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Indian Healthcare Industry

Healthcare industry in India is poised to expand


rapidly
Key Focus Area Indian Healthcare US$ 80bn
Industry (FY12)

Hospitals Medical Devices Diagnostics Pharmaceuticals Others

71% 9% 3% 12% 5%

Indian Healthcare is among the fastest growing globally… …poised to become a US$160bn industry by 2017
2011-15 CAGR
Global average – 5.6% 160
17.0%

10.0%
8.4%
6.3%
5.2% 80
2.2% 68
60
45 52
India
America

Western

America
Asia Pacific

Middle East
Europe
North

Latin

& Africa

2008 2009 2010 2011 2012 2017E

Source: BMI Report, Frost & Sullivan, LSI Financial Services, IBEF Research, Hospital Market – India by Research on India, JP Morgan
Page 6
Robust Fundamentals
Growing Demand
1
Underpenetrated  Under-penetrated healthcare delivery market expected to provide a long-term
Market sustainable growth opportunity

2  Flourishing middle class


Accelerated
 Rise in disposable income
Urbanization
 Increase in “share of wallet” spend on healthcare services

3 Shift from  Lifestyle related diseases have led to an increase in the demand for specialized care
communicable to
lifestyle diseases  Currently, c.50 per cent of spending on in-patient beds is for lifestyle diseases

4  Gross healthcare insurance market has expanded at a CAGR of 28% from US$ 1.2bn
Enhanced penetration of from FY09 to US$ 2.8bn in FY13
healthcare insurance
 Private insurers contributed c.38% of the total health insurance market in FY13

5
Increasing Trend of  India is gradually emerging as a destination for elective and critical treatment on
Medical Tourism account of lower costs, better patient care and sophisticated medical technology

6  100% FDI allowed through automatic route


Favourable investment
 Various fiscal and tax incentives related to healthcare Infra financing
environment
 Promotion of Public Private Partnership (PPP)

Source: IRDA, CII, Grant Thornton, Gartner, Technopak, IBEF Research


Page 7
1 Underpenetrated Market

Low expenditure on Healthcare as % of GDP1 … …with low per capita Healthcare expenditure1

20.0% 17.9% 10,000


(PPP basis US$)
8,362
16.0% 8,000

12.0% 6,000
9.6% 9.0% Global average – 9.4%
8.0% 4,000 3,480 3,204 Global average – 990
5.1%
4.1%
4.0% 2,000 1,028
379 132
0.0% -
US UK Brazil China India US UK Japan Brazil China India

India has one of the lowest bed densities.. ..With low physician and nursing staff density
Beds per 10,000 people Physician Global average – 14.2
Low bed density mostly due to low Nursing Global average – 28.1
government investment on Healthcare Physicians Nursing
160 120 101
137 98
100 85
120 97
Global average – 30
80 64
59
80 60
42 41 43
33 31 30 24 40 27
40 13 21 18 24 20
6 1414 18
20 710 3
0
0
UK

US
Japan

China

Brazil

India

Indonesia
Russia

Singapore

UK

US

India
Japan

China

Singapor

Brazil
Russia

Indonesia
e
Source: Barclays Research
Page 8 Note 1: WHO Statistics 2012
2 Accelerated Urbanisation

Growing middle class with higher disposable income… …Resulting in enhanced Healthcare share of
wallet

Income in US$

>16,700

50 mn Middle class 600 mn 3,300 to


16,700 13%
9%
7%
< 3,300 4%

1995 2005 2015 2025


2005 2025
Source: MGI

Source: MGI & EY


Healthcare spend –
Share of wallet

 The Middle class segment of the population


tends to have the maximum share of wallet
on healthcare expenditure
Low Medium High  The growing middle class population in
Income Level India is supporting the growth in the
Source: MGI & EY
healthcare share of wallet

