INDIAN HEALTHCARE INDUSTRY

The Indian healthcare sector is expected to reach US$ 100 billion by 2015 from the current US$

65 billion, growing at around 20 per cent a year

The Indian healthcare industry is seen to be growing at a rapid pace and is expected to become a

US$280 billion industry by 2020.

Rising income levels and a growing elderly population are all factors that are driving this growth.

In addition, changing demographics, disease profiles and the shift from chronic to lifestyle

diseases in the country has led to increased spending on healthcare delivery.

In order to meet manpower shortages and reach world standards India would require investments

of up to $20 billion over the next 5 years.

GOVERNMENT POLICY AND TAX BENEFIT

To encourage investment in the health care sector, government of India has allowed 100% FDI

under the automatic route

Government has also accorded the infrastructure status to the hospitals and has announced Lower

tariffs (between 5–8 per cent) on medical equipment and devices.

In a move that would benefit the corporate hospital chains expanding in urban areas, the

government has decided to extend its provision of tax relief to new hospitals with over 100 beds

in metros and other urban agglomerations, which had been deprived of such benefits till now.

The National Rural Health Mission (NHRM) had allocated US$ 10.15 billion for the up

gradation and capacity enhancement of healthcare facilities.

Moreover, in order to meet revised cost of construction, in March 2010 the Government

allocated an additional US$ 1.23 billion for six upcoming AIIMS-like institutes and up

gradation of 13 existing Government Medical Colleges.

The tax relief would also apply to ‘new’ hospitals with over 100 beds in previously ‘excluded

area’ which includes the urban agglomerations of Greater Mumbai, Delhi, Kolkata, Chennai,

Hyderabad, Bangalore and Ahmedabad, the districts of Faridabad, Gurgaon, Ghaziabad, Gautam

Budh Nagar and Gandhinagar and the city of Secunderabad.

Tax benefit is now available to hospitals which are constructed and have started or would start

functioning at any time during the period beginning the 1st day of April, 2008 and ending on the

31st day of March, 2013.

Customs duty exemption on specific personal medical aids like crutches, wheel-chairs, walking

frames and artificial limbs.

Customs duty, excise duty and CVD exemption on specific medical devices such as talking

books, Braille computer terminals, etc.

DEMAND V/S SUPPLY

DEMAND SCENARIO

• Bangalore has the 2 highest literacy rate (83%) and per capita income of Rs. 30,000. So

there is better health awareness and willingness to spend on health.

• Corporate provide medical insurance to their employees. This too has led to a spurt in

demand for quality healthcare.

• With more people buying medical insurance, the average time spent in the hospital has

gone up and are also prolonging their post-operative stay in the hospital. All this

translates into higher demand for hospital beds.

• Low-cost treatment is the ultimate factor in Bangalore. Medical care costs only 1/5 th of

the costs in the West which gave rise to medical tourism.

• Only 20% of payment is done through insurance so there is a lot of demand to penetrate

the insurance market and rest is through direct payment. This has led to 60% of

healthcare expenditure being financed out-of-pocket.

2. Demand for number of beds/1000 population

Number of beds/1000 population is 2.2 and the world average requirement is 3.96

beds/1000 populations but this should increase to 7beds/1000 population with the

increasing population and growing healthcare diseases.

So approximately 16,000 beds needs to be added in order to reach the ratio of 3.96

beds/1000 population

3. Demand for number of patients

Average occupancy ratio for private hospitals is 70-90%.

• With bed strength of 700 beds, the average number of out-patients visiting the hospital/day is

about 1000, and the number of in-patients admitted/day is 420.

• With bed strength of 200 beds, the average number of out-patients visiting the hospital/day is

about 290, and the number of in-patients admitted/day is 140.

Occupancy ratio of 60-70% is good enough to break even. So there is a demand to increase the

occupancy ratio which will increase the number of out-patients and in-patients visiting the

hospital/day.

Incorporated in 1979, Apollo is a Chennai-based company promoted by Dr Prathap Reddy. It

commenced operations in 1983 with a 150-bed hospital in Chennai. Over a period of time,

Apollo has emerged as Asia’s largest and integrated healthcare group with over 8,000 beds

across 47 hospitals in India. Apollo has also forayed into diagnostic clinics, dispensing

pharmacies a consultancy services.

