Healthcare Market Overview, India - May 2014

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Prepared by Catapult! May 2014!

CAT PULT

India Healthcare Macro Environment!A Brief Overview!

Strictly Confidential 2

Brief introduction to India and its health system!contents!

Note: All data is from published (government or otherwise) sources, unless specified

2. Healthcare in India – brief overview

3. Burden of Disease and Causes of Death

4. Healthcare Industry Market Size

5. Health Infrastructure

1. India – a quick overview

6. Health Services

7. Specialists in India


India – a quick overview!!

People !  Population: 1.21 Billion !  Urban and Rural population share at

31% and 69%, respectively !  Top 20 cities account for ~5.3% of its

total population !  28 states & 7 Union Territories

Key, Select Economic Indicators !  GDP, Purchasing Power Parity basis

-  Total: US$ 5.3 Trillion -  Per Capita: US$ 4,209

!  In 2008, Urban GDP (~30% popln.) accounted for 58% of India’s GDP (share to go up to 70% by 2030)

!  Top 5 states (viz., Maharashtra, Gujarat, Andhra Pradesh, Tamil Nadu & Delhi) have highest share of GDP to total

Notes: UT is Union Territory – an administrative division that is under the direct rule of the central (federal) government Sources: GDP estimates from The International Monetary Fund (2013); McKinsey Global Institute (2010 Report)

16

MA P-4

CENSUS OF INDIA 2011PERCENTAGE OF URBAN POPULATION

Tier-1 city Tier-2 city


Healthcare in India – brief overview, 1!macro environment!

!  Health in India, is a state subject. This means that while the central government enacts laws, the implementation of such laws is left to each state (currently 28 states & 7 union territories) -  While India does not have universal health coverage, it does have national health insurance

schemes targeted mainly at the rural poor. Furthermore, some states have implemented health insurance schemes covering the state’s entire population

!  While improvements have been made across in macro health indicators, major challenges remain: -  Healthcare expenditure as % of GDP is est. at 4%*, of which 12th Plan (2012-2017) goal is to increase

government funding to 2.5% of GDP (from current ~1.4%). Remainder is private expenditure -  ~60% of health expenditure is estimated to be out-of-pocket (OOP)* (down from ~67% in 2000)

* 2010 Data (best estimates) Note: Various govt. estimates are available for OOP expenditure on health – some reports suggest OOP to be ~70% of total Sources: Report of National Commission on Macro-Economics & Health (2005); Confederation of Indian Industry (Dec 2012)

Backdrop

Health Services

!  Nearly 80% specialist doctors work in urban areas -  Estimates suggest that ~700 Mn. people (i.e. ~60% of popln.) have no access to a specialist doctor

!  Government has not kept pace on infrastructure needs to provide access to patients " private sector dominates existing bed capacity, currently at 63% of total beds (vs. 49% in 2002)

Strictly Confidential

Healthcare in India – brief overview, 2!key, select indicators!

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Disease / Health Condition

# of Cases (2005)

# of Cases (2015E)

HIV / AIDS 5.1 Mn. 19.0 Mn

Cancers 0.807 Mn. 1.00 Mn.*

Diabetes 31 Mn. 46 Mn.

Cardiovascular 29 (2000) 64 Mn.

Injuries – deaths 0.98 1.1 Mn.

* 2012 Estimate Notes: Exchange rate of 1 US$ = INR 60; Private spending includes spending by employers, NGOs & international entities Sources: National Commission on Macroeconomics & Health (2005 Report); World Bank; High Level Expert Group on Universal Health Coverage for India (2011 Report); GLOBOCAN Project for International Agency for Research on Cancer

Top 10 cancer types in India 1.  Breast 2.  Cervix 3.  Lip, Oral Cavity 4.  Lung 5.  Colorectum

6.  Stomach 7.  Oesophagus 8.  Other Pharynx 9.  Liver 10.  Larynx

73

27

1 Private Public

1,820 (or, US$ 30)

Health spending in Indian Rupees (2009-10), per capita per year

2,787

1,007

585

372

205

Top Quintile

20-40%

40-60%

60-80%

Bottom Quintile

Most private spending is by the

wealthiest households

basis National Sample Survey of households (66th national round)

Sele

ct D

isea

ses


Burden of Disease and Causes of Death!!

