
2%
1.3%
Population
Growth
Increasing
Burden Diseases
Inflation
Insurance/
Coverage
Increasing
Accessibility
Others: Regulatory Impact, Increased Awareness, Quality up gradation, corporatization, etc.
11
Total
Indian Consumer Spend
10%
The share of average household spend on Healthcare in India, is
expected to increase from 7% to 10% in the next decade.
11%
9%
7%
8%
12%
17%
40%
Source: National Accounts Statistics
12
7%
3%
4%
18%
2015
$1400b
33%
6%
3%
3%
17%
6%
5%
3%
2%
2010
$800b
2020
$2500b
6%
9%
11%
5%
9%
36%
Food
Transportation
Housing
Personal Products
Healthcare
Clothing
Education
Household Product
Communication
Investment Opportunities in Healthcare
Healthcare Delivery
• Single Specialty Hospitals
• Secondary Care and Tertiary Care
Hospitals
• Neighborhood Clinics
• Diabetes Centers
• Rehabilitation Centers
• Day Care Surgery Centers
• Mother and Child Care
14
Medical Education
• Medical College
• Nursing College
• Paramedical/ Allied College
Investment Opportunities in Healthcare
Alternative Medicine
• Hospitals
• Wellness
15
Diagnostics
• Laboratories
• Radiology
• Comprehensive
Diagnostic Centers
Others
• Operation &
Management
• Senior Assisted living/
Hospice Care
• Healthcare Management
Consulting
• Healthcare IT
• Home Healthcare
• Medical Value Travel
• Medical
Devices/Equipment
Key Investment Criteria
Market Potential
Resource Availability
Scalability
Return On Investment
Exit Valuation Multiple
Faster EBITDA Breakeven
Patient Awareness
Reimbursement/Insurance Coverage
Strategic Sale/Exit Opportunity
Existing Success Stories
16
Attractive Investment Opportunity in Healthcare
Eye Care
Clinics
Day Care
Surgery
Centers
Home
Healthcare
Infertility
Treatment
Clinics
MARKET POTENTIAL
H
H
H
H
M
H
STRATEGIC SALE/EXIT OPPORTUNITY
H
M
M
H
H
M
RESOURCE AVAILABILITY
H
H
H
M
H
M
SCALABILITY
H
H
H
H
H
M
ROI
H
M
H
H
H
H
EXIT VALUATION MULTIPLE
H
M
H
H
H
H
FASTER EBITDA BREAKEVEN
H
H
H
H
H
M
PATIENT AWARENESS
H
H
M
H
H
H
REIMBURSEMENT/INSURANCE COVERAGE
Y
Y
N
N
Y
Y
EXISTING SUCCESS STORIES
Y
Y
Y
Y
Y
Y
INVESTMENT OPPORTUNITIES
17
Lab/
Cancer Care
Diagnostic
centers
Comparative Analysis of Various Growth Options
Greenfield Model
Brownfield Model
(shop-in-shop)
Management
Operations Model
"STAR" Practitioner
Model
CAPEX
H
L
M
M
ROI
M
M
L
M
RISK
H
H
H
H
SCALABIITY
H
L
L
L
CLINICAL GOVERNANCE
H
H
L
L
EXIT VALUATION MULTIPLE
H
M
L
L
EBITDA BREAKEVEN TIMING
H
L
M
L
LOSS FUNDING
H
L
M
H
MARKETING EXPENSE
H
M
M
L
NA
H
L
M
EQUITY DILUTION
18
Summary
19
Overall we believe that the investment opportunity in healthcare services
is sound and attractive due to the following reasons:
1
4
20
Almost a US$ 240 Billion opportunity by 2020
2
Private sector to remain the engine of growth for healthcare
delivery. Innovations needed in delivery of low-cost, highimpact business models
3
Government shift from provider to payer
Increased Demand, Enablers, Awareness and Affordability levels
21