CHAPTER 1 INDUSTRY ANALYSISHEALTH CARE INDUSTRY

Thehealth care industry is an aggregation of sectors within theeconomic systemthat provides goods and services to treat patients withcurative,preventive,rehabilitativecare. Health care has become one of India's largest sectors - both in terms of revenue and employment. The healthcare sector is the sector of the economy made up of companies that specialize in products and services related to health and medical care. The healthcare sector includes publicly-traded companies that power all dimensions of the healthcare industry. It comprises of providers of diagnostic, preventive, remedial, and therapeutic services such as doctors, nurses, hospitals and other private, public, and voluntary organizations. It also includes medical equipment and pharmaceutical manufacturers, health insurance firms. The modern health care sector is divided into many sub-sectors, and depends on interdisciplinary teams of trained professionals and paraprofessionals to meet health needs of individuals and populations. The health care industry is one of the world's largest and fastest-growing industries. Consuming over 10 percent of Gross Domestic Product (GDP) of most developed nations, health care can form an enormous part of a country's economy. The health care industry is typically divided into several areas.The sector comprises hospital and allied sectors that include: a. Medical care providers that includes physicians, specialist clinics, nursing homes and hospital b. Diagnostic Service Centre and pathology laboratories c. Medical equipment manufacturers d. Contract research organizations and pharmaceutical manufacturerse. Third party support service providers. The third party involves activities of or under the supervision of nurses, midwives, physiotherapists, scientific or diagnostic laboratories, pathology clinics, residential health facilities, or other allied health professions. E.g. in the field of optometry, hydrotherapy, Medical massage, yoga therapy, music therapy, occupational therapy, speech therapy, chiropody, homeopathy, chiropractic, acupuncture, etc.The Indian healthcare industry is growing at a tremendous pace due to its strengthening coverage, services and increasing expenditure by public as well private players.

HEALTH CARE INDUSTRY IN INDIAHealthcare in India features a universal health care system run by the constituent states and territories of India. The Constitution charges every state with "rising of the level of nutrition and the standard of living of its people and the improvement of public health as among its primary duties". The National Health Policy was endorsed by the Parliament of India in 1983 and updated in 2002. However, the government sector is understaffed and underfinanced; poor services at state-run hospitals force many people to visit private medical practitioners, Government hospitals, some of which are among the best hospitals in India, provide treatment at taxpayer expense. Most essential medicines are offered free of charge in these hospitals. Government hospitals provide treatment either free or at minimal charges. For example, an outpatient card at AIIMS (one of the best hospitals in India) costs a onetime fee of rupees 10 (around 20 cents US) and thereafter outpatient medical advice is free. In-hospital treatment costs depend on financial condition of the patient and facilities utilized by him but are usually much less than the private sector. For instance, a patient is waived treatment costs if he is below poverty line. Another patient may seek for an air-conditioned room if he is willing to pay extra for it. The charges for basic in-hospital treatment and investigations are much less compared to the private sector. The cost for these subsidies comes from annual allocations from the central and state governments. Primary health care is provided by city and district hospitals and rural Primary Health Centres (PHCs). These hospitals provide treatment free of cost. Primary care is focused on Immunization, prevention of malnutrition, pregnancy, child birth, postnatal care, and treatment of common illnesses. The Indian healthcare market is one of the prominent contributors to the countrys Gross Domestic Product (GDP) having attracted large number of players- domestic as well as International during the past few years. According to a report, The Indian healthcare market is currently estimated at US$103 billion and is expected to reach US$120 billion by 2015 and US$150 billion by 2017. Highly qualified doctors and scientists, state-of-the-art technology and low costs have helped India become an attractive global destination for medical tourism, clinical studies, and research and development (R&D) programs.HISTORY OF GROWTH AND DEVELOPMENT IN THE HEALTH CARE INDUSTRYInthe last three decades the sector has gone through avery rich transition. The sector has witnessed tremendous growth in all the segments. Some of the private,corporate players and also leading government institutions have now become some of the best namesworldwide. The Government has done a splendid jobin focusing on healthcare in the last few years. A lotof attention has been coming on the different necessary elements of healthcare; the global technologyproviders have been focusing on the Indian marketnow.In between the 1950's and 1980's the Health care facilities and personnel increased substantially, but gradually due to the fast population growth, the number of licensed medical practitioners per 10,000 individuals had fallen in the 1980's to 3 per 10,000. From the 1981 level of 4 per 10,000. There were approximately ten hospital beds per 10,000 individuals in 1991. Primary health centers are majorly the cornerstone of the rural health care system.