Sources: Report on Macroeconomics and Health in India (Burden of Disease in India, Background Papers) 2005; India Health Beat – a publication of WHO & Public Health Foundation of India (Jun 2012 Issue)

50.3%

33.0%

16.7% Communicable Diseases, Maternal & Perinatal Conditions

Non-Communicable Diseases

Injuries

1998 2005

39.0%

50.0%

11.0%

36.2%

29.0%

16.0%

10.8%

8.0%

Communicable Disease

Cardiovascular Disease

Other Chronic Diseases

Injuries

Cancer

2005

21.0%

35.9% 19.1%

12.1%

11.9%

2025 Forecast

Burden of Disease

Main Causes of Death


Burden of Disease!summary notes!

Non-Communicable Diseases (NCDs) !  Overall, NCDs will become the leading cause of death & has been projected to see a two-fold in its risk by

2025 (by WHO). India already faces serious challenges, as briefly summarized in select examples below: -  CVD occurs earlier among Indians (by at least 10 years, relative to developed countries) & at lower risk

factor thresholds; India is already termed as the diabetes capital of the world, with est. 51 Mn. people with diabetes (2010) & likely to go up to 87 Mn. by 2030*; A estimated 214 Mn. people will suffer from hypertension by 2030

Communicable Diseases (CDs) !  Even though NCD burden will become larger, by no means the burden from NCDs be contained sharply.

India faces many challenges & select few are summarized below: -  In 2002, it was estimated that ~40% of population of all ages has Mycobacterium tuberculosis infection &

that TB is the single most important cause of death; Similarly, with about 2.5 Mn. HIV infected persons, India has the world’s 3rd highest number of cases in absolute numbers – though much less so in rates

Overview !  In the 2005 NCMH study, 17 priority health conditions were identified as significant public health problems !  Within communicable diseases, HIV, TB, Malaria, Diarrhoea, Acute Respiratory Infections, Maternal &

Perinatal conditions accounted for nearly half of India’s disease burden in 1998 !  Within NCDs, Cardiovascular disease (CVD), Diabetes, Respiratory conditions (asthma & COPD) &

mental health disorders are expected to account for a sharp increase in disease burden in the future

* people with diabetes aged between 20-79 years Sources: Report on Macroeconomics and Health in India (Burden of Disease in India, Background Papers) 2005 Study; India Health Beat – a publication of WHO & Public Health Foundation of India (Jun 2012 Issue); WHO India Country Cooperation Strategy 2012-17


Healthcare Industry Market Size!snapshot!

2008 2012 Others 0.5 1.0 Diagnostics 1.2 2.5 Medical Equipment 0.4 6.7 Delivery 27.4 54.5

-

10.0

20.0

30.0

40.0

50.0

60.0

70.0

Mar

ket S

ize

(US$

Bn.

)

30

65

Overall Market

22% CAGR

Note: numbers rounded-off

Healthcare Services Market Characteristics !  Healthcare services delivery in India is

private-sector dominated & highly fragmented

!  While overall market has grown at 20%+ CAGR, medical equipment & diagnostics markets have grown faster

!  Between 2000-2011, estimated Foreign Direct Investment in hospitals & diagnostics sector was US$ 1 Bn. -  Diagnostics sector has received the largest

number of FDI approved projects (though not the maximum $ investments)

!  Various policy initiatives have been taken to promote investments in healthcare services incl. automatic approvals for up to 100% ownership, reduction in customs duty for import of medical equipments, among others

Note: Market estimate excludes pharma, biotech & the health insurance sector; Others includes medical tourism market Sources: ASSOCHAM-Yes Bank Report (2012); other secondary reports; Catapult analysis


Health Infrastructure!overview!

