GLOCALIZED MED-TECH INSIGHTS IN EMeRGING MARKETS

2015 HOSPITAL YEARBOOK | INDIA

Summary

ETHNOGRAPHIC MEDICAL RESEARCH GROUP © 2015. Ethnographic Medical Research Pvt. Ltd. All rights reserved.

Table of Contents

CHAPTER SLIDE NO.

Healthcare Demographics in India……………………………..…... 3

Indian Healthcare Industry | 2014…………………………. 4

Medical Device Market in India | 2014…………………… 5

Disease Burden in India | 2014………………………………. 6

Need-gaps and Opportunities by Clinical Segments | 2015 7

Oncology……………………………………………..………………... 8

Critical Care Facilities……………………………………………… 9

Diagnostic Imaging…………………………………………………. 10

Cardiovascular Diseases…………………………………………. 11

Hospital Demographics in India | 2014……………………………. 12

Types of Hospitals…………………………………………………… 13

Public vs. Private Hospital Splits | 2014….………………. 14

Top 8 Focus Areas for Indian Hospitals | 2015………………… 15

Key Drivers for Indian Hospitals | 2015……………………. 16

Key Challenges for Indian Hospitals | 2015………………. 17

Top 5 Clinical Areas for Hospitals | 2015…………………………. 18 Hospital and Healthcare Services: Evolving Business Focus............................................................................. 21

Key Target Customer Segments for Med-tech | 2015…….. 26

Opportunities for Global Med-Tech Suppliers | 2015 27

Hospital and Healthcare Services: Organic Expansions in India | 2014……………………………………………………………………. 29

Hospital and Healthcare Services: Inorganic Expansions in India | 2014……………………………………………………………………. 38

Key M&As in India | 2014………………………………………. 39

Private Investment Deals…………………………………………. 44

Research Methodology and Information Sources……………. 47

HEALTHCARE INDUSTRY DEMOGRAPHICS IN INDIA

2014

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$72.7Bn, 71%

$15.4Bn, 15%

$6.1Bn, 6%

$4.9Bn, 5%

$3.4Bn, 3%

Hospitals

Pharmaceuticals

Medical Devices

Medical Insurance

Diagnostic facilities

INDIAN HEALTHCARE INDUSTRY | 2014

Growing at approximately 15.5% CAGR (2015-2018), the Indian

healthcare industry was valued at $102.5Bn in 2014

Revenue Analysis of Indian Healthcare Market, 2014 $102.5Bn

•Valued at $72.7Bn, hospital services market is expected to reach $81Bn by 2015, accounting over 71% of the overall healthcare industry in India •Despite gradual consolidation, the diagnostic services industry is expected to grow at a CAGR of 20% from 2015 to 2018

Source: EMeRG Analysis

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MEDICAL DEVICES AND CONSUMABLES MARKET IN INDIA

Medical imaging equipment and accessories

Medical consumables

Dental devices

Orthopedic devices

Others

Currently valued at over $XX Bn, the Indian Medical Devices and

Consumables market is set to grow at a steady CAGR of XX% from

2015-2018

• Driven by an increasing number of elective procedures including hip and knee replacements, the orthopedic devices market is expected to be one of the fastest growing categories, growing at a CAGR of XX>.% from 2015-2018

• Driven by the need for DR systems, new installations of CT and replacement of MRI systems; the medical imaging equipment and accessories market is expected to grow at a CAGR of ZZ.X% from 2015 to 2018

Source: EMeRG Analysis

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Proportional Mortality (% of total deaths), 2014

• India is faced with the twin battle with surging non-communicable and flaring communicable diseases

• Nearly half of the deaths in India are caused due to non-communicable diseases, with cardiovascular diseases accounting for over 25% of burden followed by COPD, cancer and diabetes

• Among the communicable diseases, one-fourth of the deaths in the country are caused by diarrhoea, respiratory infections, TB and Malaria

Source: WHO country profiles, 2014

Cardiovascular diseases

26%

Cancers 7%

Chronic Respiratory

diseases 13% Diabetes

2%

Other NCD 12%

Communicable maternal, perinatal

and nutritional condition

28%

Injuries 12%

DISEASE BURDEN IN INDIA | 2014

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NEED-GAPS AND OPPORTUNITIES BY CLINICAL SEGMENTS

2015

7

ONCOLOGY: NEED-GAPS AND OPPORTUNITIES

2.5Mn cancer patients with 1Mn new cases added every year

Of 300+ cancer care centers; XX% lack advanced cancer care equipment

Acute shortage: Only XXX Radiation Therapy equipment installed across India

Over 70% of cancer cases detected late in advanced stages making the cost of treatment very high and chances of survival low