Apollo is a leader in the Indian healthcare industry with 8,000 beds across 47 hospitals. In the

past, it primarily focused on the southern region and expanded to other markets only through

partnerships/JVs. It is now changing strategy and is planning to add 2,700 beds in different

regions. Given strong brand recognition, we believe Apollo is well poised to benefit from robust

growth in the healthcare industry.

Geographic presence

Mainly present in the southern region (63% of owned beds are in Chennai and Hyderabad).

Diversified to northern and eastern regions through JV/associate model; it is now looking to

foray into the western region, mainly Mumbai and also to tier II and III cities through self-owned

hospitals

Key competitors

Fortis Healthcare, Max India, Manipal Group, Metro Hospital. As many as 8,000 beds across 47

hospitals rank Apollo No. 1 in the Indian healthcare industry. Manipal Group, the second largest

private player, has ~7,000 beds under operations followed by Fortis Healthcare with ~5,500

beds. Given the leadership position and strong brand recognition, Apollo is well poised to benefit

from the strong growth in the Indian healthcare industry. CRISIL.Research expects the

healthcare services industry to grow at a five-year CAGR of 12% to Rs 3,500 bn in FY15.

About 2,200 self-owned beds to be operational by FY14

APOLLO Expansion plan

s. No

 

Owned projects

 

Operational

beds

Total

cost

(Rs mn)

Company's

expected

date of completion

Our expected

date of

completion

 

Expansion in existing

projects 130      

1

Hyderabad - International

Block 100 1,225 11-Mar 11-Mar

2 Chennai - Main 30 100 12-Sep 13-Mar

3 Bilaspur - Oncology   80 11-Sep 11-Sep

  REACH HOSPITAL        

4 Ayanambakkam 200 700 12-Jun 12-Sep

5 Nasik 125 520 12-Jun 12-Sep

6 Karaikudi 100 260 10-Sep 10-Sep

7 Nellore 200 667 12-Oct 13-Mar

8 Trichy 200 655    

  Super speciality hospitals 1275      

9 Vizag 300 1,150 13-Jun 13-Sep

10 Belapur 350 3,500 13-Jun 13-Sep

11 Mumbai 300 1,400 13-Jun 13-Sep

12 secundrabad 150 370 10-Apr 10-Apr

13 Hyderguda 175 443 11-Jun 11-Sep

  TOTAL 2,230 11,070    

  JVs and Associate        

14 Thane 250 2,000 13-Mar 13-Oct

15 Bangalore(expansion) 52 60 13-Nov 11-Mar

16 Newdelhi (expansion) 136 40 10-Nov 11-Mar

  TOTAL 438 2,460    

Incorporated in 1996, Fortis Healthcare Limited (FHL) provides a comprehensive range of

primary, secondary and tertiary healthcare services. The company has expertise across 4

specialties, namely heart care, brain and spine care, bone and joint care and minimal access

surgery. FHL has hospitals and medical facilities in Amristar, Bengaluru, Chennai, Faridabad,

Delhi, Mumbai, Mohali, Raipur, Kolkata, Jaipur and Mauritius.

Landmark acquisitions in FY10

The company acquired the Greenfield Hospitals division of Wockhardt Hospitals Ltd,

comprising 10 hospitals — 2 in Mumbai, 5 in Bangalore and 3 in Kolkata. With this acquisition,

the total number of Fortis hospitals in India increased to 48, and its bed capacity rose to ~7,700.

Hospitals under construction and completed

Fortis Healthcare (India), recently announced the launch of four hospitals as part of its plan to

strengthen its presence across the country. This announcement fulfills the ‘10 in 10’ commitment

made by the company on its tenth Anniversary during June end, to announce 10 new hospitals in

10 weeks. Fortis has now announced 10 launches in less than 10 weeks, taking its bed capacity to

10,270 beds. Besides setting up new hospitals in Cochin, Bilaspur and Bangalore, Fortis

Healthcare will manage the Cardiac Care unit at HLG hospital in Asansol, West Bengal.

