Medical devices market in india 2014 - Sample

Medical Devices Market – India

February 2014

2 MEDICAL DEVICES MARKET IN INDIA 2014.PPT

Executive Summary

Market

Trends

Competitive Landscape

Domestic market for medical devices in India was pegged at INR X1 bn in 20-- which is poised to grow to INR X7 bn by 20--

Growing hospital infrastructure and healthcare spending is fostering the need for high-end devices for accurate and fast treatment

Relocation of manufacturing facilities

Increasing joint ventures and tie-ups

Various exhibitions and trade fairs

Drivers & Challenges

Drivers: Improving health infrastructure Increasing healthcare spending Changing demographics and growing target

consumer group Increasing lifestyle diseases and therapies Increasing medical tourism in India Growing health insurance market

Government Involvement

Govt. bodies and associations such as MoHFW, CDSCO and AIMED are aiming to provide medical devices sector with a regulatory structure in order to promote indigenous production CDSCO has laid down registration and license mechanisms to regularize import of drugs and

devices

Challenges: High dependency on imports

Lack of standard regulatory structure

Increasing demand for refurbished devices

Focus on cost reduction and innovation

Use of plastics in medical devices

Major Players

Company A Company B Company C


•Macro Economic Indicators •Indian Healthcare Scenario •Introduction •Market Overview •Export Import •Distribution Channel •Drivers & Challenges •Trends •Government Involvement Government Bodies Government Regulations Government Initiatives

•Competitive Landscape •Recent Investments •Strategic Recommendations •Appendix

4

SAMPLE Economic Indicators (1/3)

14.71

11

12

13

14

15

INR tn

Q4

n4 m4

Q3

o3 n3

m3

Q2

p2 o2 n2

m2

Q1

p1 o1 n1

m1

20-- - -- 20-- - -- 20-- - -- 20-- - --

GDP at Factor Cost: Quarterly

Inflation Rate: Monthly

0.83

1.26

0.42

0.85

1.73

0.0

0.5

1.0

1.5

2.0

Jun 2013 - Jul 2013 Oct 2013 - Nov 2013

%

Sep 2013 - Oct 2013 Aug 2013 - Sep 2013 Jul 2013 - Aug 2013

MEDICAL DEVICES MARKET IN INDIA 2014.PPT

5

Healthcare system in India requires a larger public outlay due to huge population base Healthcare Industry Overview

•According to “World Health Statistics 2011 Report, India”,

healthcare comprised 4.2% of India’s GDP in 2008 Public and private expenditure on healthcare as percentage of

GDP was 1.4% and 2.8% respectively

• Favorable demographics, increase in awareness levels

and better medical care are some of the driving factors

behind the healthcare sector in India

•Hospitals form the largest segment of overall healthcare

market, followed by pharmaceuticals, medical devices,

health insurance and diagnostics

•Gradual penetration of health insurance is making health

services more affordable through increased demand for

preventive and curative healthcare services

• Superior quality healthcare, coupled with low treatment

costs in comparison to other countries, is benefiting

Indian medical tourism which has, in turn, enhanced the

prospects of the Indian healthcare market Treatment for major surgeries in India costs approximately 20%

of that in developed countries

Healthcare Sector – Market Size & Growth

0

5

10

15

h6

2017e

INR units

2016e

H%

2018e

h7

h5

2015e

h4

2014e

h3

2013e

h2

2012

h1

Healthcare Market Segmentation: Overview

C% A%

E%

B%

D%

F%

F D

E C

B

A

Note: ‘Others’ include healthcare IT and allied activities in healthcare space



Medical Devices are classified as per the risk level and their intended use

•Medical devices under Section 3 (b) (iv) of the Drug and Cosmetic Act refers to any instrument, apparatus, machine, appliance, implant, in vitro reagent or calibrator, software, material or other similar or related articles Intended by manufacturer to be used alone or in combination, for human beings for one or more specific purposes of diagnosis,

prevention, monitoring, treatment or alleviation of disease Does not achieve its primary intended action in or on the human body by pharmacological, immunological or metabolic means, but

which may be assisted in its intended function by such means

•Medical Devices in India are classified as per their risk levels and intended use and are divided into different classes •Classification is carried out in accordance with Annex IX of Schedule M-III provided by The Drugs Technical Advisory

Board (DTAB)

Class A Low Risk

Class B Low-moderate Risk

Class C Moderate-high Risk

Class D

•Heart valves, implantable defibrillator

High Risk

• Includes devices such as thermometers and tongue depressors

•Hypodermic needles, suction equipment

• Lung ventilator, bone fixation plate

If a manufacturer desires to reclassify a device to a lower class, they must submit a justification to The Central Licensing Approval Authority (CLAA) for evaluation that the movement to the lesser stringent class will assure sufficient safety and

effectiveness of the device

Medical Devices – Definition


Growing population, along with a high growth economy, will be instrumental in driving demand for medical devices

•Medical devices is essentially a multi product industry that comprises of products ranging from MRI equipment to surgical needles