Page 9
3 Shift from Communicable to Lifestyle diseases

Demographic shift with population over 30 yrs


Number of hospitalized cases (million)
increasing
7 8 8 9 11 12 8.3
11 12 14 15 16 16
20 20 20 21 23 5.2
24
27 28 4.2
29 28 3.4
26 24 2.9 3.1
2.0 2.3
35 32 29 27 25 1.2
23

2001 2007 2012E 2017E 2021E 2026E


Cardiac Oncology Diabetes
0-14 yrs 15-29 yrs 30-44 yrs 45-59 yrs 60+ yrs 2008 2013F 2018F
Source: MOSPI, CRISIL Source: JP Morgan Research

► India’s population above 45 years of age is ► Increased incidences of lifestyle diseases


expected to increase from 22% of total population contributing to rising healthcare spending by
in 2012 to 26% by 2021E individuals

► This segment of population is expected to have ► Lifestyle diseases accounted for 48 per cent of the
greater requirement for healthcare services in-patient revenue in 2013 (c.US$ 17bn)

Page 10
4 Enhanced penetration of healthcare insurance

► The health insurance industry expanded at a CAGR Indian health insurance market size (US$ bn)
of 23% from FY09–13

► Over the next 5 years the Healthcare Insurance


market is expected to grow at a CAGR of c.19%, to 2.8
be a US$ 6.5bn market by FY18 2.4

► Awareness and rising healthcare cost are 2.0


expected to increase penetration within the
1.5
retail segment
1.2
► Increase in organized labour force is expected
to result in the growth of the corporate
segment

► The share of population having medical insurance is


FY09 FY10 FY11 FY12 FY13
likely to rise to 20
5 per cent by 2015 from the
Note: Conversion at constant rate of INR55/US$
present 2 per cent

► With increasing number of companies offering


insurance cover to their employees, the healthcare
insurance business in India is set to expand further
Source: IRDA, Towers Watson IBEF Research
Page 11
5 Increasing trend of medical tourism

Medical Tourism in India


► India is emerging as a destination for elective and
critical treatment for citizens of other nations 4.5

(medical tourism) given: 2.5

► Lower cost,
1.1 2.2
► Availability of skilled doctors/nursing staff,
2012 2015
► World class hospitals Revenues (US$ bn) Medical tourists (mn)
► Sophisticated medical technology and

► Excellent patient care Cost of surgeries in different countries (US$’000)

290 300
► High influx of patients from Africa, CIS countries, 250
Gulf and SAARC nations, Pakistan, Bangladesh and 200

Myanmar witnessed currently 150 140


100
75
60 4850
45 45
2020 25
5 1020 8

Heart surgery Bone marrow Liver transplant Knee


transplant replacement
US UK Thailand Singapore India

Source: Ministry of Health, RNCOS, KPMG, LSI Financial Services, Apollo Investor Presentation, CRISIL
Page 12
6 Favourable investment environment

Highly favourable healthcare


investment regime

Promotion of
100% FDI Public –
medical Healthcare Fiscal
(Automatic Private Tax benefits
tourism Infra Financing incentives
Route) Partnership
oriented cities

Source: DIPP, Health Ministry, IBEF


Page 13
Healthcare Services / Hospitals in India
Overview

Healthcare Services / Hospitals


(US$ 55 bn Industry)

Primary Care Secondary Care Tertiary Care

Multi-specialty Single-specialty

Primarily includes Capital Intensive & Less capital intensive


Mainly at the grass
nursing homes and higher gestation & low gestation
root level
recovery rooms period periods

Investment in such
Minimal involvement Diversified specialty
centres to reduce
of private players in mix with higher Niche play
ALOS of tertiary care
this segment patient volume
centres

80% spend of overall healthcare services –


20% of overall healthcare services – Catered Catered primarily by private sector
through the govt. channels

 Low share of govt. spending and strong demand trends has led to increasing investment by private players

 Currently, Private sector’s share in hospital beds is estimated at 40%

Page 16
Private and confidential

In the short term the organized sector will continue to form a


small proportion of the healthcare delivery landscape
Current private bed landscape (2013) Projected private bed landscape
1.6 mn beds 1.0 mn beds 0.08 mn beds 1.0 mn beds 2.0 mn beds
Others 40,000