In the year 1991, India constituted about 22,400 primary health centers, 11200 hospitals, and 27,400 dispensaries. Such facilities were the part of a tiered health care system which funnels more difficult cases into urban hospitals while attempting to provide routine medical care to the vast majority in the countryside. Primary health centers and sub-centers would majorly rely on trained paramedics to meet most of their needs.Indian healthcare industry operates in both of the private and public sectors. The public sectors are healthcare system consists of facilities run by the central and state governments. The facilities are provided freely or at subsidized rates to lower income families in rural and urban areas. However, further the Indian healthcare industry is going through a growth phase due to its healthy economy. As the country's middle class continues to grow this industry's growth will increase. India's ever-growing middle class are able to afford quality healthcare. With such an increased ability to pay for better healthcare, the demand for healthcare services has grown from $4.8 billion in 1991 to $22.8 billion in 2001-2002. Today 50 million Indians are able to afford western medicine and over 150 million have annual incomes of more than 1000 US dollarsFUTURE GROWTH PROSPECT OF HEALTHCARE INDUSTRY Healthcare support occupations are expected to grow by about 28 percent, or about 1.1 million jobs, from 2012 to 2022. Healthcare support occupations are projected to grow more than any other service occupations. In terms of numbers, registered nurses are the largest healthcare occupation, with 2.7 million workers in 2012. Healthcare occupations will continue to dominate the list of the fastest growing occupations. Among the 20 fastest growing occupations between 2012 and 2022, 11 of them are health-related. Personal care aide is projected to be the fastest growing healthcare occupation, increasing by 53 percent, followed closely by home health aide, increasing by 48 percent and diagnostic medical sonographers, increasing 46 percent. The job growth in these occupations is a result of a growing elderly population, less costly home care compared to institutional care and discharged patients need for continued healthcare. Personal care aides are expected to gain the largest number of jobs, about 581,000, by 2022. Registered nurses are the second largest healthcare occupation in terms of job growth, followed by home health aides and nursing assistants. Interested in a more in-depth look at healthcare employment in your target geographic area? Click on this link to speak with an NAS Insights Analyst.Industry Employment 2012 and Projected 2022Employment in the healthcare and social assistance industry is projected to grow by 29% from 2012 to 2022, according to the Bureau of Labor Statistics. This is more than twice as fast as the projected total employment growth overall.Employment in the Healthcare and Social Assistance Industry 2012, and Projected 2022The healthcare and social assistance industry is projected to have a nearly 2% growth rate from 2012 to 2022, adding nearly 5 million jobs to the economy over the decade.Employment Growth within the Healthcare and Social Assistance Industry Projected 2012-2022 (thousands)Ambulatory healthcare services is expected to grow by nearly 2.5 million jobs over the 2012 to 2022 period. Ambulatory services include offices of physicians, dentists and other healthcare practitioners, as well as outpatient care centers, medical and diagnostic laboratories, home health services and other ambulatory care services.Employment Distribution in the Healthcare and Social Assistance Industry 2012 and Projected 2022Over the next decade, hospitals share of the healthcare and social service industry is expected to decline, while ambulatory healthcare services will increase. This is because of a shift from higher cost hospitals to less expensive outpatient services. Hospitals are actually the slowest growing industry within the healthcare and social assistance sector.Occupational growth rate 2012 and Projected 2022Healthcare support occupations are expected to grow by 28% from 2012 to 2022 or about 1.1 million jobs, according to the Bureau of Labor Statistics. Healthcare support occupations include home health aides, nursing assistants, dental assistants, medical assistants, medical transcriptionists, phlebotomists, physical therapist aides and others. Healthcare practitioner and technical occupations will grow by 22%, or about 1.7 million jobs. These occupations include physicians, pharmacists, registered nurses, therapists, diagnostic medical sonographers, health information technicians and many others.MAJOR PLAYERS IN THE INDUSTRY1. FORTIS HEALTHCAREFortis Healthcare Limited is a leading integrated healthcare delivery service provider in India. The healthcare verticals of the company primarily comprise hospitals, diagnostics and day care specialty facilities.The company operates its healthcare delivery services in India, Dubai, Mauritius and Sri Lanka with 54 healthcare facilities (including projects under development), approximately 10,000 potential beds and 260 Diagnostic Centre.In a global study of the 30 most technologically advanced hospitals in the world, its flagship, the Fortis Memorial Research Institute (FMRI), was ranked No.2, by topmastersinhealthcare.com, and placed ahead of many other outstanding medical institutions in the world.2. MAX HEALTHCARE

