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Indian Healthcare Industry
Page 6
Source: BMI Report, Frost & Sullivan, LSI Financial Services, IBEF Research, Hospital Market – India by Research on India, JP Morgan
Healthcare industry in India is poised to expand rapidly
Indian Healthcare Industry
Diagnostics Medical Devices Hospitals Others Pharmaceuticals
71% 9% 3% 12% 5%
US$ 80bn (FY12)
Key Focus Area
Indian Healthcare is among the fastest growing globally…
5.2%
2.2%
10.0%
17.0%
6.3% 8.4%
No
rth
Am
eri
ca
We
ste
rnE
uro
pe
Asi
a P
acif
ic
Ind
ia
La
tin
Am
eri
ca
Mid
dle
Ea
st&
Afr
ica
Global average – 5.6%
2011-15 CAGR
45 52 60
68 80
160
2008 2009 2010 2011 2012 2017E
…poised to become a US$160bn industry by 2017
Page 7
Shift from communicable to lifestyle diseases
Lifestyle related diseases have led to an increase in the demand for specialized care
Currently, c.50 per cent of spending on in-patient beds is for lifestyle diseases
Enhanced penetration of healthcare insurance
Gross healthcare insurance market has expanded at a CAGR of 28% from US$ 1.2bn from FY09 to US$ 2.8bn in FY13
Private insurers contributed c.38% of the total health insurance market in FY13
Source: IRDA, CII, Grant Thornton, Gartner, Technopak, IBEF Research
Increasing Trend of Medical Tourism
India is gradually emerging as a destination for elective and critical treatment on account of lower costs, better patient care and sophisticated medical technology
Accelerated Urbanization
Flourishing middle class
Rise in disposable income
Increase in “share of wallet” spend on healthcare services
Underpenetrated Market
Under-penetrated healthcare delivery market expected to provide a long-term sustainable growth opportunity
Favourable investment environment
100% FDI allowed through automatic route
Various fiscal and tax incentives related to healthcare Infra financing
Promotion of Public Private Partnership (PPP)
1
2
3
4
5
6
Robust Fundamentals Growing Demand
Page 8
Low expenditure on Healthcare as % of GDP1 … …with low per capita Healthcare expenditure1
17.9%
9.6% 9.0%
5.1% 4.1%
0.0%
4.0%
8.0%
12.0%
16.0%
20.0%
US UK Brazil China India
Global average – 9.4%
8,362
3,480 3,204
1,028 379 132
-
2,000
4,000
6,000
8,000
10,000
US UK Japan Brazil China India
(PPP basis US$)
Global average – 990
21
43
14 27
18 24 18
7 3
41
85
14
101
59
98
64
10 20
0
20
40
60
80
100
120
Ja
pa
n
Ru
ssia
Ch
ina
UK
Sin
ga
po
re
US
Bra
zil
Ind
ia
Ind
on
esi
a
Physicians Nursing
India has one of the lowest bed densities..