Fortis marks its entry into Kerala with a 45 bed boutique hospital in Cochin, which will offer

quality healthcare for women under the ‘Fortis La Femme’ brand.

As part of the hub and spoke model, a multi-speciality hospital in Bilaspur, acting as a spoke to

the Mohali hub, will cater to the Kullu-Manali-Mandi belt by FY 2012.

Expanding its reach in West Bengal, Fortis will operate and manage a 50-bed Cardiac Care unit

at multi-specialty HLG hospital in Asansol.

The group also strengthens its presence in the south with a world-class tertiary care hospital in

Bengaluru, strategically located near the Marathalli Junction, which will commence operations

by 2013. This follows the recent announcement to operate a 100-bed boutique hospital for

women in the state.

Said Aditya Vij, CEO, Fortis Healthcare (India), said, “These new hospitals across the country

conform to our plan for strengthening the Fortis network in India. With this announcement, we

have met the “10 hospitals in 10 weeks” commitment made on our tenth anniversary. Locations

and operational models have been carefully selected to increase access to quality healthcare,

while maintaining affordability, for local communities. We continue to strengthen our presence

in bigger cities, while penetrating smaller towns, helping to address the enormous need for

quality healthcare in India.”

Max Healthcare Institute (BSE: 500271, NSE: Max) is a healthcare institute based in New

Delhi, India. The Institute is a wholly owned subsidiary company of Max India Limited.

Established in 1985, Max India Limited is a Public Limited company listed in the Bombay Stock

Exchange and National Stock Exchange of India with more than 37,000 shareholders.[1]

The institute operates eleven centers in Delhi,NCR and neighboring Punjab region, providing

health care services in more than 30 disciplines.[2] The company provides patient services

including nuclear medicine and cardiac imaging, labs, scans, interventional cardiology, cardiac

pacing and electrophysiology, neurosciences, orthopedics, gynecology and obstetrics, pediatrics,

maternity services, diagnostic services, pediatric ophthalmology, neurophthalmology, internal

medicine, general surgery, urology, nephrology, gastroenterology, mental health and behavioral

sciences, rehabilitative services, and pulmonology. Dr. Ajay Bakshi is the CEO of Max

Healthcare.

Max expansion plan

Max plans to add nearly 700 beds this year as it goes on an expansion drive for its healthcare arm

by opening four new hospitals in 2011.

MAX : Max Plans to add nearly 800 beds this year. 200 beds each in Mohali & Bathinda

(Punjab); 100 beds in Dehradun, 289 beds in Shalimar Bagh (Delhi).

PL. Despite the global economic downturn, medical tourism in India has emerged as the fastest

growing segment of tourism industry. High cost of treatments in the developed countries,

particularly in the USA and the UK, has been forcing patients from such regions to look for

alternative and cost-effective destinations to get their treatments done. Indian medical tourism

industry is presently at a nascent stage, but has an enormous potential for future growth and

development. How is Max looking at this vibrant change?

NUMBER OF HOSPITALS IN BANGALORE

Hospitals empanelled by Insurance companies and Third Party Administrators (TPA). There are more than 165 hospitals which are empanelled by various Insurance Companies and Third Party Administrators (TPA).

central Bangalore 75

NEW PROJECTS IN

BANGALORE

Trinity Hospital & Heart Foundation, started in 2001, is a Super Speciality Hospital dealing

exclusively in Cardiology and Cardiac Surgery, Nephrology & Kidney Transplant.

Trinity Hospital has 100 Super Speciality Beds including 15 Bed Coronary Care Unit, 12 Bed

Critical Care Unit,

Trinity Hospital and Heart Foundation would be setting up a new multi-speciality facility in the

city at a cost of Rs.40 Crores (Approximately US $8.8 Million). The new 125-bed healthcare

centre would have extended facilities such as nephrology, and orthopaedic care and surgery. It is

expected to be launched in the next 18 months.

Narayana Hrudayalaya group has Narayana Health City at Bangalore covering 25 acres of

Land and Rabindranath Tagore International Institute of Cardiac Sciences and Rotary Narayana

Nethralaya a Super Specialty Eye Hospital. It has also proposed to set up a Super specialty

hospital with following features

Narayana Hrudayalaya P Ltd (NHPL) plans to establish 5,000-bed health cities in the major state

capitals of India. It intends to reach 20,000 beds within the next five years. The group owns three

hospitals in the cities of Bangalore and Kolkata with a total bed capacity of 2,500. It is currently

expanding the 1000-bed Bangalore facility to a 5000-bed facility.