Yashoda 900 8-10%


Vikram 1,000 20%
39% Metro 1,000

Kamineni 1,000
Public Medanta 1,000

Miot 1,000
92%
CA 1,000
92% 90%
Other Private Sterling 1,500

KIMS 1,650

Max 1,850

Global 2,000

Care 2,400
61%
Fortis 4,800
8%
Private Manipal 4,900

NH 6,200 8% 10%
Private chains
Apollo 8,600
2013 Private chain Other private 2020
Total beds Private beds Private chains growth growth

► Despite the strong growth in bed capacity expected by private chains over the next few years, these are
likely to remain a small proportion of the hospital delivery landscape

Source: EY analysis, McKinsey 2010, ASSOCHAM July 2013


Page 2
Healthcare Services / Hospitals in India
Single Specialty vs. Multi Specialty – Key Contours

Parameters Single Specialty Multi-Specialty

Capital Investment  Low - <US$2 - 5mn per centre  High - >US$12 -15mn for 100 bed hospital

 10-50 bed facilities


 >100 beds across multiple specialties
 Mostly Out-patient day care centres
 Real estate intensive
Business Model  High patient throughput
 Greenfield project execution gestation
 Facilities - <5,000 sq. ft. rental locations
period of c.2years for 200 bedded facility
 Faster roll-out
 EBITDA breakeven in 2- 3 years
 Typical EBITDA margins: c.20%  Typical EBITDA margins:17 – 20%
Profitability  EBITDA break even within 1 year  Earnings diversification – multiple
 Medium realization & ARPOB procedures specialties
 High realization & ARPOB procedures

 Talent acquisition  Project execution


Key Challenges  Management  Equipment up gradation
 Scale up across new markets  Talent acquisition & retention

Page 17 Assumed US$/INR 60


Healthcare Services / Hospitals in India
Industry Landscape

Particulars

Listed Yes Yes No No No No No No

Region Focus Pan India Pan India S-W India South India S-W India North India S-W India North India

Total Beds 9,000 4,500 7,100 5,000 1,200 1,560 1,912 1,250

Owned Beds 6,900 3,500 NA 5,000 NA 1,560 NA 1,200

O&M Beds 2,100 1,000 NA Nil NA Nil NA Nil

Capacity
71% 74% NA NA 45% 74% NA >85%
Utilization

Operating Parameters

ALOS 4.8 4.03 NA NA NA 4.10 NA NA

ARPOB (US$/
463 512 NA NA 1304 c.533 NA c.500
Day)

Fragmented industry set to enter the consolidation phase with top 8 players currently controlling
c.25% of the organized private healthcare market in India
Source: EY Research, Research report (HSBC, Nomura, Axis Capital, D&B, Barclays, Investor presentation of Fortis and Apollo, Economic Times)
Page 21 Note: US$/INR 60
Healthcare Services / Hospitals in India
Single Specialty – Overview

Emergence of single specialty and short – stay format hospitals as an attractive healthcare segment

ENT General
10% 5%
Oncology Average Operating Margins Across MSHs
Plastic 4%
Surgery
and various SSHs
3%
27-30%
Gyne
25-28%
7% Urology 22% - 25%
19% - 20%
25% 17%
Ortho
8%
Gastro
14%
Opthal
24%
Eye Cardiac Care Urology Cancer MSH

(#) Centres – Distribution across Robust EBITDA Margins


Specialties

Significant growth & scale potential amongst various short – stay format medical specialities
Source : Espicom Q4’2013 Indian Medical Devices Report
Page 23 Assumed US$/INR 60
Healthcare Services / Hospitals in India
Ophthalmic Care: Industry Landscape

No. of Centers 180 51 (12 in Africa) 49 30 13 15

Revenue
Financi (13 – US$mn)
100 31 12.5 7.2 10(1) 2.8
al
Summ Revenue
ary Growth 34% 22% 32% 87% — 41%
(Y-o-Y)

