Hospital market in india 2014 - Sample

Hospital Market in India
March 2014

2HOSPITAL MARKET IN INDIA 2014.PPT
Executive Summary
Drivers &
Challenges
Competitive
Landscape
Drivers:
Shortage in Number of Hospital Beds
Increasing Lifestyle Diseases
Surge in Medical Tourism
Government Initiatives Propelling
Investment
Growing Target Hospitalization Population
Group
Growing Health Insurance Market
Rising Disposable Income
Challenges:
Shortage of Medical Professionals
Lack of Investment in IT Infrastructure
Shortage of FDI Inflow in Indian
Hospitals
 The hospital market in India was valued at INR X1 units in 20-- and is expected to reach INR X7
units by 20--
 The sector is divided primarily into public and private hospitals, along with NGO operated
hospitals
 Constantly rising population results in perennial shortage of hospital beds in India
 Specialty Clinics
 Glocal Healthcare Systems
 Hospital Mobile Applications
 Hospital Information Centre
 Luxury Offerings
 Diversified Business Approach
Key Players
Player A Player B Player C
Player D Player E Player F
Market
Overview
Key Trends

3
•Economic Indicators
•Indian Healthcare Scenario
•Introduction
•Market Overview
•Drivers & Challenges
•IT Adoption
•Role of Government
•Key Trends
•Key Initiatives
•Competitive Landscape
•Trade Fairs & Events
•Recent Transactions
•Strategic Insights
•Appendix
HOSPITAL MARKET IN INDIA 2014.PPT

4
SAMPLEEconomic 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 2013Aug 2013 - Sep 2013Jul 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%
FD
EC
B
A
Note: ‘Others’ include healthcare IT and allied activities in healthcare space

6
Hospitals can be classified on grounds of ownership and
clinical operation
Classification of Hospitals
Public
Hospitals
Run by Central Government,
State Government and local bodies
Private
Hospitals
Run by Central Government,
State Government and local bodies
Ownership Basis
Corporate
Hospitals
Public limited companies formed under
Companies Act run commercially and are likely
to operate chain of hospitals
Voluntary
Hospitals
Functions with public or private funds on a
non-commercial basis
Clinical Basis
General
Hospitals
Hospitals staffed by at least two medical
officers that provide in-patient accommodation
and medical care for more than one category
of medical discipline
Specialized
Hospitals
Provide medical attention for one discipline
and are administratively attached to a general
hospital
Isolation
Hospitals
Hospitals dedicated to the care of persons
suffering from infectious diseases
Tertiary
Hospitals
State and Central government hospitals
established in respective state capitals
Teaching
Hospitals
A hospital to which a college is attached
for medical/dental education
Rural
Hospitals
Located in rural areas permanently staffed by
at least one physician that provides in-patient
accommodation and medical care for more
than one category of medical discipline

7
Most concentrated healthcare
facilities
Presence of mostly unorganized
players providing sub-optimal care at
higher cost to patients
• Almost 70% of population reside in areas
that have a 15% share of healthcare
resources
• Limited healthcare facilities eventually
lead to rural urban migration for
treatment
Hospitals comprise the most crucial aspect of healthcare
sector, constantly developing to provide world class services
• Hospitals are a major component of the Indian
healthcare industry generating more than 50% of total
healthcare sector’s revenue
• Hospital sector can be classified into two types,
namely public and private
 There are ~a private hospitals and ~b public hospitals across
the country
• Potential growth prospect of Indian healthcare
industry is attracting many foreign companies that are
willing to invest or establish base in India
 There is a growing trend to tap the high potential tier II and
tier III cities
 A trend of growth in specialty and multi specialty hospitals
in the country has also been observed
• Indian healthcare delivery distribution network
exhibits a skewed pattern with private sector ruling
the roost
 Indian healthcare scenario is dominated by the private
sector catering to almost 80% of overall patient population
 Hospital beds are segmented in 60:40 ratio between private
and public hospitals
Market Overview (1/2) Market Size and Growth – Private Hospitals
0
1
2
3
4
5
6
INR units
X%
20--e
X7
20--e
X6
20--e
X5
20--e
X4
20--e
X3
20--e
X2
20--
X1
Rural
Semi Urban
Urban
Healthcare Delivery Distribution

8HOSPITAL MARKET IN INDIA 2014.PPT
Drivers & Challenges – Summary
Drivers
Shortage in Number of Hospital Beds
Increasing Lifestyle Diseases
Surge in Medical Tourism
Government Initiatives Propelling
Investment
Growing Target Hospitalization
Population Group
Growing Health Insurance Market
Rising Disposable Income
Challenges
Healthcare Infrastructure Gaps
Lack of Investment in IT Infrastructure
Shortage of FDI Inflow in Indian
Hospitals

9
Slow progression of IT adoption in hospitals with only high
end corporate hospitals…
• Emergence of new corporate hospitals is popularizing
IT adoption with integrated enterprise resource
planning (ERP) and hospital information systems (HIS)
• Indian Health IT market is fragmented with offerings
from small to medium players and a few enterprise
players
• Huge cost involvement has led to hospitals adopting
only hospital management modules and not venturing
into clinical aspects of hospital automation
IT Adoption in Indian Healthcare IT Adoption – Market Size & Growth
0
5
10
15
20
25
30
35
40
INR units
A%
a6
20--e
a5
20--e20--e
a4
20--e
a3
20--e
a2
20--
a1
• Business streamlining and patient administration are the
biggest benefits of IT adoption in hospitals
• IT leveraging and sharing data on cloud helps in saving
infrastructure and manpower to a great extent
• High growth opportunity of IT services in healthcare sector
with majority of hospitals awaiting IT adoption
• Growing number of corporate hospitals and their number of
branches
• Corporate entities setting up state-of-the-art hospitals
• Poor IT budget and cost pressures de-motivate large scale IT
adoption
• Lack of adequate regulatory controls for automation of Indian
hospitals
• Lack of awareness also adversely impacts IT adoption in
hospitals
• Unavailability of any full time IT personnel in hospitals results
in absence of initiatives towards IT adoption
Strengths of Indian Healthcare IT Weaknesses of Indian Healthcare IT

