Presented by
Sudhakar Jayaram
20 June 2015
Emerging Trends and Funding Opportunities
Confederation of Indian Industry
Flow
1 Emerging Mega Trends
2 Forces Shaping Healthcare Landscape
3 Key Funding Opportunities
4 M&A Scenario – Global & Indian
5 Emerging Opportunities
6 Recommendations
Emerging Mega Trends
Mega Trend 1 : Urbanization
Mega Trend 1 : Urbanization
URBAN Maximum concentration of healthcare facilities
SEMI URBANPresence of mostly unorganized players providing sub optimal care athigh cost to patients
RURALFew basic healthcare facilities available; requiring travel to urbancenters for most situations
Potential in smaller towns
More than 46% of the patients travel over 100 kms from small towns to metros to seek
medical care
Mega Trend 1 : Urbanization
More than 46% of the patients travel over 100 kms from small towns to metros to medical care
Potential in Smaller Towns
The top 6 players together will have only 43,000 beds by 2015 – clearly inadequate to create healthcare access
Fortis Apollo Narayana Manipal Max KIMS
9.78.7
2.9
3.4
5.0
2.0
5.1
0.91.1
1.01.1
1.
2.
Current (Mar’11)
Bed Capacity
Announced additions
FY ‘11-’15
India has 1.6 million beds today; projected to grow to at least 2.1 million by FY15
But the share of the category each player will still be miniscule until 2015
Bed Capacity (in ‘000 beds)
12.5
11.0
2.3 8.4
2.0
Projected category
Share in 2015 0.6% 0.5% 0.4% 0.1%
2.1
0.1%
7.1
0.3%
Mega Trend 2 : Consolidation
21.0%
32.6%
20.5%
19.8% 16.2% 8% 5%
16.4% 7% 7% 5%
3%
23%
16%
FY202
1
FY201
0
Food &beverages
Transport &communication
Housing andutilities
Apparels &
accessories
Medical care &health services
Education,
recreation
Misc. goods &services
Emerging middle income class segment will also impact the private consumption on
healthcare which is set to increase from 5% to 7.5% by end of this decade
• The expansion of the emerging middle incomeclass is driven by strong domestic growthaccompanied by a decrease in the numbers of thelower segments
• As the share of wallet increases for products and
services such as healthcare, transport, education,durables, etc – significant opportunity exists forthe companies targeting this income segment
Indian household expenditure distribution
India’s Population Distribution (millions) 1.36 billion1.19 billion
Householdincome/year (INR)
$*/dayper capita
2010 CAGR (%) 2021(Projection) (%)
> 8,50,000
3,00,000 – 8,50,000
1,50,000 – 3,00,000
< 1,50,000
Upper middle +
Middle
Emerging middle
Low
>$10
$5-$10
$1.7-$5
<$1.7
9.7%
6.3%
1.9%
-4.6%
14%
23%
42%
21%
80
170
470
460
190
300
570
290
Mega Trend 3 : Demographic
Sourc: eIndia Healthcare Market • The opportunity today
PwC
Mega Trend 3 : Demographic
India is dealing with the dual burden of communicable and non-communicable
diseases, which developed countries have had to deal with only sequentially
Share of non communicable disease segment isrising in the country
• India has 17% of world population, it accounts for 21%
•
of global disease burden
NCD’s constitute 63% of overall disease burden inIndia & their increasing incidence will adverselyimpact the economy to the extent of 230 billion INRin a decade
• Rural India accounts for 70% communicable diseasecases, and over 50% of non-communicable disease.