 Sequoia  Listed Company  Matrix Partners  Song Investments  TVS Capital  Sequoia India
 GIC, Singapore  Market Cap – US$  Nexus Partners  ePlanet Ventures
Private Equity  Westbridge 15mn  Helion Ventures
Investors Ventures  Evolvence Life
Sciences

 Both greenfield &  Greenfield &  Majorly acquisition  Both greenfield &  Recently merged  Greenfield
brownfield Brownfield based brownfield with Hyderabad
 Recently raised
 Diversifying into based eye care
 Looking to raise  Recently acquired  Plans to invest to US$10 mn for
dental chain Maxivision
US$ 20mn of New Vision Laser US$ 20mn to open expansion
Business Model Hospitals
 Focusing on primary investment Centre and Shree 40 new hospitals in
Highlights  Target to have 30
expansion in from PE investors Hi-Tech Clinics tier II and tier III  Looking to raise
centres operating
northern region towns in states of US$30mn through
 plans to increase  Looking to raise by 2014 in North &
 SA's Net Care Punjab, Gujarat, PE for expansion
the network to 100 US$30mn PE Central India
recently in talks for Haryana and Uttar
over the next 3yrs
a majority stake Pradesh by FY16

Location

Source : Company websites, Secondary Search, EY Research


Page 25 Note (1) – Consolidated Revenue for Medfort – Maxivision operations
Assumed US$/INR 60; MCap as on 12.11.2014
Healthcare Services / Hospitals in India
Urology & Renal Care: Overview
Indicative List of Major Urological Procedures Urology Care in India
 Lithotripsy  Female Urology  Concentrates on the diseases of the female and male urinary tracts along with
(US$410-500) (US$1,300-2,500) male reproductive organs

 Uro-endoscopy  Urologic Oncology  Combines management of both surgical as well as non-surgical problems:
(US$1,300-2,000) (US$4,200-6,700) – Surgical conditions include correction of congenital abnormalities, cancers
and correction of stress incontinence among others
 TURP  Pediatric Urology
(US$1,000-1,160) (US$1000-1,700) – Non-surgical problems include benign prostatic hyperplasia and urinary
tract infections among others
 Andrology  Cystoscopy
(US$1,000-1,700) (US$800-2,500)  Recent trends observed in India:

 PCNL – Keyhole – Urological conditions have witnessed the fastest advent & growth of robotic
 Laparoscopy surgery driven procedures in India
Surgery
(US$1,300-1,700)
(US$1,300-1,700) o Accounts for 60-70% of overall robot-assisted procedures performed
in India
 Urethral Strictures
 Radical Prostatectomy o Currently, 23 Da Vinci Si robots, used for performing high-precision
Treatment
(US$2,500-3,300) robot-assisted surgeries, are installed in India(1)
(US$800-1,700)

Urological Procedure Volume – MSH (2013)(2) Leading Private Sector Urological care hospitals in India

16000 15,000 Focus Key players


12,500
National Chains
12000 Apollo Hospitals, Fortis Hospitals, Max Healthcare
(MSH)
Pan India
8000 RG Stone Hospital, Vattikuti Urology Institute
5,000 Presence

4000 South Nephroplus, Nephrolife, Alliance Medicorp, Apex Kidney Care

0 West Muljibhai Patel Urological Hospital, Apex Kidney Care


Max Fortis Apollo
Source : Da Vinci Q4, FY2013 investor presentation, Investor Presentations, company Websites & EY Research
Page 26 Assumed US$/INR 60
Healthcare Services / Hospitals in India
Urology & Renal Care: Industry Landscape

No. of Centers 16 26 14 8 25

FY13 Sales
17 1(1) 1.7(1) NA 2.3
(US$mn)

