Post on 16-Dec-2015
“Investment Opportunities in Healthcare”
Gaurav Malhotra
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Flow of Presentation
Indian Healthcare Landscape
Key Challenges
Enablers and Growth Drivers
Investment Opportunities
Summary
INDIAN HEALTHCARE LANDSCAPE
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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
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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
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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
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3
2
4
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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
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