Max Healthcare commenced operations in 2001. Today, it is India's first provider of comprehensive, seamlessly integrated, world-class healthcare services. The organisation has 12 facilities in North India, offering services in over 32 medical disciplines. Of these, nine facilities are located in Delhi & NCR and the others in Mohali, Bathinda and Dehradun. These include state-of-the-art tertiary care hospitals at Saket, Patparganj, Shalimar Bagh, Mohali, Bathinda and Dehradun; secondary care hospitals at Gurgaon, Pitampura and Noida; and an out-patient facility and speciality centre at Panchsheel Park. The 12 hospitals together have over 1900 beds.With the most advanced technology and state-of-the-art infrastructure, Max Healthcare is one of the leading chains of hospitals in India. It is committed to the highest standards of medical and service excellence, patient care, scientific and medical education.3. LILAVATI HOSPITAL AND RESEARCH CENTRE

The premier multi-specialty tertiary care hospital of India has been acknowledged globally as centre of medical excellence. The kind of confidence, trust it has developed on strong foundation of the state-of-the-art facilities, best medical expertise, research, education and charitable endeavors; that today it serves patients from all walks of life national and international. Based on a powerful Sanskrit inspiration, Sarvetra Sukhina: Santu, Sarve Santu Niramaya: which means Let all be blissful, Let all stay healthy, the hospital has focused its operation on providing quality care with a human touch; which truly reflects the essence of its mottoMore than Healthcare, Human Care.The hospital is located in the heart of Mumbai; and is very close to the domestic and the international airport. The hospital started functioning in 1997 with 10 beds and initially had only 22 doctors. Today, it boasts of 314 beds with one of the largest Intensive Care Units (ICUs), most advanced 12 Operation Theaters, more than 300 consultants and manpower of nearly 1,800.Hospital attends to around 300 In-patients and 1,500 Out-patients daily.4. MEDANTA HOSPITAL Medanta - The Medicityis one of India's largest and most prestigious multi-super specialty medical institutes. Spread across 43 acres in Gurgaon NCR and houses 1,250 beds and over 350 critical care beds, with 45 operation theatres, the hospital was founded in 2009 by renowned cardiovascular and cardiothoracic surgeon, Dr.Naresh Trehanand is located in Gurgaon, part of the National Capital Region.Primarily known as an institute specializing in cardiology, presently Medanta has 32 institutions, departments and division that cater to over 20 specialities. Adhering to NABH standards, the hospital is as of 2013 accredited by ISQua (International Society for Quality in Healthcare), NABL, and JCI.5. TATA MEMORIALThe Tata Memorial Hospital was initially commissioned by the Sir Dorabji Tata Trust on 28 February 1941 as a center with enduring value and a mission for concern for the Indian people.In 1952 the Indian Cancer Research Centre was established as a pioneer research institute for basic research - later called the Cancer Research Institute (CRI). In 1957 the Ministry of Health took over the Tata Memorial Hospital. The transfer of the administrative control of the Tata Memorial Centre (Tata Memorial Hospital & Cancer Research Institute) to the Department of Atomic Energy in 1962 was the next major milestone. The Tata Memorial Hospital and Cancer Research Institute merged as the two arms of the Tata Memorial Centre (TMC) in 1966 as a classic example of private philanthropy augmented by Government support with a mandate for Service, Education & Research in Cancer.GOVERNMENT POLICY IN HEALTHCARE INDUSTRYThe Government of India has planned some significant policy changes and intends to introduce new regulations to make healthcare not only more accessible and affordable but also more transparent and ethical. Health policycan be defined as the "decisions, plans, and actions that are undertaken to achieve specifichealth caregoals within a society." According to