 Bessemer invested
 IEP -40% stake (2010) US$5mn in Dec-2011  NEA, Da Vita Inc. invested
Private Equity
 ICICI Ventures – Erstwhile US$ 8.3mn for 45% stake  Vattikuti Foundation NA
Investors investor  IFC & Bessemer invested in 2012
US$ 10mn Jun’14

 Nephrology, Lithotripsy,  Nephrology, HD, CAPD,  Nephrology, HD, CAPD,  Robot-Assisted Urological
Specialty Focus Uro-Oncology, Endo- Minor Urology based Minor Urology based procedures, MAS, Endo-  Nephrology, HD, CAPD
Urology Procedures Procedures Urology

 Operates both Standalone  Exclusively operates via


 Cluster based operational  Operates both Standalone
& SIH formats SIH model in India
strategy & SIH formats  Operates both Standalone
 Physician partnership  Parentage – Vattikuti & SIH formats
 Focused on Metros / Tier-I  Physician partnership
based model Urology Centre: Henry
cities based model  Physician partnership
Ford Hospital, USA
Business Model  Primary focus on South based model
 Significant presence in  Majority stake acquired by
Highlights India market with recent  Tie-up with leading
North, East & West India US based Da Vita Inc.
expansion across North quaternary care facilities  Apex is planning to
 Plans to raise around India  Primary focus on South in India such as Medanta, escalate to 50-55 centres
US$170mn of PE to India market with recent Apollo, Kokilaben Hospital, by 2016
 Targeting 110 centres Manipal, KIMS etc.
expand to 35 hospitals in expansion across North
across 15 to 20 states in
5 years India
the next five years

Location

Source : Company websites, annual reports, secondary search


Page 27 Assumed US$/INR 60
Healthcare Services / Hospitals in India
Investment proposition – Strategic evaluation
Low - end Healthcare Services Value Chain High - end

Primary Care Secondary Care Tertiary Care

Single - Specialty Multi - Specialty

 Caters to low realization / low ARPOB generating  Caters to high realization / high ARPOB generating
minor investigations & low – risk procedures complex procedures

 Segments on the priority list of government’s  Limited government presence, with private players
healthcare initiatives expected to dominate this segment

 Lion’s share of government’s funding on  Advent of lifestyle diseases & accelerated


healthcare is channeled to these 2 segments urbanization results in an enhanced capacity to
pay for both critical and elective procedures
 Offers low value proposition from RoI standpoint
 Witnessed plenty of interest strategic & financial
 Limited investment platforms / formats available
from an investment perspective investors alike in the recent past

 Offers multitude of investment opportunities such


as multi-specialty vs. single specialty focus,
standalone vs. regional vs. national chains

Page 29
Healthcare Services / Hospitals in India
Multi Specialty - Key transaction linked sector insights
Date Target Acquirer/Investor Deal Value (US$ mn) Stake
Private Equity
Jun-14 KIMS, Hyderabad ICICI Ventures 36 28%
Dec-13 Medica Synergie Quadria, Swedfund, DEG 34 60%
Oct-13 Medanta Carlyle 163 28%
May-13 Fortis Healthcare IFC 146 17%
Aug-12 Manipal Hospitals India Evolving Fund, IVF 107 32%
Mar-12 Quality Care India Advent 105 80%
Jan-12 Aster DM Healthcare Olympus Capital 97 26%
May-10 Fortis Healthcare GIC 100 8%
M&A Transactions
Jul-14 Max Healthcare Institute Life Healthcare Group 66 20%
Feb-14 Soni Hospitals Manipal Health Enterprises 20 100%
Jan-13 Saket City Hospital Spice Global Investment 74 100%
Jun-12 Imperial Hospital and Research Apollo Hospitals Enterprise 18 49%
Oct-11 Max Healthcare Institute Life Healthcare Group 105 26%

Key underlying themes observed across transaction spectrum in multi-specialty segment:


 Marquee investor interest
 Capacity enhancement driven high intrinsic growth potential
 Scalability of the healthcare delivery platform
 Multitude of options available in terms of niche sector play
− Standalone vs. healthcare chains, regional dominance, tertiary / quaternary care
focus, Centre of excellence (core specialties) among others