10
SAMPLERole of Government: Summary
Role
of
Government
Budgetary Allocation
Financial Incentives
Public Private
Partnerships
(PPPs)

11
SAMPLEKey Trends – Summary
Diversified Business
Approach
Specialty
Clinics
Glocal Healthcare
Systems
Hospital
Information Centre
Luxury
Offerings
Hospital Mobile
Applications
Key
Trends

12
SAMPLEKey Initiatives – Summary
Key
Initiatives
Health Cities
Telemedicine Mobile Hospitals

13MEDICAL DEVICES MARKET IN INDIA 2014.PPT
Key Ratios of 3 Major Companies – Operational Basis (FY 20-----) (1/4)
Competitive Benchmarking (2/5)
0
20
40
60
c3b3
Player B Player C
a3
%
c2
b2
a2
Player A
c1
b1
a1
Net MarginOperating MarginGross 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

14
SAMPLEPublic: 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

15
SAMPLEKey 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 / LossTotal 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
540.87524.80
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)

16
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)

17
SAMPLE
• X • X
• X• X
TO
WS
Public: Domestic Company – Player A – SWOT Analysis (4/4)

18
Private: Domestic Company – Player B (1/5)
Key People
Products and Services
Company Information
Corporate Address xx
Tel No. xx
Fax No. xx
Website xx
Year of Incorporation xx
Name Designation
Category Products/Services
Healthcare Service s
It offers treatment for a wide range of
diseases through its latest medical
services and technologies
Bengaluru
Head Office
Head Office – India

19
Shareholders of the Company as on xx/xx/20xx Ownership Structure
Name No. of Shares held
Total X
0.02%
2011
0.02%
99.98%
2012
99.98%
Directors or relatives of directors
Foreign holdings
Ownership structure corresponds to Date of AGM: xx/xx/20xx and
xx/xx/20xx

20
SAMPLEFinancial Snapshot Key Ratios
Financial Summary
• Company earned a net profit of INR 76.5 mn in FY 2012, as
compared to net profit of INR 25.3 mn in FY 2011
• It reported total income of INR 5,908.4 mn in FY 2012,
registering an increase of 90.9 per cent from FY 2011
• Earned an operating margin of 97.97 per cent in FY 2012, a
decrease of 1.41 percentage points over FY 2011
• The company reported a debt to equity ratio of 0.65 in FY
2012, a decrease of 26.93 per cent over FY 2011
Improved Decline
Net Profit / LossTotal Income
20
0
-20
6,000 80
60
40
4,000
2,000
0
INR mn INR mn
2012
76.5
5,908.4
2011
25.3
3,095.3
Particulars
y-o-y change
(2012-11)
2012 2011
Profitability Ratios
Operating Margin -1.41 97.97% 99.38%
Net Margin 0.48 1.29% 0.82%
Profit Before Tax Margin -1.41 97.97% 99.38%
Return on Equity 2.79 4.29% 1.50%
Return on Capital Employed 99.89 196.33% 96.43%
Return on Working Capital 7667.34 8072.94% 405.60%
Return on Assets 62.47 131.13% 68.66%
Return on Fixed Assets 119.43 254.43% 135.01%
Cost Ratios
Operating costs (% of Sales) 1.41 2.03% 0.62%
Administration costs (% of Sales) 0.00 0.00% 0.00%
Interest costs (% of Sales) 0.00 0.00% 0.00%
Liquidity Ratios
Current Ratio -37.78% 1.06 1.71
Cash Ratio -54.93% 0.53 1.18
Leverage Ratios
Debt to Equity Ratio -26.93% 0.65 0.89
Debt to Capital Ratio -16.29% 0.39 0.47
Interest Coverage Ratio N.A. N.A. N.A.
Efficiency Ratios
Fixed Asset Turnover 91.18% 2.60 1.36
Asset Turnover 93.73% 1.34 0.69
Current Asset Turnover 188.49% 4.88 1.69
Working Capital Turnover 1919.05% 82.40 4.08
Capital Employed Turnover 80.29% 3.31 1.84

21
SAMPLE
Description News
Overview
• It has a network of five tertiary care, nine secondary care and three primary care clinics across Bengaluru,
Salem, Mangalore, Vijayawada, Vishakapatnam and Goa
Facilities
• Its services include plastic and cosmetic surgery, accident and emergency critical care, bone marrow
transplants, bariatric surgeries, cancer care, dental implantology, eye surgeries and LASIK and several
others
• Other services include anaesthesiology, cardiology, dermatology, dental medicine, diabetes and
endocrinology, ENT, gastroenterology, general surgery, general medicine, maxillofacial surgery, medical
and numerous other specialties
Accreditations
• Group’s flagship hospital in Bangalore is NABH accredited and ranks among the Top 10 multispecialty
hospitals in India
Business Highlights

22
SAMPLE
• X
• X
• X• X
TO
WS

23
SAMPLEAppendix
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

24
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Hospital Market – India report is part of Research on India’s Healthcare Industry Series.
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Hospital market in india 2014 - Sample