Kpmg Report Health Care

8/4/2019 Kpmg Report Health Care

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ADVISORY

GlobalInfrastructurTrendMonitorIndian Healthcare Edition:

Outlook 20092013

The Global Infrastructure: Trend

Monitoris a series of publications

allowing infrastructure investments

to be compared across geographies.

In this third edition, we analyze

the medium-term expenditure on

healthcare infrastructure across

India. Our aim is to help improve the

quality of debate in identifying the

geographically attractive markets in

Indias healthcare infrastructure.


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ii Global Infrastructure: Trend MonitorIndian Healthcare Edition

2009 KPMG International. KPMG International provides no client services and is a Swiss cooperative with which the independent member firms of the KPMG network are affiliated. All rights reserved. 20866NSS

India saw rapid economic growth from 2003 to the start of the

global economic slowdown in 2008.

Among the largest economies in the world, its growth rate was second

only to that of China. However, few would disagree that Indias past

expenditure on infrastructure has fallen short of demand and, as a

result, it may be constraining current and future economic growth.

With a population of over a billion, the coordination and strategic

choices concerning expenditures on healthcare infrastructures are of

vital importance. These are especially challenging given the complex

migration patterns typically seen within emerging economies. It

remains to be seen how the policies currently in place will shape the

Indian healthcare infrastructure market in the future.

Private healthcare capacity in India is already significant. Given the

anticipated incentives to be offered by the government, including

the use of user fee financed provision and the opportunities for

Public Private Partnerships (PPP), it is believed that the private

sector market will attract further foreign investment. Additionally,

the recent election victory of the United Progressive Alliance (UPA)

with a stable majority, may help provide a mandate to push through

major social infrastructure improvements for this emerging global

economic power.

This third edition of the Global Infrastructure: Trend Monitor

presents forecasts for current and future healthcare infrastructure

expenditure across India. By this, we aim to help improve the quality

of the debate on the size and geographic location of opportunities in

India. We hope you enjoy this publication and find our commentaryon this exciting market informative.

Foreword

Kai RintalaHead of Infrastructure Intelligence

KPMG in the UK

Pradip KanakiaHead of Markets

KPMG in India


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Global Infrastructure: Trend MonitorIndian Healthcare Edition 2


Notes

1) This publication distinguishes between

model output-oriented commentary, which

is based on the data collated from stated

sources, and insight-oriented commentary,

which is based on the views among KPMG

professionals. The limitation of the former

is that it does not attempt to capture market

developments, new initiatives or shifts in

policy.

2) The 2009-2013 data are modelled using the

latest figures available at the time of writing

3) All figures in this publication are in 2006 US

dollars based on exchange rates to facilitate

direct comparisons and they represent

all investment, by both public and private

sector, in healthcare infrastructure which

may include activities such as medical

research, drug production or primary care

services

4) Annual growth rates over the period2009-2013 are in real terms, i.e. they exclude

the impact of inflation

Objective

The aim of the Trend Monitor is to help

stimulate informed debate of global

infrastructure opportunities by providing

Important Notes

observations and on-the-ground market insight

underpinned by econometric modeling.

Existing publications tend to focus on the

short-term, identifying opportunities that are about

to come to market, or the long-term, estimating

the size of the required investment over decades

to come. The Trend Monitor is purposefully

positioned between the two in order to present

a medium-term (2009- 2013) view of market

potential.

Our analysis builds on what we believe to be

the most consistent data sources, and relies on

only a small number of explicit assumptions. The

publication also leverages the local specialization

of professionals in KPMGs Indian member firm to

present a better informed view of the future.