Page 30
Healthcare Services / Hospitals in India
Single Specialty – Key transaction linked sector insights
Key PE Deals in Singe Specialty Hospitals (2010-YTD14)

Deal Value (US$


Date Target Investor Speciality Stake
mn)
Aug-14 DCDC Health Pragati India Fund Renal 10.0 n/a
May-14 Vasan Eye Sequoia, GIC, WestBridge Ophthalmic 50.0 n/a
Sep-13 Kids Clinic Matrix Partners, Sequoia Paediatric 15.9 n/a
Mar-13 HCG Temasek Oncology 24.0 17.3%
Jul-12 Dr. Agarwal’s Evolvence India Ophthalmic 12.5 n/a
Aug-12 Nova Medical NEA IV Fertility 53.6 41.4%
Mar-12 Vasan Eye GIC Ophthalmic 100.0 19.2%
Sep-11 Eye-Q Vision Helion Venture, Nexus India Ophthalmic 12.0 40.9%
Dec-11 Nephrocare Bessemer Renal 37.0 70.6%
Oct-10 Centre for Sight Matrix Partners Ophthalmic 11.3 21.3%

Key underlying themes observed across transaction spectrum in single-specialty segment:


 Enhanced level of interest across specialties catering to lifestyle diseases with high realization & heavy
surgical mix such as ophthalmic, urological care as against chains offering low value procedure mix such as
dental & renal (dialysis) care
 Niche specialties such as oncology & IVF attracting next wave of growth capital
 Certain key segments such as ophthalmic & renal / urological care are set to enter the consolidation phase

Page 31
Diagnostic Services
Overview
Key Highlights Diagnostic Service Industry
 The Indian diagnostic industry, including clinical US$bn
pathology, imaging and radiology, accounts for 27.6% 26.8%
Overall 1.0 4.3 13.9
3% of the healthcare industry CAGR CAGR
 The diagnostics industry expected to grow at a 25%
CAGR of 27.5% (2009-2015) to US$4.2bn CAGR 3.8
 Factors driving growth include:
— growing incidence of lifestyle diseases
— increasing consumer awareness
10.2
— importance of preventive healthcare 1.2
0.3 3.0
 The industry is unregulated, unorganized and
highly fragmented with over 50,000 path labs 0.7
due to low entry barriers and no specific 2009 2015 2020
accreditation requirements Radiology Pathology
 The organised players account for only c.9%, and Indian Diagnostic Industry Market Break-up
operate under a hub and spoke model
Thyroc
Key Players Metrop are, 7%
 SRL is the largest player in the Indian diagnostics olis,
Unorga 20%
industry with ~48% share
nised, SRL,
 Other key players include Dr. Lal Path Labs, 91% Dr Lal 48%
Metropolis and Thyrocare Organis Path
ed, 9% Labs,
25%
Source : Espicom Q4’2013 Indian Medical Devices Report
Page 34 Assumed US$/INR 60
Diagnostic Services
Benchmarking

Revenue FY13 (US$mn) 97 71 34 25

EBITDA Margin FY13 14% 31% 32% 53%

1
No. of Labs 280 150 120
Central Lab - Navi Mumbai

No. of Collection Centres 5,500 2,000 750 700 franchises

Number of Tests 3,500 4,000 4,000 208

Presence 450 cities 125 cities 39 cities 700 cities

Tests processed daily 80,000 30,000 28,000 30,000

International Presence
SAARC    
Middle East    
Others   
Other services
Wellness  
Clinical Research   
Lab Management   
Source : Company websites, VCC Edge, secondary search
Page 35 Assumed US$/INR 60
Diagnostic Services
Investment proposition – Strategic evaluation

Regional Diagnostics Setup Pan India Diagnostics Chains

Low-end diagnostics Basic radiology High-end diagnostics High-end imaging

 Offers standard diagnostics & basic radiology  Critical service offerings such as high-end
services - low value proposition diagnostics & imaging acts as the key differentiator