137
97
42 33 31 30 24 13 6
0
40
80
120
160
Ja
pa
n
Ru
ssia
Ch
ina
UK
Sin
ga
po
re US
Bra
zil
Ind
ia
Ind
on
esi
a
Global average – 30
Low bed density mostly due to low government investment on Healthcare
Physician Global average – 14.2
Nursing Global average – 28.1 Beds per 10,000 people
..With low physician and nursing staff density
1
Source: Barclays Research Note 1: WHO Statistics 2012
Underpenetrated Market
Page 9
Low Medium High
He
alt
hca
re s
pe
nd
–
Sh
are
of
wa
lle
t
Income Level
50 mn
2005 2025
600 mn
Income in US$
< 3,300
3,300 to 16,700
>16,700
Middle class
4% 7%
9%
13%
1995 2005 2015 2025
Source: MGI
Source: MGI & EY
Source: MGI & EY
2
Growing middle class with higher disposable income… …Resulting in enhanced Healthcare share of wallet
Accelerated Urbanisation
The Middle class segment of the population tends to have the maximum share of wallet on healthcare expenditure
The growing middle class population in India is supporting the growth in the healthcare share of wallet
Page 10
Number of hospitalized cases (million)
► Increased incidences of lifestyle diseases
contributing to rising healthcare spending by
individuals
► Lifestyle diseases accounted for 48 per cent of the
in-patient revenue in 2013 (c.US$ 17bn)
2.9 2.0
1.2
5.2
3.1 2.3
8.3
4.2 3.4
Cardiac Oncology Diabetes
2008 2013F 2018F
Source: JP Morgan Research
► India’s population above 45 years of age is
expected to increase from 22% of total population
in 2012 to 26% by 2021E
► This segment of population is expected to have
greater requirement for healthcare services
3
35 32 29 27 25 23
27 28 29 28 26 24
20 20 20 21 23 24
11 12 14 15 16 16
7 8 8 9 11 12
2001 2007 2012E 2017E 2021E 2026E
0-14 yrs 15-29 yrs 30-44 yrs 45-59 yrs 60+ yrs
Demographic shift with population over 30 yrs increasing
Source: MOSPI, CRISIL
Shift from Communicable to Lifestyle diseases
Page 11
Indian health insurance market size (US$ bn) ► The health insurance industry expanded at a CAGR
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
be a US$ 6.5bn market by FY18
► Awareness and rising healthcare cost are
expected to increase penetration within the
retail segment
► Increase in organized labour force is expected
to result in the growth of the corporate
segment
► The share of population having medical insurance is
likely to rise to 20 per cent by 2015 from the
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
1.2
1.5
2.0
2.4
2.8
FY09 FY10 FY11 FY12 FY13
Source: IRDA, Towers Watson IBEF Research
4
Note: Conversion at constant rate of INR55/US$
Enhanced penetration of healthcare insurance
Page 12
Cost of surgeries in different countries (US$’000)
► India is emerging as a destination for elective and
critical treatment for citizens of other nations
(medical tourism) given:
► Lower cost,
► Availability of skilled doctors/nursing staff,
► World class hospitals
► Sophisticated medical technology and
► Excellent patient care
► High influx of patients from Africa, CIS countries,
Gulf and SAARC nations, Pakistan, Bangladesh and
Myanmar witnessed currently 100
250
300
48 45
290
200
50 20
60 75
10 20
150 140
20 5
25 45
8
Heart surgery Bone marrowtransplant
Liver transplant Kneereplacement
US UK Thailand Singapore India
Source: Ministry of Health, RNCOS, KPMG, LSI Financial Services, Apollo Investor Presentation, CRISIL
5
Medical Tourism in India
1.1 2.2
2.5
4.5
2012 2015
Revenues (US$ bn) Medical tourists (mn)
Increasing trend of medical tourism
Page 13 Source: DIPP, Health Ministry, IBEF
Fiscal incentives
Public – Private
Partnership
Promotion of medical tourism
oriented cities
Tax benefits 100% FDI
(Automatic Route)
Healthcare Infra Financing
Highly favourable healthcare investment regime
6 Favourable investment environment
Page 16
Healthcare Services / Hospitals in India Overview
20% of overall healthcare services – Catered through the govt. channels
80% spend of overall healthcare services – Catered primarily by private sector
Healthcare Services / Hospitals (US$ 55 bn Industry)
Primary Care Secondary Care Tertiary Care
Mainly at the grass root level
Minimal involvement of private players in