Definitions and classifications

Size and prospects of individual states:

Largeandgrowingfaststateswhere2006

expenditure is above $500m and investmentis expected to expand relatively rapidly, with

average projected annual growth rates of over

6.5 percent in the period 2009-2013

Largeandgrowingslowlystateswhere

2006 expenditure is above $500m though

investment is expected to expand relatively

slowly, with average projected annual

growth rates below 6.5 percent in the period

2009-2013

Smallandgrowingfaststateswhere

2006 expenditure is below $500m while


rapidly, with average projected annual

growth rates of more than 6.5 percent in the

period 2009-2013

Smallandgrowingslowlystateswhere

2006 expenditure is below $500m and


slowly, with average projected annual

growth rates below 6.5 percent in the period

2009-2013

The term state is used throughout this

publication as a reference to various areas of

the respective federal structures of India. The

Trend Monitor is concerned with all 28 states

and four of the seven union territories of India

as data for the least populous union territories

of Dadra and Nagar Haveli; Daman and Diu;

andLakshadweepwereunavailable.

Method

A detailed overview of the research and

analysis method applied can be found in the

Method Output section of this report.


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India: expenditure on healthcare infrastructure in 2006 (US$ million)

India: expenditure on healthcare infrastructure in 2006 per person (US$)

Analysis: KPMG International, refer to Method section of this report


0

200

400

600

800

1,000

1,200

1,400

AndamanandNicobarIslands

AndhraPradesh

ArunachalPradesh

Assam

Bihar

Chandigarh

Chattisgarh

Delhi

Goa

Gujarat

Haryana

HimachalPradesh

JammuandKashmir

Jharkhand

Karnataka

Kerala

MadhyaPradesh

Maharashtra

Manipur

Meghalaya

Mizoram

Nagaland

Orissa

Puducherry

Punjab

Rajasthan

Sikkim

TamilNadu

Tripura

UttarPradesh

Uttranchal

WestBengal

US$m

0

5

10

15

20

25

30

35

40


AndhraPradesh

Arunac

halPradesh

Assam

Bihar

Chandigarh

Chattisgarh

Delhi

Goa

Gujarat

Haryana

Himac

halPradesh

Jammua

ndKashmir

Jharkhand

Karnataka

Kerala

Madh

yaPradesh

M

aharashtra

Manipur

Meghalaya

Mizoram

Nagaland

Orissa

Puducherry

Punjab

Rajasthan

Sikkim

TamilNadu

Tripura

UttarPradesh

Uttranchal

W

estBengal

US$


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5 Global Infrastructure: Trend MonitorIndian Healthcare Edition


India: forecast cumulative expenditure on healthcare infrastructurein 20092013 (US$ billion)

India: forecast average annual growth rate in healthcare infrastructureexpenditure 2009- 2013 (percent)



0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

Andaman

andNicobarIslands

AndhraPradesh

ArunachalPradesh

Assam

Bihar

Chandigarh

Chattisgarh

Delhi

Goa

Gujarat

Haryana

HimachalPradesh

J

ammuandKashmir

Jharkhand

Karnataka

Kerala

MadhyaPradesh

Maharashtra

Manipur

Meghalaya

Mizoram

Nagaland

Orissa

Puducherry

Punjab

Rajasthan

Sikkim

TamilNadu

Tripura

UttarPradesh

Uttranchal

WestBengal

0

1

2

3

4

5

6

7

8


AndhraPradesh

ArunachalPradesh

Assam

Bihar

Chandigarh

Chattisgarh

Delhi

Goa

Gujarat

Haryana

H

imachalPradesh

Jam

muandKashmir

Jharkhand

Karnataka

Kerala

MadhyaPradesh

Maharashtra

Manipur

Meghalaya

Mizoram

Nagaland

Orissa

Puducherry

Punjab

Rajasthan

Sikkim

TamilNadu

Tripura

UttarPradesh

Uttranchal

WestBengal

US$bn


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India: forecast cumulative expenditure on healthcare infrastructure in20092013 per person (US$)

India: ratio of forecast cumulative expenditure on healthcare2009 2013 to the forecast average for all states


0

50

100

150

200

250

300


AndhraPra

desh

ArunachalPra

desh

Assam

Bihar

Chand

igarh

Chattis

garh

Delhi

Goa

Gu

jarat

Haryana

HimachalPra

desh

JammuandKas

hmir

Jhark

hand

Karnataka

K

erala

MadhyaPra

desh

Mahara

shtra

Manipur

Meghalaya

Mizoram

Nagaland

O

rissa

Puducherry

Punjab

Rajas

than

Sikkim

TamilNadu

Tr

ipura

UttarPra

desh

Uttranchal

WestBengal

US$

3

.66

2.6

6

2.