72%
28%
68%
32%
60%
40%
53%
47%
63%
37%
1990 1998 2000 2005 2012
Communicable Non Communicable
Communicable Vs. Non-Communicable
67%
29%
8%5%
12%
Leading causes of death : Communicable
Diarrhoeal Diseases
Respiratory Infections
Tuberculosis
HIV/AIDS
Hepatitis
30%
16%12%
22%
3%4%
9%4%
Leading causes of death: Non- Communicable
Cardiovascular DiseasesStroke
Malignant Neoplasms
Diabetes/EndocrineNeuropsychiatric
COPD & Asthma
Digestive Diseases
Genitourinary diseases
Source: WHO Global Burden of Disease 2010
Mega Trend 3 : Demographic
Sourc: eIndia Healthcare Market • The opportunity today
PwC
Never have Patients been so involved in their Healthcare
55% of patients trust the
Internet more than the doctor
75% want to move from
informed consent to shareddecision making
74% of Consumers Open to
Virtual Doctor Visit
Mega Trend 4 : Psychographic
Source: eIndia Healthcare Market • The opportunity today
PwC
60%
The WHO reports NCDs
to be by far theleading cause ofdeath in the world,representing over 60%of all deaths
7%
In 2012, around 44
million (6.7%) of theworld’s children agedless than 5 years wereoverweight or obese
12%
The global share of
older people (aged 60years orover) increased to11.7 per cent in 2013
Older , Sicker and Fatter …
Mega Trend 4 : Psychographic
Source: eIndia Healthcare Market • The opportunity today PwC
Proliferation of narrownetworks
Rising demand/cost inemerging markets
Government (& Privatesector) changing role infunding
Rise of consumerism
5
6
7 8
1
2
3
Macro-trends
4
Regulatory reform
Focus on value overvolume
Blurring lines between insurerand care provider/ deliverer
Emphasis on big data (includingnext gen analytics)
A new health economy is inevitable
Mega Trend 5 : Integrated Ecosystems
Source: eIndia Healthcare Market • The opportunity today PwC
Indian Market Strategies
Market-appropriate
productsIncreased rural
marketing
Treatment Engagement Support Management DeliveryPrevention
Low-cost
manufacturing
Diagnosis
Business Model
Transformation:Owning the Disease
Mega Trend 6 : Engagement
Source: eIndia Healthcare Market • The opportunity today PwC
“Owning the Disease”
Mega Trend 7 : Longitudinal and Accountable Care D
egre
e o
f C
om
ple
xity
& R
isk
Sh
arin
g
Forces Shaping Healthcare Landscape
Company Current Market Cap*(USD Mn)
% EBITDA EV/EBITDA Multiple(2014E)
Asian healthcare service providers
IHH Healthcare
Bangkok Dusit Medical
Bumrungrad Hospital
Raffles Medical
Apollo Hospitals
Fortis Healthcare
12,496
8,974
2,968
1,787
2,640
986
24.3%
20.4%
26.5%
30.1%
17.8%
8.6%
23.6x
24.1x
21.5x
24.0x
23.4x
26.3x
International healthcare companies
Ramsay HealthcareLaboratory Corp of America
Holdings
Davita Inc
HCA Holdings, Inc.
Community Health Systems, Inc.
9,311
8,545
15,800
28,990
6,010
12.9%
21.0%
20.3%
14.5%
13.8%
14.2x
7.4x
9.2x
8.4x
8.1x
Source: eIndia Healthcare Market • The opportunity today PwC
Force 1 : Superior Valuations
Comparable EV/EBITDA Multiples and MCaps
CompanyCompany Valuation-Equity - Post Money
(INR Cr)
Revenue Multiple (based on Equity
Value/Market Cap)
EBITDA Multiple (based on Equity
Value)
PAT Multiple (based on Equity
Value)
Manipal Hospitals 3600 3.1 19.8 NM
KIMS Hospital 786 2.68 12.9 44.7
Asian Institute of Medical Sciences 273 2.77 15.68
Medanta Medicity 3636 3.86 15.28 35.26
Fortis Healthcare 4581 0.85 3.04 8.12
Moolchand Healthcare 462 30.93 40.6 76.5
Apollo Hospitals 3798 2.57 15.66 32.17
AVERAGE 20.02
Source: Prime database, Market Reports
Force 2 : Elevated Multiples
Force 3 : Exit IRRs
Force 4 : Superior Destination
Health insurance is stimulating the growth of healthcare delivery
Growing health insurance penetration
•
•
•
The health insurance market is currently valued at ~2.9 BnUSD and registered a growth of 18%
Close to 300 million population (~25%) is covered undersome form of health insurance in the country today
Around 70% of healthcare expenditure is still being paid out ofpocket by individuals
• Voluntary (private) health insurance market growing at ~ 35%and is expected to grow at a rate of 23-25% for next 5 years
Changing role of Government from provider to payer