Opportunities in the public sector: •Establishment of State cancer institutes (SCI) and Tertiary Cancer care centers by central Government underway •INR 4,697 Crores ($782.2Mn) earmarked by Cabinet Committee on Economic Affairs (CCEA) to renovate tertiary care cancer facilities

Opportunities for diagnostic and therapeutic equipment suppliers:

•500 PET/CT equipment required to manage the current burden; another 500 required by 2020 •1,200 Radiation therapy required to treat the current burden •600+ cancer care centers required – opportunities to partner hospitals in green-field projects

KEY NEED GAPS

OPPORTUNITIES

8

HOSPITAL DEMOGRAPHICS IN INDIA

2014

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TYPES OF HOSPITALS

SPLIT OF HEALTHCARE FACILITIES

PUBLIC PRIVATE

• Corporate chain hospitals

• Regional Chain hospitals

• Large stand alone hospitals

• Nursing homes

• Diagnostic Labs

• Pathology labs

Key: CGHS: Central Government Health Scheme

ESIS: Employee State Insurance Scheme

AYUSH: Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homoeopathy

Secondary Care Tertiary care

Primary health centre

Sub-district hospitals

District hospitals

State hospitals

Teaching hospitals

ESIS hospitals & dispensaries

Municipal hospitals

Railway, Army & specialised

hospitals

Sub-centre

Primary Care

Source: EMeRG Analysis

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+

Community Health centre

CGHS/AYUSH dispensaries

TOP 8 FOCUS AREAS FOR INDIAN HOSPITALS | 2015

1|

2|

3|

4|

5|

6|

7|

8|

Raising funds aggressively: Engaging foreign investors by showcasing low capex, innovative delivery models, quicker ROI projections and market penetration strategies

Emphasizing on high acuity areas: e.g. – To create a compelling brand image for individual specialties including orthopedics, cardiovascular, oncology and neurology etc.

Reducing operational costs: Optimizing work shifts, increasing lifespan of medical equipment, reducing spent on supplies, standardization of treatment protocols to maximize procedure volume; leasing etc.

Gaining market shares in medical tourism: Routing medical tourists to new destinations including Hyderabad, Ahmedabad, Bangalore etc. Procuring high-end technologies; improving marketing channels

Increasing patient touch-points: Includes retail pharmacies, mobile Health initiatives, medical education etc. to reach out to a larger catchment area

Expanding to Tier 2/3 towns: Capitalizing on the low-cost resources and high demand for cost effective healthcare; Management contracts of other hospitals

Capturing higher market shares of patients with private insurance: Liaison with corporate houses, various packages for health, wellness and diagnosis; creation of micro-insurance schemes etc.

Managing resource-training and attrition: Investing on various training modules and employee satisfaction

Source: EMeRG Analysis 11

Diabetes Clinics

Oncology units

Single Specialty hospitals (Endoscopic labs/Cancer care hospitals/Orthopaedic hospitals/etc.)

• With over 67Mn diabetics, India is set to become world capital of diabetes in the coming years

• Apollo hospitals recently established a dedicated wing – Apollo Sugar Clinic to provide holistic management and preventive care

• Many such private clinics like Diabetacare, MV hospital for diabetes etc. have been initiated to tap the unaddressed market

• Expansion into tier 2 and tier 3 towns is underway

• Driven by increasing number of cancer cases and improved awareness, oncology has become one of the key departments in multispecialty hospitals

• Many hospitals such as Apollo hospitals, Fortis, Max healthcare, etc. and regional chain hospitals have accomplished full-fledged cancer care units

• Advanced diagnostic devices, success rate, evolved radiation therapy and research capabilities are typically used as compelling features to attract patients

• While multi-speciality hospitals lead the market with sheer volume and patient footfall, a wave of small single speciality hospitals is on the rise in Tier 2/3 towns

• Driven by higher ROI and lesser capital investment, dedicated orthopaedic hospital, endoscopy labs, eye hospitals, cancer institutes, heart clinics etc. are being established

OTHER CLINICAL AREAS OF FOCUS| 2015

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HOSPITAL AND HEALTHCARE SERVICES Evolving Business Focus (3/5)

Reducing Spent on Medical Devices: Hospitals

(excluding tertiary care center, large corporate chains etc.) are looking to reduce their overall spent on medical devices including the total cost of ownership, annual maintenance contracts, spent on consumables etc. •Some hospitals are leasing medical equipment on a pay per use basis •CARE hospitals has developed stents that cost one-tenth the price of imported ones •Apollo ensures its suppliers provide shorter sutures to ensure minimal wastage and price adjustment •Narayana Health has set up its own entity for manufacture of disposable drapes, gowns and other surgical supplies •Hospitals are also liaising with local entities to outsource maintenance contracts of various medical devices to prolong their lifespan