• There are some 700 medical device makers in India Domestic manufacturers dominate the market for low value

medical supplies such as needles, syringes, catheters, blood collection tubes, medical electronics and implants, while multinational corporations control the high end medical equipment segment

• In terms of technology – high end medical devices are primarily found in tier I cities Gradually it is expected that demand in tier II and tier III cities

will also rise As economic growth picks up, this transition is expected to be

smooth • The various stakeholders in the medical devices industry

include manufacturers, distributors, hospital chains, pathology labs and diagnostic centers

• The medical equipment forms the largest share in the medical devices market Medical equipments stand out due to the high price of the

equipment in comparison to implants and disposables and supplies

Market Overview (1/3)

0

200

400

600

800

INR bn

X%

20--e

X7

20--e

X6

20--e

X5

20--e

X4

20--e

X3

20--e

X2

20--

X1

Medical Devices Market Size & Growth

Market Segmentation 20--

Y%

Z%

X%

Y X Z


Drivers & Challenges – Summary

Drivers

Improving health infrastructure

Increasing healthcare spending

Changing demographics and growing target consumer group

Increasing lifestyle diseases and therapies

Increasing medical tourism in India

Growing health insurance market

Challenges

High dependency on imports

Lack of standard regulatory structure

9

SAMPLE


Trends

`

Relocation of manufacturing facilities

Increasing joint ventures and tie-ups

Focus on cost reduction and innovation

Increasing demand for refurbished devices

Various exhibitions and trade fairs Key

Trends

Use of plastics in medical devices


Disclosures to be made by the importers of medical devices are as follows:

• Applicant’s and foreign manufacturer’s company name, address and contact information

• Name and address of the local authorized representative

• Name and address of the importer

• Description of device • Category of device • Method of use • Medicals specialty of the device • Particulars of the constituents • Packaging description • Storage conditions • Contraindications, warnings,

precautions & alternate therapy, wherever applicable

• Approval of the product from any other regulatory agency

• Copy of ISO/EN Certification for the manufacturing facility

• List of countries where the device is being sold

• List of countries where device is withdrawn from sale with reasons, if any

• Details of Good Manufacturing Practices employed by the manufacturer to ensure quality of the device

• For e.g. Component/Material used, manufacturing process, final product testing or design inputs/outputs verification, shelf life

Applicant Details

• If a device incorporates a medicinal product, it must be accompanied by: data on the safety, quality & usefulness of the medicinal substance used, data on compatibility with the products, clinical data & published articles, and batch release certificate

Product Information

Regulatory Status

Master File

Devices Containing Medicinal Product

Post Market

Surveillance

Conformity of Product Safety and Standards

• Procedures for distribution of records

• Complaint handling • Adverse incident reporting • Procedure for product recall

• Registration Certificate shall be issued in Form 41 of the said Rules

• Application for import license shall be made in Form 8 along with a fee of INR 1,000 in the Form and manner prescribed under the Drugs and Cosmetics Rules


Key Ratios of 3 Major Companies – Operational Basis (FY 2012-13) (1/4)

Competitive Benchmarking (2/5)

0

20

40

60

c3 b3

Player B Player C

a3

%

c2

b2

a2

Player A

c1 b1

a1

Net Margin Operating Margin Gross Margin (%)

• Player A recorded gross margin of a1% higher than both Player B and Player C which recorded gross margins of b1% and c1% respectively

• Player A recorded operating margin of a2%, higher than both Player B and Player C which recorded operating margins of b2% and c2% respectively

• Player A recorded net margin of a3% higher than both Player B and Player C which recorded net margin, of b3% and c3% respectively

Note: Calculation on basis of figures for latest available financial years

12

SAMPLE Public: Domestic Company – Player A (1/4)

Key People

Products and Services

Company Information Offices and Centres – India

Corporate Address xx

Tel No. xx

Fax No. xx

Website xx

Year of Incorporation xx

Ticker Symbol xx

Stock Exchange xx

Name Designation

Thane

Head Office

Category Products/Services

Healthcare Equipment and Supplies

Manufactures and sells sterile needled sutures such as absorbable , non absorbable sutures, female urinary incontinency set, surgical mesh, disposable skin stapler, cardiovascular vessel knife


13

SAMPLE Key Ratios

Financial Summary

• The company earned a net profit of INR 15.74 mn in FY 20--, as compared to net profit of INR 15.09 mn in FY 20--

• The company reported total income of INR 540.87 in FY 20--, registering an increase of 3.06 per cent over FY 20--

• The company earned an operating margin of 7.48 per cent in FY 20--, a decrease of 0.46 percentage points over FY 20--

• The company reported debt to equity ratio of 0.72 in FY 20--, an increase of 10.58 per cent over FY 20--