• The emergence of government sponsored health insuranceschemes provided the impetus to the insurance industry and
•
•
is expected to further expand to the different states/provinces
Main objective of these schemes was to offer financialprotection to below-poverty line segment against catastrophichealth shocks
Between 2007 and 2010, 6 major schemes have emerged,including one sponsored by the government of India (GOI)and five state-sponsored schemes
• Approx. 240 million Indians are covered by these schemes sofar , up from 34 million beneficiaries in 2003
67.0%
2.0%3.0%
2.0%2.4%7.2%
14.4%
2.0%
Sources of Finance in Health Sector in India
Central
GovernmentState
GovernmentLocal
GovernmentOut-of-Pocket
Public Firms
Private Firms
0.31
3
15
0
4
FY 05 FY 10 FY 15E FY 20P
Health insurance premium collected (USD Bn)
16
12
8
Source: eIndia Healthcare Market • The opportunity today PwC
Force 5 : Coverage
Altogether, six themes will continue to underlie the investment landscape:
• Continued focus on cost management
• Integrated care delivery models that focus on outcomes rather than volume
• Emerging payment models
• Shifting care to lower-cost sites and models
• Higher consumer power, engagement and expectations
• Focus on wellness and prevention
Force 6 : Summary
Key Funding Opportunities
It is estimated that Cardiology is the largest contributor at ~27-30% ofrevenues and Oncology ~17-22% of revenues of the top 5 hospital chains in India
CARDIAC IS ALSO ESTIMATED TO BE ONE OF
THE TOP 3 MOST PROFITABLE SPECIALTIESCARDIOLOGY IS THE LARGEST REVENUE
SEGMENT FOR THE TOP 5 HOSPITAL CHAINS
Over the next 5 years, cardiology and oncology are expected to
drive ~50% of the bulk of in-patient revenue in India
Current Focus : Cardiology and Oncology
Sources: Philips internal data
No.
of
pati
ents
(m
illi
on
)
2,540
CHD Growing Rapidly to Exceed 50 Million Patients in 2013251
Himachal
Pradesh400
Uttarakhand
7,357
Uttar
Pradesh
2,802
Madhya Pradesh
1,296
Punjab
946
Haryana 1,091
Delhi19
Sikkim
134
Tripura
985 62
Assam Nagaland
112
Manipur
52
Mizoram
3,378
Tamil nadu
3,286
Andhra
Pradesh
3,397
Bihar
1,197
Jharkhand3,309
West
Bengal
5,204
Maharashtra
62
Goa
Karnataka
2,706
Rajasthan
2,480
Gujarat
Daman & Diu
Dadra &
Nagar
Haveli
1,560
Orissa
81
Pondicherry
1-3000
3-5000
>5000
115
Meghalaya
CHD population (000s)
< 500
500-1000
30
20
10
0
70
60
50
40
4.55.5
6.1
5.9
5
2000
6.2
7.3
8.3
7.7
6.4
2005
9.1
11
10
8.5
2010
14.3
13
11.3
2015
Coronary Heart Disease
40-49 years
10.5
12.5
60-69 years
30-39 years
50-59 years
20-29 years
6%
8.3
Cardiology
India has more than 50M patients with coronary heart disease
481
Jammu
and Kashmir
But India has the capacity to only perform only ~2M procedures
Sources: Philips internal data
Punjab
1,296 Pradesh
West
2,706
Rajasthan
Gujarat
Meghalaya 985Assam Nagaland
Bengal
PradeshPunjab
40
Rajasthan
31
Madhya Pradesh
Nagaland
Meghalaya
India has a big shortage of Cardiac Centers
5
Himachal54
5Uttarakhand
2744
HaryanaDelhi
50
Uttar
Pradesh
6
Jammu
and Kashmir
2
Tripura
5
Assam
2
Manipur
Mizoram
93
Tamil nadu
120
Andhra
Pradesh
6
Bihar
5
Jharkhand
1
Sikkim
61
West
Bengal
202
Maharashtra
8
Goa 99
Karnataka
57
Gujarat
6
Orissa
8
Pondicherry
21-50
50-100
>100
No. of cath labs
nil
1-5
6-20
251
Himachal
400
Uttarakhand946
Haryana 1,091
Delhi
7,357
Uttar
Pradesh
2,802
Madhya Pradesh
481
Jammu
and Kashmir
115
134
62
Tripura 112
Manipur
52
Mizoram
3,378
Tamilnadu
3,286
Andhra
Pradesh
3,397
Bihar
1,197
Jharkhand
19
Sikkim
3,309
5,204
Maharashtra
62
Goa 2,540
Karnataka
2,480
Daman & Diu
Dadra &
Nagar
Haveli
1,560
Orissa
81
Pondicherry
1-3000
3-5000
>5000
Daman & Diu
Dadra &
Nagar
Haveli
CHD population (000s)
< 500
500-1000
Total # CHD patients: >50 million Total # Cath Labs: 1052
Sources: Philips internal data
Increased investments in Cardio and Onco - the most profitable segments
CARDIOLOGY AND ORTHO ARE THE LARGEST REVENUE SEGMENTS – TYPICAL 200 BEDDED + TERTIARY HOSPITAL THESE ARE ALSO THE MOST PROFITABLE SEGMENTS
Focus on ‘CONCORT’-
Cardio, Onco, Neuro, Critical
care, Ortho, Radiology,
Transplants