theWorld Health Organization, an explicit health policy can achieve several things: it defines a vision for the future; it outlines priorities and the expected roles of different groups; and it builds consensus and informs people. There are many categories of health policies, including personal health care policy,pharmaceutical policy, and policies related topublic healthsuch asvaccination policy,tobacco control policy. Medical research policyMedical researchcan be both the basis for defining evidence-based health policy, and the subject of health policy itself, particularly in terms of its sources of funding. Those in favor of government policies for publicly funded medical research posit that removing profit as a motive will increase the rate of medicalinnovation. Those opposed argue that it will do the opposite, because removing the incentive of profit removes incentives to innovate and inhibits new technologies from being developed and utilized. The existence of sound medical research does not necessarily lead to evidence-based policymaking. For example, in South Africa, whose population sets the record forHIV infections, previous government policy limiting funding and access for AIDS treatments met with strong controversy given its basis on a refusal to accept scientific evidence on the means of transmission. A change of government eventually led to a change in policy, with new policies implemented for widespread access to HIV services. Another issue relates tointellectual property, as illustrated by the case of Brazil, where debates have arisen over government policy authorizing the domestic manufacture ofdrugs used in the treatment of HIV/AIDS in violation ofdrug patents.Health workforce policy Some countries and jurisdictions have an explicit policy or strategy to plan for adequate numbers, distribution and quality ofhealth workersto meet health care goals, such as to addressphysicianandnursing shortages. Evidence-based policies for health workforce development are typically based on findings fromhealth services research.Health in foreign policyMany governments and agencies include a health dimension in theirforeign policyin order to achieveglobal healthgoals. Promoting health in lower income countries has been seen as instrumental to achieve other goals on the global agenda, including: Promotingglobal security linked to fears of globalpandemics, the intentional spread ofpathogens, and a potential increase in humanitarian conflicts, natural disasters, and emergencies. Promotingeconomic development including addressing the economic effect of poor health on development, of pandemic outbreaks on the global market place, and also the gain from the growing global market in health goods and services. Promotingsocial justice reinforcing health as a social value and human right, including supporting the United Nations'Millennium Development Goals.Global health policyGlobal health policy encompasses the global governance structures that create the policies underlying public health throughout the world. In addressingglobal health, global health policy "implies consideration of the health needs of the people of the whole planet above the concerns of particular nations."Distinguished from both international health policy (agreements among sovereign states) and comparative health policy (analysis of health policy across states), global health policy institutions consist of the actors and norms that frame the global health response.

MICHAEL PORTER FIVE FORCES MODEL IN HEALTHCARE INDUSTRY: 1. POTENTIAL OF NEW ENTRANTSThe two important considerations in observing the topic of new entrants to the health care industry are the levels of attractiveness and the barriers to entry. The industry incomes form the focus of operations for this analysis. The rapid growth of private hospitals was the result of the government policy of letting private sector play greater roles in the healthcare industry. The prospect of making money has therefore resulted in more potential entrants under companies wanting to make fortunes inhealthcare industry.