Hosmat Hospital started out as a 350 bedded Hospital in 1991 in the city of Bangalore and today

has expanded itself up to 450 beds super-speciality hospital specialising in orthopaedics and joint

replacement. The Hospital has plans to increase its bed strength to 500 beds in the coming future

making it the largest speciality hospital of its kind in Asia.

Hospital for Orthopaedics, Sports Medicine, Arthritis, Accident-Trauma, Hosmat Arthritis and

Joint Replacement Centre, HOSMAT Neuro Centre and HOSMAT Spine Centre is a super major

speciality hospital of 350 beds in Bangalore, India, ideally located in central Bangalore about 0.5

kilometers from Brigade Road or MG Road. It is the first comprehensive hospital in India

specializing in Orthopaedics, Sports medicine, Arthritis, Accident, Trauma and Neurosciences,

and is undergoing an expansion phase to 500 beds, making it the largest speciality hospital of its

kind in Asia.

SBF Healthcare Pvt. Ltd., Bangalore, was founded in 2006 by Wing Commander (Dr) V. G.

Vasishta (Retd.) soon after his retirement from the Indian Air Force. SBF in Bangalore quickly

gained popularity as one of the best healthcare centres in the country for Osteoarthritis treatment

and Cancer treatment, owing to unrelenting dedication to excellent medical services and

pioneering research in life-saving Osteoarthritis and Cancer medical technologies.

With the launch of its revolutionary, non-invasive form of Osteoarthritis treatment and some

forms of Cancer — Sequentially Programmed Magnetic Field (SPMF) Therapy or what is

popularly known as QMR Therapy, SBF Healthcare's popularity increased manifold and its

Osteoarthritis treatment and Cancer treatment regimes won mentions in leading medical journals

and publications.

SBF Healthcare Pvt. Ltd, is looking to raise $5 million (about Rs24 crore) from investors to set

up a countrywide network so as to scale up a non-invasive treatment of osteoarthritis. SBF

Healthcare Pvt. Ltd is planning to set up 50 centers across India in the next financial year.

Global Hospital has commenced operations of the 500-bed BGS Global Hospital, a super-

speciality and tertiary care hospital in Bangalore which is a joint venture between the BGS Trust

and Global Hospitals, built on a 50-acre campus of BGS Health and Education City. The total

investment in the facility is about Rs 170 crore.

The Bangalore Metro Rail Corporation Limited (BMRCL) is all set to construct a children’s

hospital on a 7,500 sqm area adjacent to the Vani Vilas Maternity Hospital at a cost of Rs 13

crore.

On the State government’s plan to bring five hospitals — Victoria, Vani Vilas, Minto, Nephro-

Urology and Dental College — and the Bangalore Medical College and Research Institute

(BMRCI) under one campus, Medical Education Minister S A Ramdas told mediapersons here

on Wednesday that infrastructure in these hospitals would be upgraded on the lines of the All

India Institute of Medical Science in Delhi. In two years time the children’s hospital, an

extension of the existing Vani Vilas hospital, will be constructed in two-and-a-half years.

s.no Name of the hospital Number of beds in 2010

Expected beds in 2012

1Hosmat Hospital 350

420

2Koshy’s Hospital 100

120

3Manipal Hospital 600

720

4Apollo Hospital 550

660

5Pristine Hospital 102

123

6Shekhar Hospital 105

126

7St. Johns Hospital 1200

1,440

8Sagar Hospital 665

798

9Vydehi Hospital 1000

1,200

10 Global Hospital 1700 2,04011 Church of South India

Hospital 220

26412

Mahabodi Mallige Hospital 150

18013 Indira Gandhi Institute of Child

Health 180

21614

Mallya Hospital 150

18015

Sparsh Hospital 400

48016 MVJ Medical College &

Research Centre 640

76817

St. Martha’s Hospital 550

660

According to the survey of Northbridge capital (2010)