Primary Health Centers

Hospitals

Med. Colleges

Type Total

Medical Colleges 335

All Hospitals (General, Specialized) 11,993

Primary Health Centers (incl. private clinics, community

centers & sub-centers) 176,820

Notes !  Of the nearly 12,000

hospitals, nearly 7,500 hospitals (~62%) are in rural areas

!  Community centers (4,809) are in semi-urban areas & combine villages & small towns, whereas primary centers (23,887) & sub-centers (148,124) cover even smaller areas / population

!  India lags behind all macro-indicators (WHO guidelines), whether on bed capacity (0.9 per 1000 population), or number of health professionals (doctors, nurses)

!  Private sector has taken a lead role in development / addition of new bed capacity " private bed capacity has increased at nearly 3 times the rate of govt. owned bed capacity between 2002-10 and is now nearly double that of public facilities at an aggregate

Notes: Community centers (covering a district) may be classified as a hospital; World Average of Beds per 1000 population is 3.96 Sources: National Health Profile of India (2011), Central Bureau of Health Intelligence, Ministry of Health and Family Welfare; Confederation of Indian Industry Study (Dec 2012)

All forecasts suggest supply will not keep pace with demand for services

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Key Overall Challenges !  Disease-related: India faces serious burden of disease,

whether CDs, or NCDs. While significant progress has been made across many diseases, much remains to be done

!  Trained Health Staff: While health infrastructure has expanded substantially in the past decade, the picture for trained health staff is not as encouraging. Surveys suggest even basic services (e.g. no. of deliveries) are not fully utilized due to lack of trained health staff at facilities

!  Quality of Services: While there exists the challenge of providing health services to the population, on the other hand India is recognized as an emerging leader in medical tourism " Highest-quality health care is available if there exists the ability to pay (mainly) out-of-pocket

!  Significant progress has been made in certain CD areas (e.g. HIV/AIDS, TB) due to concerted effort (with support of various multi-lateral agencies) to contain the spread

!  Since states (not central govt.) are primarily responsible for implementation of health policies, certain states have successfully implemented insurance schemes that cover a large part of their population

!  Innovative models of treatment are being taken up that are not only improving patient access, but significantly lowering treatment costs (e.g. ‘Aravind Eye Hospital’ for eye care – http://www.aravind.org)**

CDs is Communicable Diseases and NCDs is Non-Communicable Diseases ** https://globalconnections.hsbc.com/global/en/articles/frugal-innovation-healthcare Sources: National Health Profile of India (2011), Central Bureau of Health Intelligence; Tertiary Care Institutions, 12th 5-Yr Plan (2012-17), Planning Commission of India; HLEG Report on Universal Health Coverage for India (2011), WHO India Country Cooperation Strategy 2012-17

Health Services!overview!


Specialists in India!chronic shortage to persist!

Notes: Gastroenterology Surgeons members, as of October 2011; Seats incl. Medical Council of India (MCI) and Diplomate of the National Board (DNB); best estimates as not all members register in various associations; all date are best estimates only Sources: respective Associations, (various) Secondary sources; Catapult analysis

2.  General Surgeons, performing laparoscopy surgeries

4.  Gastroenterology Surgeons

Key Specialties

1.  Total registered General Surgeons

There are are an 16,000 ‘practicing’ general

surgeons across India

Though membership list is estimated to be ~25,000, no other data is available to

further validate these numbers

An est. 5,000 surgeons practice the laparoscopy

technique

An est. 700 surgeons (across specialties) perform large number of

surgeries, in the top 30 cities

862 surgeons, across 240 cities

An est. 300 surgeons perform large number of surgeries, in the top 26 cities

5.  Intervention Radiologists

200-240 surgeons, practicing (largely) in top

20 cities n.a.

Overall Estimates Notes

In all, across surgical disciplines (only), there are 1593 seats for super-specialties courses, of which Urology, Cardiothoracic & Vascular Surgery, Neuro, Plastic and Paediatric surgical

disciplines (top 5) account for 70% of all seats

3.  Nephrologists An est. 800-850 practicing nephrologists

Vast majority of nephrologists in the top 30 cities


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Healthcare Market Overview, India - May 2014

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