The threat of new entrants reflects the ease with which a competitor can enter the market. Private hospitals may be threatened by increased funding for public hospitals. As with the increase in number of private hospitals, there is abig (or high)threat in private healthcare industry. New entrants can provide better services & promotion to the customers which can be a threat for other hospitals. The new entrants are coming wing a sole purpose to get the same market. There have been a few complications faced by potential entrants in executing the strategy to establish new hospitals. Despite highhealthcarecosts involved. Theoperationcosts are relatively low. Secondly the government has made it easier to find sites, purchase land, gain various approvals and build hospitals strategically positioned adjacent to prime markets especially in cities and big towns. The barriers to entry into the healthcare sector are fairly high. For the biotechnology industry, the biggest barrier is the initial cash investment necessary for research and development (R&D). Firms must be willing to risk large amounts of money with the likely possibility of no return. For the insurance companies, the most significant barriers to entry are state regulatory requirements and the initial cash investment of establishing a physician network. Recently, though the insurance industry has had large profits, there have been very few new entrants into the market because it is very difficult for a start-up insurance company to compete with the large insurers for physicians to add to their network. Hospitals face similar barriers to entry as the insurance industrythey are also heavily regulated by the government, which often will not allow new hospitals to be established in a given area or will not allow a hospital to acquire healthcare technology, thus preventing it from entering the market.

Within the healthcare industry, the threat of new entrants is very tight. For example, pharmaceutical companies must have the initial capital to invest into their research and development department to develop new drugs. After developing these new drugs, these companies must also deal with the policies that must be meet by the government agencies before the drug is released.When it comes down to insurance companies, the threat of new entrants is also limited. This is due to the fact that there are many federal and state guidelines that these insurance companies must follow to remain open. These policies make it very hard for anyone to open an insurance company. Besides federal and state regulations, new insurance companies would need to have a significant amount of capital to be able to attract physicians to their network. Having to compete with the large insurance companies like Aetna, Kaiser Permenante, and Blue Cross, would take a require a strong supporting cast and the necessary capital to draw other physicians from their existing network. In regards to actual healthcare, this field also seems to be very tight for new entrants to enter. This is very difficult due to the fact that the US has very strict guidelines and regulations set by the government to open a hospital. These guidelines also prevent the huge monopoly of hospitals being open in a certain area by only allowing certain amount of hospitals to be open within a given area. A general conclusion from potential new entrant dimension is that it is much attractive to enter the health care industry, even by way of setting up new facilities. The companies do not need to acquire existingoperations butrather they establish hospitals from scratch.

2. COMPETITION IN THE INDUSTRY According toNankervis A. (2005),Competitive Rivalry reflects the relationship between dominant players in the industry. The competitive rivalry within the private healthcare industry in ishighas the private sectors are increasing day by day. The increase in number already increases in competition which gives so many reasons for the hospitals to give different offer to their customers (Patients). As the competitors number is high in the private industry, the hospitals have to appoint highly qualified staff which is also a factor hospitals are looking to.Althoughmany hospitalsare continually increasing & improving the services and quality management to attract more customers compare to other competitors. The competitive rivalry in the healthcare industry is very intense, especially in the biotech/drug discovery andinsuranceindustries. Pharmaceutical companies are continuously competing with each other to be the first one to create a drug that can effectively treat a disease. Many companies are simultaneously investing a great deal of money into R&D, but only one company (if any) will reap the benefits because only the first company to come up with the drug will be able to acquire a patent for it and thus profit from the drug. The rivalry in the insurance industry is also intense because people will not buy more than one insurance policy. Oftentimes, the insurance companies sell most of their policies to large companies who provide healthcare to their employees, so large insurance companies must continuously compete for the business of large companies. Hospitals face less competitive rivalry because there are usually not very many hospitals in a given area and if anyone is very sick, they will be brought to the nearest hospital. Also, hospitals essentially all cost the same price (and most of the time is covered by insurance), so there is no price competition between hospitals and therefore very little competitive rivalry.