62

2.3

9

2.3

2

2.3

1

2.2

0

1.9

1

1.6

9

1.5

9

1.3

3

1.1

0

0.8

5

0.7

8

0.5

7

0.5

4

0.4

8

0.

48

0.4

8

0.

41

0.

35

0.3

3

0.2

0

0.

14

0.1

3

0.1

0

0.

08

0.

07

0.

06

0.0

5

0.0

5

0.0

3

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Maharashtra

Rajasthan

WestBengal

UttarPradesh

TamilNadu

AndhraPradesh

Kerala

Gujarat

Karnataka

Haryana

Delhi

MadhyaPradesh

Punjab

HimachalPradesh

Bihar

JammuandKashmir

Orissa

Assam

Jharkhand

Uttranchal

Chattisgarh

Manipur

Tripura

Nagaland

Chandigarh

ArunachalPradesh

Meghalaya G

oa


Mizoram

Sikkim

Puducherry

Ratio


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Model Output

Total healthcare infrastructure

expenditure for 2013 is predicted to

reach $14.2 billion, a near 50 percent

increase on the 2006 total.

Of the 32 states, the six states of

Maharashtra,Rajasthan,WestBengal,

Uttar Pradesh, Tamil Nadu and Andra

Pradesh represent just over 50 percent

of the total expenditure in 2006.

Maharashtra alone spent around 12

percent of the total expenditure at

approximately US$1.1 billion, yet the

state accommodates fewer than 10

percent of the overall population.

Twelve states spent less than

US$100million each in 2006, together

representing less than 4.5 percent

of total national expenditure and 3.6

percent of the population. Among

these the smallest expenditure

states were Goa, Andaman and

Nicobar Islands, Mizoram, Sikkim, and

Puducherry.

The state of Uttar Pradesh was only

the third largest in terms of absolute

expenditure in 2006 but hosts over 16

percent of the population.

The states of Himachal Pradesh,

Manipur and Andaman and Nicobar

Islands were the only states to spend

over US$30 per capita on healthcare

infrastructure in 2006, with about

two thirds of the remaining states

spending less than US$15, including

the 6 largest absolute expenditure

states.

The state with the highest per capita

healthcare expenditure for 2006 is the

Andaman and Nicobar Islands at $36,

while the state with lowest is Bihar at

just $1.9, revealing uneven distribution

of infrastructure expenditure.

The states of Manipur and Nagaland

are expected to grow the fastest

through the medium term, each

projected to have average annual

growth rates over 8 percent against

an overall national rate of 5.8 percent.

Of the larger states, expenditure on

healthcare infrastructure is expected

togrowthefastestinRajasthanand

West Bengal.

Maharashtra maintains its dominance

as the state with the highest

cumulative healthcare infrastructure

expenditure over the forecast

period, with a projected spend at

over US$7.3 billion. Only the 2 other

statesofRajasthanandWestBengal

are projected to witness cumulativehealthcare expenditures of over US$5

billion from 2009 to 2013.


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2 KPMG/Confederation of Indian Industry (2008) Health Insurance Inc.: The Road Ahead

Insight

Against a world average of around four

hospital beds per 1000 population,

India lags behind at just over 0.72. This

is a clear indication of the insufficiency

of healthcare infrastructure in India.

The Indian healthcare industry is

estimated to double in value by 2012

and more than quadruple by 2017. The

main factors propelling this growth

are rising income levels, changing

demographics and illness profiles

with a shift from chronic to lifestyle

diseases. This is likely to result in

considerable infrastructure challenges

and opportunities.