 Lack of high-end infrastructure, regional  Pan-India footprint backed by state-of-the art central
presence & limited opportunity to scale up – Low labs leading to extremely to low error rates & faster
market share & restricted customer base turnarounds – High market share & sticky
institutional client base
 Witnessed low / negligible interest from growth
capital funding perspective  All leading pan-India chains have witnessed
significant PE interest over the years
 Facing extreme competition from bigger players
 The landscape is poised to enter the consolidation
phase, to derive next phase of growth, presenting an
attractive investment opportunity

Page 37
Diagnostic Services
Key Transactions
Key Transactions in Diagnostic Services Segment (2010-YTD14)

Deal Value
Date Target Acquirer Stake
(US$mn)
Private Equity
Feb-13 Dr. Lal PathLabs Westbridge, TA Associates 45.5 15.8%
Sep-12 Thyrocare Technologies Norwest Venture Partners 22.7 11.7%
Jun-12 SRL Ltd. IFC, NYLIM Jacob Ballas 65.4 23.5%
May-11 SRL Ltd. Spring Healthcare Fund 11.1 4.2%
Apr-11 SRL Ltd. Avigo Capital Partners 22.1 9.3%
Dec-10 Thyrocare Technologies CX Partners, Samara Capital 45.5 26.6%
Aug-10 Dr. Lal PathLabs TA Associates Advisory 35.0 15.9%
Jun-10 Metropolis Healthcare Warburg Pincus India 85.0 26.9%
M&A Transactions
Mar-14 Medinova Diagnostic Vijaya Diagnostic Centre 0.3 36%
Mar-14 Medinova Diagnostic (Bangalore) Chaparral Health Services 1.2 100%
May-13 Ekopath Metropolis Lab Services Metropolis Healthcare n/a 100%
Feb-13 Quest Diagnostics India DHR Holding India n/a 100%
Feb-13 Amins Pathology Laboratory Metropolis Healthcare n/a 100%
Dec-12 Eins Edutech Westfield Apparels 0.2 65%
Apr-12 Primex Healthcare and Research Mr. Agnivesh Aggarwal n/a 60%
Aug-11 Vijaya Diagnostic Vijaya Diagnostic Centre n/a 96%
Apr-11 SRL Ltd. Fortis Healthcare 178.8 75%

1. Almost all sizeable diagnostic player in India is backed by multiple PE funds – a testimony of high
interest in this segment
2. M&A on the other hand is limited to small deals with larger players acquiring single lab companies to
either increase market share or penetrate into newer geographies

Source : VCC Edge, News Articles


Page 38
Medical Devices
Overview
Indian Medical Devices Industry (US$ mn)
US$ 3,651mn 9,378
7,919
6,701
5,522
4,437
3,651
2,830 3,174
2,479
2,061 2,028

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Indian Medical Devices Industry by category – 2013


• Medical devices is essentially a multi product Others,
industry that comprises of broad range of 27%
products from MRI equipment to surgical
needles Pateint
• Domestic manufacturer dominate the market Aids, 10%

for low value add products like syringes,


catheters, etc. High end equipment, on the
Orthopaed
other hand are imported from international ic, 8%
Consumab
majors like Braun, FMC, etc.
les, 18%
• Key stakeholders in the industry chain includes Dental, 3%
manufacturers, distributors, hospital chains,
path labs and diagnostic chains
Diagnostic
Imaging,
33%
Source : Espicom Q4’2013 Indian Medical Devices Report
Page 41
Medical Devices
Key Segments
Market Size (US$ mn) CAGR
Segment Description
2013 2018 2013-18

Orthopaedic
Limb, hip, knee, shoulder, ear, nose, throat and mouth implants; jaw 29%
Implants & 287 1,036
prosthetics; and orthopaedic braces, plates, supports and shoes
Prosthetics

Electrocardiographs, Ultra Sounds, MRIs, Other electro diagnostic


Diagnostic
apparatus, CT scanners, Other X-Ray apparatus, imaging parts and 1,220 3,023 20%
Imaging
accessories

Dental equipment and supplies, dental implants and prosthetics, dental 25%
Dental 128 399
cements, teeth and other fittings, dental drills etc.