Oncology is ~8% of inpatient revenue
Sources: Philips internal data
India has a prevalent population over 4 M cancer patients with only 15 states accounting for 93% of cancer cases
1.41.31.21.1
7.0
5.7
4.5
3.5
+12%
2017201520132011
Prevalence
Incidence
Number of cancer cases
(in Millions)
Sources: Philips internal data
M&A Scenario : Global & Indian
M&A Scenario : Global
M&A Scenario : Global
M&A Scenario : Global
Exit
• In 2013 , over a tenth of all PE investments in India were in the Healthcarespace
• The healthcare and life sciences sector in India has emerged second in termsof investment value with investments worth 729 million USD from 15 deals
• The healthcare and life sciences sector tops the list of PE exits, in terms ofboth value and volume, with six deals worth 513 million USD. Thisconstitutes 45% of the total deal exit value
• In addition to investments by PEs, recent trends point to investorsholding a controlling stake in major players such as Vasan Healthcare,Care Hospitals etc.
The Indian health care sector is becoming an attractive investment
destination for PE and VC companies and is exhibiting investments
across the spectrum
Hospital chains –
PE / Strategic Investor -
Year
2013
2012
2011
2010
2009
2008
2007
Deals
73
30
24
23
24
18
23
Value($ Mn)
1,264
755
274
438
281
333
395
M&A Scenario : Indian
Source: eIndia Healthcare Market • The opportunity today PwC
Foreign playerTemasek, Singapore/ Carlyle,
USACDC, UK Parkway Pantai, Singapore
Indian player Medanta Narayana Health Continental hospitals
Location within
IndiaGurgaon, Haryana Pan India Hyderabad
Current no. of beds 1,250 beds ~7,500 beds 350 beds
Investment made
(approx.)INR 650 Cr / INR 1,000 Cr INR 299 Cr INR 282 Cr
Stake 18% / 30% Minority stake (undisclosed) 51%
Transaction year 2015 / 2013 2015 2015
In addition to investing in the hospital sector, international healthcareproviders have also shown keen interest in exploring the opportunityacross spectrum of healthcare formats
M&A Scenario : Indian
Source: eIndia Healthcare Market • The opportunity today PwC
Foreign player JBIC, Japan Life Healthcare, South Africa TPG Capital, USA
Indian player Sakra hospital Max healthcare Manipal health
Location within
IndiaBangalore, Karnataka Pan North India Pan South India
Current no. of beds 300 beds ~1,900 beds ~4,900 beds
Investment made
(approx.)INR 63 Cr INR 766 Cr INR 900 Cr
Stake Undisclosed 46.4% 24.75%
Transaction year 2014 2014 2015
In addition to investing in the hospital sector, international healthcareproviders have also shown keen interest in exploring the opportunityacross spectrum of healthcare formats
M&A Scenario : Indian
Source: eIndia Healthcare Market • The opportunity today PwC
Foreign playerCancer Treatment Services
International (CTSI), USADaVita Healthcare Partners, USA Columbia Asia, Malaysia
Indian player Citizens hospital Nephrolife Care Adopted 100% FDI route
Location within
IndiaHyderabad Pan India Pan India
Current no. of beds 300 beds - 1,300+
Investment made
(approx.)INR 220 Cr INR 200 Cr INR 1,000+ Cr
Stake Undisclosed Undisclosed -
Transaction year 2012 2012 2005
In addition to investing in the hospital sector, international healthcareproviders have also shown keen interest in exploring the opportunityacross spectrum of healthcare formats
M&A Scenario : Indian
Source: eIndia Healthcare Market • The opportunity today PwC
28,54733,953
2,990
FY10 FY11 FY12 FY13 FY14 FY15 FY16YTD
India Primary Market Fund Raising
Historical Primary Market Fund Raising Activity (Rs. Cr.)*
94,848
78,634
65,552
55,018
Market Outlook
• The maximum amount of equity fund raised in India capital markets was ~Rs.95,000 cr. in FY10
• Pipeline for ~Rs.1.33 lakh cr . of equity fund raising for FY15-16
• Disinvestment target of ~Rs.69,500 cr. in FY15-16
• Strong pipeline of Public Issues and QIP for the coming year
• After 3 years of slowdown, Primary market fund raising activity picking up, with increasing confidence levels
• Timing the issue will be key for successful fund raising in coming year
Source: Prime database, Market Reports
S.