Indian healthcare infrastructure over

the last decade has not kept pace with

growth in population. The available

capacity has increased but not in linewith rising demand. This is likely to be

in part due to lack of capacity building

in semi urban and rural areas.

The Indian healthcare system is

controlled by respective state

authorities, presenting an opportunity

to improve responsiveness to

healthcare needs at a more local

level. Our analysis suggests that

there is uneven focus on healthcare

infrastructure in India. The variety

of organizational structures and

processes in healthcare delivery may

result in greater inequalities between

geographical areas.

There is a growing agenda to deal

with the issues of urban healthcare

infrastructure as rural to urban

migration has significantly increased

demand for these services.

The healthcare sector in India is

undergoing considerable reform

prompted by the continuing phase

of rapid economic growth. Emerging

markets, such as diagnostic chains

and medical device manufacturers,

are attracting increasing amounts ofinvestment.

There is growing appreciation for

the role private involvement may

have in meeting public demand and

government is piloting the use of PPP

models to help improve infrastructure

and healthcare provision.


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Method

This publication draws on data from

named sources and insights from profes-

sionals in KPMGs Indian member firm, in

order to present both model outputs and

commentary on the Indian healthcare

infrastructure market.

Information on market size has not

been readily available and as such it is

produced using an econometric model,

utilising data sourced externally and a

limited number of explicit assumptions.

The dataset3 is presented in Appendix 1.

Our forecasts of the future size of

the healthcare infrastructure markets

across India encompass expenditure at

different levels of government as well

as the private sector on building and

maintaining healthcare infrastructure

for uses such as medical research, drug

production or primary care services.

Our modeling relies on past trends to

project the future and does not attempt to

capture the undercurrents of political risk,

financial and other market fluctuations, or

sudden spikes in infrastructure activity.

The process of data gathering and

presentation was as follows:

Constructionoutputdata(2000-2006)

for 32 Indian states was obtained from

Indian National Income Accounts at

factor cost and converted to market

prices.

Theconstructionoutputdatawas

converted to US$ at June 2000

exchanged rate and rebased in 2006

prices using a price index from US

Bureau of Economic Analysis.

Constructionoutputforeachstate

was multiplied by 0.66 to arrive

at healthcare construction output

(including new build as well as repair

and maintenance). This ratio is based

on the average long-run ratio in UK

Construction Statistics Annual (UK

Department of Business Enterprise

andRegulatoryReform).

Healthcareconstructionoutput

was multiplied by 3.6 to include the

expenditure on design and professional

services, land, plant and materials.

This ratio was derived from the UK

Construction Statistics Annual and UK

Quarterly Capital Expenditure Inquiry

(UK Office of National Statistics).

Theforward-lookingexpenditures

up to 2013 were estimated by linear

extension of the line of best fit for the

historical data.

Thepercapitaexpenditureswhere

created using 2006 population sizes

(www.india.gov.in) except for Jammu

& Kashmir (2005), Nagaland (1997),

West Bengal (2004) and Puducherry

(undated) due to availability of data.

The population sizes were considered

to remain unchanged in the calculation.

It should be noted that the numbers

for India are not directly comparable

with those presented in other editions

of Global Infrastructure: Trend Monitor

as different sources and methods have

been used in producing them.

3 The datasets have been produced in collaboration with Dr Stephen Gruneberg


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Appendices


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Appendix 1. Historical and forecast future healthcare infrastructure expenditure in India (in US$ millions at 2006 prices)