Improving Healthcare IT: With the increase in healthcare

data arising from rising medical procedures and advent of private health insurance, hospitals are looking to improve their Hospital IT infrastructure. While hospitals in Delhi, Andhra Pradesh and Maharashtra represent the highest penetration of HIT systems; high growth of EMRs is anticipated in hospitals across Karnataka, Tamil Nadu, Gujarat etc. EMeRG anticipates sustained growth in customized EMRs for various departments; IT applications for clinical handovers, Radiology Information Systems and Lab management information systems.

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“There is an increasing acceptability of locally made medical devices now. We could rely on local companies for radiant

warmers, patient monitors, ECG, intraocular lenses, disposables and so on…” - Medical Director, Corporate Chain Hospital, India

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HOSPITAL AND HEALTHCARE SERVICES

Organic and Inorganic Expansions in India

2014

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HOSPITAL AND HEALTHCARE SERVICES Organic Expansions in India | 2014

COLUMBIA ASIA

$150Mn – Investments being made

for hospital expansion globally

3 – new multispecialty hospitals to be

added

360 – additional number of beds being

added Community hospitals are being planned in Tier 2 towns such as Dehradun, Lucknow, Jalandhar and Meerut

HEALTHCARE GLOBAL

~$17Mn – Investments towards expanding cancer hospitals

3 – more hospitals to be added

~$7Mn - towards women’s cancer center in Mumbai

a MANIPAL HEALTH

~$16Mn – Investments

towards expansion in Rajasthan

2 – new hospitals to be

purchased in Mumbai and Delhi

~$200Mn - towards

purchase of new hospitals

b

Other key hospitals that demonstrated organic expansion strategies include Apollo; Rockland; Fortis; Cloudnine; Jaypee etc.

c

SNAPSHOT: KEY ORGANIC HOSPITAL EXPANSIONS

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Hospital M&As in India | 2014 (1/4)

JAN

AIMS explores acquisitions in North India Asian Institute of Medical Sciences - a part of Blue Sapphire Healthcare Pvt. Ltd. is looking to acquire boutique and secondary care hospitals in and around Delhi NCR. The super-specialty hospital based in Faridabad raised $20Mn from PE firm OrbiMed and has earmarked 40% of it for inorganic growth. The firm is also targeting revenue growth of over 30 per cent in the current fiscal year.

Religare to buy Fortis’ Mohali unit for $45.5Mn Religare Health Trust will be buying the Mohali property from religious trust Radha Swami Satsang Beas for $45Mn as well as the clinical establishment unit along with its associated assets of the hospital from Fortis Healthcare for $2.5Mn as per a stock market disclosure. As a part of the deal, Religares’ subsidiary - Escorts Heart and Super Specialty Hospital Ltd (EHSSHL) shall provide clinical establishment services and Fortis will manage and operate this unit.

FEB

MAR

Narayana Health buys hospitals in West Bengal Bangalore-based Narayana Health has bought the hospital business from Jubilant First Trust Healthcare (JFTH), a wholly owned subsidiary of pharmaceutical and life sciences firm Jubilant Life Sciences Ltd. This deal will help JFTH to focus completely on its mainstream business of pharmaceuticals and life sciences.

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HOSPITAL AND HEALTHCARE SERVICES Private investments

HOSPITALS TO WATCH OUT FOR (1/2)…

Asian Institute of Medical Sciences

Aster DM Healthcare

$20Mn investments bagged

Plans to reach small towns in North India Targeting 30% revenue growth

$600Mn investments

towards hospitals, medical colleges and healthcare services in India and Middle East Likely to go IPO soon Inorganic expansion in West and South India

Manipal Health Enterprise

$240Mn investments

towards setting up of 7-12 new hospitals Expanding in northern India

Apollo Hospitals $250Mn investments to add

2200 hospital beds Launching single-specialty hospitals with focus on cardiology and oncology 17

RESEARCH METHODOLOGY AND INFORMATION SOURCES

This is an excerpt from EMeRG’s 2015 Hospital Yearbook. The yearbook presents a deep-dive into the demographics of the hospital industry in India, their key focus areas in 2015, need-gaps by clinical segments, key target customer segments, and a detailed analysis of the organic and inorganic expansion of hospitals in India among others.

The 2015 Hospital Yearbook is available for FREE. To get your free copy of this report, please write to us at letsspeak@emerg-inc.com

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