General disposable equipment and supplies including gloves, syringes,


catheters, electrodes, bandages, plasters, first-aid kits, sutures, medical 19%
Consumables 668 1,595
register paper, drainage bags, feeding bags, and wound management
and compression products

Portable aids, including hearing aids and pacemakers & Therapeutic 27%
Patient Aids 377 1,241
appliances, including mechano-therapy and artificial respiration apparatus

This segment includes all other devices including stents, wheelchairs, 17%
Others 970 2,085
ophthalmic devices etc.

Source : Espicom Q4’2013 Indian Medical Devices Report


Page 42
Medical Devices
Benchmarking of Key Indian Players
In a market dominated by
exports, medical
150 consumables is the only trade
surplus sub segment

50
FY13 Revenues (US$ mn)

20

10

Hospital Furniture and Others Diagnostic Imaging and IV Medical Consumables Cardiac Stents, Pacemakers,
Growth 14.6% Diagnostics Growth 17.4% Implants
Growth 15.3% Growth 34.4%
Segment Growth Rate (2008-13)
Note:
1. Opto Circuits derives only c.4% revenues from India
2. Hospital furniture and others’ segment include hospital furniture, wheelchairs, ophthalmic instruments, dental products, amongst others
3. Cardiac stents, pacemaker and implants’ segment includes orthopaedics & prosthetics devices and patient aids segment
4. Revenue figures are approximate and have been sourced from public sources
Source : Espicom Q4’2013 Indian Medical Devices Report, Medical Buyer, Market Research
Page 43 Assumed US$/INR 60
Medical Devices
Investment proposition – Strategic evaluation
Low - end High - end

Medical Devices Value Chain

Hospital furniture Medical consumable Diagnostic Imaging Implants

 High-end segments such as implants, diagnostics imaging & equipment manufacturer offers a high growth,
high value proposition

o However, limited number of investment opportunities currently available in this segment including key
players such as TTK Healthcare, BPL Healthcare, Trivitron, Transasia etc. to name a few

 Certain fast growing & sizeable medical consumable platforms such as Polymed & Sutures India also offer a
attractive investment opportunity in the medical devices segment

Page 45
Medical Devices
Key Transactions
Key Deals in Medical Devices Segment (2010-YTD14)
Deal Value (US$
Date Target Investor Stake
mn)
Jun-14 Prognosys Medical Sys. Somerset Indus Healthcare 3.3 n/a
Jun-14 Cura Healthcare Peepul Capital LLC 6.0 n/a
Dec-13 Forus Health IDG, Accel, Asian Healthcare Fund 8.0 n/a
Nov-13 Trivitron Healthcare India Value Fund 24.6 n/a
Sep-13 Lotus Surgical Specialities Samara Capital Partners 24.2 n/a
Sep-13 Panacea Medical Tech New Enterprise Associates 5.6 49%
Aug-13 Sutures India TPG Capital Inc. 22.5 22%
Aug-13 Skanray Technologies Ascent India Fund 12.4 40%
May-13 BPL Medical Technologies Goldman Sachs 20.2 49%
Dec-12 Perfint Healthcare Norwest Venture 11.0 12%
Oct-12 Trivitron Healthcare Fidelity Growth Partners 74.1 n/a
Sep-12 Sutures India CX Partners Fund 38.4 36%
Total 250.3

1. Around 30 private equity investments have been made in the Indian medical devices sector with a
combined deal value of USD 275 mn
2. Investments have picked up in the last 2 years with CY12 and CY13 accounting for 20 such
investments with total deal value of USD 260 mn.
3. Segments which have got funded primarily include diagnostic imaging and medical consumables

Source : VCC Edge, News Articles


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