3. POWER OF SUPPLIERSThe Health Care Providers and Services industry, the suppliers, has high bargaining power simply because such high demand exists for its services. There are few suppliers relative to the number of buyers, which also contributes to their high bargaining power. Ideally, every American will someday have health care, which means that each person in the U.S. would be a customer of this industry. Although health care costs are rising, that does not decrease the demand for health care as people continue to pay for the services at whatever price the supplier (industry) dictates simply because they wish to stay in good health at whatever the cost may be.

Bargaining power of suppliers in terms of medicine supplement is sometimeshighand sometimes could be low. For example when a company gives out a new medicine into the market, it needs the hospital to carry the drug in order to make its profits. In this situation, since the hospital wants to attract more new customers and retain the existing patients they must be able to provide the latest medications. So the hospital has a demand on the pharmaceutical companies, so if the hospital decides that they need that particular drug, the pharmaceutical company wins, and because it is a patent drug distributed by the hospital usually the pharmaceutical company can bill higher price. However, when a particular patent expires and the drug becomes a generic, the bargaining power of the supplier becomeslowerbecause everyone can carry the drug, which will result to significant drop of drug's price.

The bargaining power of suppliers islowas with the increase in hospitals, the numbers of suppliers are also increasing. The bargaining of suppliers also depend on the service providers.4. BARGAINING POWER OF CUSTOMERSWith the healthcare industry, it seems that the bargaining power of buyers is verylow. When people get sick, they will suffer from the illness. The current economy is doing well or bad will not change it. People still cannot predict when they will get the flu, or they need a knee replacement. People are willing to trust that insurance company, pharmaceutical company, and hospital can provide them the best services. At the moment people have the chance to select a certain hospital or insurance company; however, since there are limited numbers of insurance companies or hospitals within a network or an area, it becomes much harder to have buyer bargaining power. Seeing that so much of the bargaining power in the health care sector lies with suppliers it is no surprise that the bargaining power of customers is weak. If someone wants health care coverage they must pay the price for it, which is relatively consistent from company to company. A person faces very high risk not being able to afford life-saving operations or medications if they do not own health insurance and is injured in an accident or develops a medical condition, and therefore many people are willing to pay health insurance costs at a price given by the supplier. The healthcare industry as a whole is relatively unaffected by buyer power in the sense that the healthcare industry is composed of all of the companies involved in providing healthcare to people. Whether the economy is good or bad, whether the prices of medicine are high or low, does not really affect the choice of buyers to consume (or not consume) healthcare. People cannot just choose to be healthy when the economy is bad. People get sick independent of the economy (except maybe the fact that when the economy is bad there are more poor people and poor people tend to be less healthy than wealthier people), so they need medicine anyway.5. THREAT OF SUBSTITUTE PRODUCTSThe availability of substitutes varies within the healthcare sector. In general though, the healthcare sector as a whole has no substitutes. There is essentially no way to get healthcare from anywhere other than the healthcare industry (there are smaller, more specialized places you could go, like traditional Eastern medicine, or acupuncture, etc. but those are small enough and few enough that we can ignore them for our purposes). Within the industry, the pharmaceutical companies face substitutes for their drugs when their patents expire. When their patents are in effect, they have a monopoly over the drug, so they have a great deal of power, but once generic medicines are produced after the expiration of the patent, they lose their monopoly and essentially all future prospects of profit from the drug because other companies producing generic medicines can charge less for the drug because they did not have to pay the initial cost of R&D. Insurance and hospitals essentially have no substitutes.In the healthcare industry, the pharmaceutical industry profits are greatly affected byHightreat of substitutes after the patents of drugs has expired. When the patents expire, all pharmaceutical companies have the opportunity to make the drug. By allowing all companies to make the drug, this reduces the profits experienced by the sole company. In regards to the healthcare sector, substitutes do not usually affect the field. For example, if a patient has to obtain an ankle surgery, he or she has to go to a surgeon. Now, one can go to any physician they would like, but that would be more of competition amongst physicians. In recent times, there are certain substitutes such as alternative medicine which treat primary care problems.