“Investment Opportunities in Healthcare”

Gaurav Malhotra

2

Flow of Presentation

Indian Healthcare Landscape

Key Challenges

Enablers and Growth Drivers

Investment Opportunities

Summary

INDIAN HEALTHCARE LANDSCAPE

4

Market Size, Growth and Infrastructure Needs

Source: National Health Account Latest Publication 2004-05, World health organization Statistics 2010,

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

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

2010 2015 2020 2025

60120

240

480

Indian Healthcare Market -US$ Bn

CAGR 15%

$46Bn

$9Bn

$5Bn

Healthcare Delivery Pharmaceutical

Medical Equipment

5

Indian Healthcare – Transition Phase

Conventional hospital

Long stays at hospitals

Unorganized sector

Curative

Out of pocket payments

Travel to urban areas for treatment

Lack of system and accountability

Driven by supply

No quality check on service

State of the art corporate hospitals

Short stay and outpatient surgical centers

Organized sector

Preventive

Insurer or employer paid

Availability of facilities in tier II & III cities

Working towards standardization

Driven by demand

Quality services & accreditation

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Zonal Healthcare Characteristics

Beds/ ‘000 Population

Avg. Size of Providers

Doctors/ Beds

Occupancy

North and East are witnessing change:Increased investment in North and East India.

South scores better in almost all the healthcare indicators than North and East India.

This can be attributed to higher concentration and larger average size of hospitals

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.

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Private Sector Takes The Lead

Public-Private Share of Hospitalization

26 2819 20 22 19 18 15

74 7281 80 78 81 82 85

Pe

rce

nta

ge

Rural Urban 1986-87

Rural Urban 2004

Source: NSSO 60th Round Round Morbidity and Healthcare Survey

Rural Urban 1995-96

Non- Hospitalization Treatment

ExpectedTrend 2014

~80% use the private sector for outpatient

curative services as a first line of treatment in

both urban and rural areas

~ 60% of the population today prefer to undergo

hospitalization at private hospitals

60 60

44 43 42 38 40 3540 40

56 57 58 62 60 65

Pe

rce

nta

ge

8

9

Key Issues in Investing in Healthcare

Real EstateHigh cost impacting viabilityNon availability in dense population pocketsAdherence to Statutory Guidelines

Workforce

Quality Accreditation Clinical Outcomes

Data for Comparables

Regulatory Compliances

1

3

2

4

5

Medical, Nursing and AlliedProfessional ManagersInadequate skill sets

Inadequate focus NABH/ JCI/NABLProtocols

No Central RepositoryNon Disclosure of Sentinel Events

Lack of EnforcementAntiquated legislation

GROWTH DRIVERS

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Growth Drivers

Population Growth

Increasin

g Burden Dise

ases

Inflation

Insurance

/ Coverage

Increasin

g Accessi

bility

Total

1%

2%

8%

1%

3%

15%

Others: Regulatory Impact, Increased Awareness, Quality up gradation, corporatization, etc.

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Indian Consumer Spend

41%

17%

12%

8%7%

6%5%

3%2%

Food Transportation Housing Personal Products Healthcare

Clothing Education Household Product Communication

33%

18%

11%

9%

10%5%

7%

3%4%

2010$800b

2020$2500b

The share of average household spend on Healthcare in India, is expected to increase from 7% to 10% in the next decade.

Source: National Accounts Statistics

36%

17%

11%

9%9%

6%6%

3%3%2015

$1400b

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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

Medical Education

• Medical College• Nursing College• Paramedical/ Allied College

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Investment Opportunities in Healthcare

Alternative Medicine

• Hospitals• Wellness

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

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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

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Attractive Investment Opportunity in Healthcare

INVESTMENT OPPORTUNITIES Eye Care Clinics

Day Care Surgery Centers

Home Healthcare

Infertility Treatment

Clinics

Lab/ Diagnostic

Cancer Care centers

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

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Comparative Analysis of Various Growth Options

  Greenfield ModelBrownfield 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

EQUITY DILUTION NA H L M

Summary

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Overall we believe that the investment opportunity in healthcare services is sound and attractive due to the following reasons:

Almost a US$ 240 Billion opportunity by 2020

Private sector to remain the engine of growth for healthcare delivery. Innovations needed in delivery of low-cost, high-impact business models

Government shift from provider to payer

Increased Demand, Enablers, Awareness and Affordability levels

1

2

3

4

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