State 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Andaman and Nicobar

Islands7 7 9 10 13 13 15 17 18 20 21 23 24 26

Andhra Pradesh 402 408 447 493 547 603 672 759 774 825 877 928 980 1,031

Arunachal Pradesh 17 19 25 22 24 29 30 33 35 37 39 41 44 46

Assam 109 114 132 119 146 148 154 160 169 176 183 191 198 206

Bihar 143 144 140 160 145 173 171 217 201 210 218 227 236 245

Chandigarh 11 12 23 18 22 31 33 40 42 46 50 54 58 62

Chattisgarh 37 32 43 46 54 76 90 108 109 120 130 141 152 162

Delhi 248 287 280 314 334 365 408 443 455 482 509 535 562 589

Goa 10 10 11 12 15 16 19 21 22 23 25 27 28 30

Gujarat 386 380 383 432 474 532 588 633 651 689 728 767 806 844

Haryana 222 273 279 320 342 392 455 505 523 562 600 639 678 716

Himachal Pradesh 130 131 142 161 161 184 210 278 258 277 295 314 332 351

Jammu and Kashmir 69 76 90 102 105 131 150 169 176 190 204 218 233 247

Jharkhand 105 100 114 112 127 141 152 161 167 176 185 194 203 212

Karnataka 297 307 350 380 405 443 499 550 567 603 640 676 712 748

Kerala 370 339 324 397 483 558 637 695 720 774 828 882 936 991

Madhya Pradesh 207 230 239 248 268 307 336 365 375 397 419 441 464 486

Maharashtra 771 631 678 748 815 1,018 1,149 1,195 1,232 1,311 1,390 1,469 1,548 1,627

Manipur 24 32 39 44 56 71 79 100 103 113 123 134 144 155

Meghalaya20 21 22 22 24 25 26 27 28 29 30 31 32 33

Mizoram 7 7 9 11 12 13 14 16 17 19 20 21 23 24

Nagaland 10 13 17 19 24 30 36 42 44 48 53 57 62 66

Orissa 113 125 125 133 139 156 154 165 171 178 185 192 199 207

Puducherry 11 11 11 12 12 12 12 12 13 13 13 13 13 14

Punjab 164 175 188 196 205 230 260 288 289 306 323 340 357 374

Rajasthan 416 386 434 470 590 569 781 866 867 934 1,001 1,068 1,135 1,203

Sikkim 5 6 8 9 11 12 14 16 17 19 20 22 23 25

Tamil Nadu 481 506 529 572 611 666 714 783 801 844 887 929 972 1,015

Tripura 20 27 33 37 43 45 51 62 64 70 75 80 86 91

Uttar Pradesh 503 530 554 558 613 672 771 805 825 869 914 958 1,002 1,047

Uttranchal 58 61 82 88 93 99 114 131 136 146 156 166 176 186

West Bengal 370 389 424 455 554 608 760 819 850 917 985 1,052 1,119 1,187


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2009 KPMG International. KPMG International is a Swiss cooperative.Member firms of the KPMGnetwork of independent firms are affiliated with KPMG International. KPMG International providesno client services. No member firm has any authority to obligate or bind KPMG International or anyother member firm vis--vis third parties, nor does KPMG International have any such authority toobligate or bind any member firm. All rights reserved. Printed in the United States.

KPMG and the KPMG logo are registered trademarks of KPMG International, a Swiss cooperative.

Designed and produced by KPMG LLP (U.S.)s National Design Proposal & Production Services

Publication name: Infrastructure trend monitor

Publication number: 20866NSS

Publication date: July 2009

The information contained herein is of a generalnature and is not intended to address the circum-stances of any particular individual or entity.Although we endeavor to provide accurate andtimely information, there can be no guarantee thatsuch information is accurate as of the date it isreceived or that it will continue to be accurate inthe future. No one should act on such informationwithout appropriate professional advice after athorough examination of the particular situation.

KPMG member firms ability to deliver somespecific services may be limited in individualcountries by local laws and governancerestrictions.

KPMG's Global Infrastructure professionals provide objective advisory support to our

member firms clients through the lifecycle of complex infrastructure projects.

Our teams have extensive local and global experience advising infrastructure contractors,

operators and investors, and government organizations in the following areas:

Planning,structuring,andmanagementofnewinfrastructureinvestments

Procurementandfinancingsupport

Improvementandmonitoringofconstructionandoperations

Restructuringofdistressedprojects

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For additional information regarding our services and capabilities,please e-mail us at [email protected].

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