Financial Summary

Net Profit / Loss Total Income

20.79

0

200

400

600

-20

0

20

40

2010

15.50 476.38

INR mn

2011

502.45

2012

15.09

INR mn

540.87 524.80

2013

15.74

Indicators Value (22/01/2014) Market Capitalization (INR) 167.82

Particulars y-o-y change

(2011-10) 2013 2012 2011 2010

Profitability Ratios Operating Margin -0.46 7.48% 7.94% 9.15% 8.09%

Net Margin 0.02 2.89% 2.87% 4.14% 3.25%

Profit Before Tax Margin -0.03 4.77% 4.80% 6.39% 4.94%

Return on Equity -0.48 9.01% 9.49% 14.45% 12.60%

Return on Capital Employed -2.32 19.00% 21.32% 25.47% 25.19%

Return on Working Capital -3.93 24.87% 28.80% 35.41% 38.05%

Return on Assets -1.20 8.52% 9.71% 10.69% 9.81%

Return on Fixed Assets -0.98 83.26% 84.24% 98.45% 74.55%

Cost Ratios Operating costs (% of Sales) 0.43 92.48% 92.06% 90.85% 91.91%

Administration costs (% of Sales)

0.94 41.69% 40.75% 42.02% 37.63%

Interest costs (% of Sales) 0.43 2.30% 1.87% 1.66% 2.92%

Liquidity Ratios Current Ratio 0.08% 1.62 1.62 1.52 1.42

Cash Ratio 247.52% 0.12 0.03 0.01 0.02

Leverage Ratios Debt to Equity Ratio 10.58% 0.72 0.66 0.70 0.95

Debt to Capital Ratio 6.14% 0.42 0.40 0.41 0.49

Interest Coverage Ratio -23.00% 3.26 4.24 5.51 2.77

Efficiency Ratios Fixed Asset Turnover 4.48% 11.08 10.60 10.76 9.21

Asset Turnover -7.30% 1.13 1.22 1.17 1.21

Current Asset Turnover -8.59% 1.27 1.39 1.32 1.40

Working Capital Turnover -8.71% 3.31 3.62 3.87 4.70

Capital Employed Turnover -9.99% 1.80 2.00 2.06 1.99

Improved Decline

Financial Snapshot

Public: Domestic Company – Player A (2/4)


14

Key Business Segments Key Geographic Segments

Business Highlights

Description Details

Overview • Is an ISO 9001:2008 certified company • Introduced Good Manufacturing Practice in production and quality control areas ,including detailed batch

record maintenance, recall system, procedure and production environment control and staff training

Medical Equipment and Supplies

• Product profile includes absorbable sutures ,including natural sutures and synthetic sutures •Offers non absorbable sutures ,including needles for cardiovascular surgery, needle suture combinations

and temporary pacemaker electrode • Provides medical devices such as female urinary incontinency set, surgical mesh, skin stapler, titanium

haemostatic clip for cardiovascular surgery, disposable aortic punch for cardiovascular anastomosis and cardiovascular vessel knife

Recent Activities • It has consolidated its position in cardiovascular sutures segment and expects to carry out further

consolidation during 2013-14

Player A has been operating solely in the medical devices & surgical sutures segment over

the last five years

Player A has been operating solely in India over the last five

years

100%

40%

60%

80%

20%

0%

2013

100.0%

Manufacturing and Selling of Medical Devices

20%

0%

100%

80%

60%

40%

2013

100.0%

India

Public: Domestic Company – Player A (3/4)


15

SAMPLE

• X • X

• X • X

T O

W S

Public: Domestic Company – Player A – SWOT Analysis (4/4)


16

SAMPLE Appendix

Ratio Calculations

Operating Margin (Operating Income/Revenues)*100

Net Margin (Net Profit / Revenues) *100

Profit Before Tax Margin (Income Before Tax / Revenues *100

Return on Equity (ROE) (Net Income / Shareholders Equity)*100

Return on Capital (ROCE) EBIT / (Total Assets – Current Liabilities)*100

Return on Working Capital (Net Income / Working Capital) *100

Return on Assets (Net Income / Total Assets)*100

Return on Fixed Assets (Net Income / Fixed Assets) *100

Operating Costs (% of Sales) (Operating Expenses / Sales) *100

Administration Costs (% of Sales)

(Administrative Expenses / Sales) *100

Interest Costs (% of Sales) (Interest Expenses / Sales) *100

Ratio Calculations

Current Ratio Current Assets / Current Liabilities

Cash Ratio {(Cash & Bank Balance + Marketable Securities) / Current Liabilities)}

Debt to Equity Total Liabilities / Shareholders Equity

Debt to Capital Ratio {Total Debt / (Shareholders Equity + Total Debt)}

Interest Coverage Ratio EBIT / Interest Expense

Fixed Asset Turnover Sales / Fixed Assets

Asset Turnover Sales / Total Assets

Current Asset Turnover Sales / Current Assets

Working Capital Turnover Sales / Working Capital

Capital Employed Turnover Sales / Shareholders Equity


17

Sources of Information

PRIMARY RESEARCH

Interviews Industry Experts

Company Websites Leading Newspapers

Government Websites / Resources Journals / Magazines

Online Magazines Business Magazines

Premium Databases

Online Journals / Articles

Electronic Media Print Media

SECONDARY RESEARCH


18

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Medical Devices Market – India report is part of Research on India’s Healthcare Industry Series. For any queries or customized research requirements, contact us at:

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