No.Transaction Stage
Amount
(Rs. cr.)
No. ofIssues
1. SEBI approval pending ~4,000 8
2. Announced IPOs ~10,000 7-8
3. Disinvestment Plans ~69,500 6-10
4. Banks fund raising ~30,000 8-10
5. Other Corporates ~20,000 9-10
Total 133,500
Equity Raising - Public Issues
Historical Fund Raising through Public Issues (IPO+FPO) (Rs. Cr.)*
Pipeline of Public Issues for FY15-16 (Announced + Filled Issues)Pipeline of Equity Issues for FY15-16
Issue
ACB (India) Limited
AGS Transact
Amar Ujala Publications
Catholic Syrian Bank
CL Educate Limited
Dilip Buildcon Limited
Lavasa Corporation Limited
Manpasand Beverages Limited
MEP Infrastructure Developers Limited
Navkaar Corporation
Pennar Engineered
PNC Infratech Limited
Power Mech Projects Limited
Prabhat Diary
Precision Camshafts
Rashtriya Ispat Nigam Limited
S H Kelkar and Company Limited
Sadbhav Infrastructure Project Limited
Shree Shubham Logistics Limited
SMC Global Securities Limited
SSIPL Retail Limited
UFO Moviez India Limited
Uniparts India Limited
~Issue Size (Rs.cr.)
500
1300
300
400
120
600
750
400
400
600
200
450
200
500
200
600
300
1050
300
125
200
750
300
46,941 46,182
10,4716,497 8,661
2,769 468
FY10 FY11 FY12 FY13 FY14 FY15 FY16YTD
Source: Prime database, Market Reports
Emerging Opportunities
Emerging Opportunities
1) Ambulatory Surgical Care Centers
2) Urgent Care
3) Data Analytics and Big data in Healthcare
4) Home Healthcare
5) Telemetry (e-ICU etc)
6) Revenue Cycle Management (RCM) for Hospitals
Recommendations
Challenges & Recommendations
• There are a limited number of high-quality fund managers that focus exclusively on healthcare. While there are over 300 healthcare-focused funds in the U.S., there are only 10-15 across the emerging markets.
• Most emerging markets healthcare investments have been made by sector-agnostic private equity funds, in which healthcare represents approximately 8-10% of the portfolio. Nevertheless, sector-agnostic funds face their own set of challenges, including difficulty managing specific sector exposure and limited ability to provide expertise to operationally enhance specialized businesses.
NMC HealthcareAn Overview
Annexure
NMC is UAE’s largest
private healthcare provider
First company from Abu Dhabi to list on the London Stock Exchange and part of FTSE 250 Index
Market cap in excess of USD 1.5 billion
2013 Revenues over USD 550 million
600 Doctors
5000 patients per day
Abu DhabiAl AinDubaiSharjahUmm Al Quwain
Only healthcare
provider with a pan UAE
presence
12 Facilities
5 Cities
4 Emirates
Centers of Excellence
Centers of Excellence
Abu Dhabi’s first private women’s hospital
Located in the Al Jazeera football stadium, the hospital features the most up to date methods for diagnosis and treatment in Gynecology, Obstetrics, Neonatal care, Infertility and Plastic Surgery
The Royal Suites at BrightPoint
BrightPoint is designed to create an optimal healing environment with a caring, emotionally supportive and home like atmosphere. Our suites are not only designed and equipped for the best clinical outcomes but also for the most relaxed stay with amenities such as Spa services, professional baby photography services , Villeroy Boch bathroom fixtures, Herman Miller furniture and iPads to control lighting, temperature, curtains and the television
Centers of Excellence
This is not a 5 star hotel (although it may feel like one)
Each BrightPoint patient is accompanied by dedicated customer service support staff during their journey and stay within the hospital to ensure a delightful experience. All our staff can converse fluently in Arabic, English, German, Romanian, Hindi, Urdu, Malayalam and Tagalog. We have a rigorous recruitment and training process to ensure that each patient is welcomed as a member of the family and is not treated as just a number
Centers of Excellence
Indian Subcontinent Footprint of Dr B R Shetty
Thank You