this segment
Primarily includes nursing homes and
recovery rooms
Investment in such centres to reduce
ALOS of tertiary care centres
Capital Intensive & higher gestation
period
Diversified specialty mix with higher patient volume
Less capital intensive & low gestation
periods
Niche play
Multi-specialty Single-specialty
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 2
Private and confidential
In the short term the organized sector will continue to form asmall proportion of the healthcare delivery landscape
61%
Public
39%
Private
Others 40,000
Yashoda 900
Vikram 1,000
Metro 1,000
Kamineni 1,000
Medanta 1,000
Miot 1,000
CA 1,000
Sterling 1,500
KIMS 1,650
Max 1,850
Global 2,000
Care 2,400
Fortis 4,800
Manipal 4,900
NH 6,200
Apollo 8,600
Other Private
92%
Private chains
8%
► Despite the strong growth in bed capacity expected by private chains over the next few years, these arelikely to remain a small proportion of the hospital delivery landscape
1.6 mn beds 1.0 mn beds 0.08 mn beds
Source: EY analysis, McKinsey 2010, ASSOCHAM July 2013
Current private bed landscape (2013)
Total beds Private beds Private chains
8% 10%
92%
20%8-10%
90%
2013 Private chaingrowth
Other privategrowth
2020
1.0 mn beds 2.0 mn beds
Projected private bed landscape
Page 17
Healthcare Services / Hospitals in India Single Specialty vs. Multi Specialty – Key Contours
Assumed US$/INR 60
Parameters Single Specialty Multi-Specialty
Capital Investment Low - <US$2 - 5mn per centre High - >US$12 -15mn for 100 bed hospital
Business Model
10-50 bed facilities
Mostly Out-patient day care centres
High patient throughput
Facilities - <5,000 sq. ft. rental locations
Faster roll-out
>100 beds across multiple specialties
Real estate intensive
Greenfield project execution gestation period of c.2years for 200 bedded facility
Profitability
Typical EBITDA margins: c.20%
EBITDA break even within 1 year
Medium realization & ARPOB procedures
EBITDA breakeven in 2- 3 years
Typical EBITDA margins:17 – 20%
Earnings diversification – multiple specialties
High realization & ARPOB procedures
Key Challenges
Talent acquisition
Management
Scale up across new markets
Project execution
Equipment up gradation
Talent acquisition & retention
Page 21
Source: EY Research, Research report (HSBC, Nomura, Axis Capital, D&B, Barclays, Investor presentation of Fortis and Apollo, Economic Times) Note: US$/INR 60
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
Utilization 71% 74% NA NA 45% 74% NA >85%
Operating Parameters
ALOS 4.8 4.03 NA NA NA 4.10 NA NA
ARPOB (US$/
Day) 463 512 NA NA 1304 c.533 NA c.500
Fragmented industry set to enter the consolidation phase with top 8 players currently controlling c.25% of the organized private healthcare market in India
Healthcare Services / Hospitals in India Industry Landscape
Page 23
Healthcare Services / Hospitals in India Single Specialty – Overview
Source : Espicom Q4’2013 Indian Medical Devices Report
Assumed US$/INR 60
Urology 25%
Opthal 24%
Gastro 14%
Ortho 8%
Gyne 7%
Plastic Surgery
3%
ENT 10%
General 5%
Oncology 4%
Emergence of single specialty and short – stay format hospitals as an attractive healthcare segment
(#) Centres – Distribution across Specialties
Robust EBITDA Margins
27-30%
25-28% 22% - 25%
19% - 20% 17%
Eye Cardiac Care Urology Cancer MSH
Average Operating Margins Across MSHs and various SSHs
Significant growth & scale potential amongst various short – stay format medical specialities
Page 25
No. of Centers 180 51 (12 in Africa) 49 30 13 15
Financial Summary
Revenue (13 – US$mn)
100 31 12.5 7.2 10(1) 2.8
Revenue Growth (Y-o-Y)
34% 22% 32% 87% — 41%
Private Equity Investors
Sequoia GIC, Singapore Westbridge
Ventures
Listed Company Market Cap – US$
15mn Evolvence Life
Sciences
Matrix Partners Song Investments Nexus Partners Helion Ventures
TVS Capital ePlanet Ventures
Sequoia India
Business Model Highlights
Both greenfield & brownfield
Diversifying into dental
Focusing on expansion in northern region
SA's Net Care recently in talks for a majority stake
Greenfield & Brownfield
Looking to raise US$ 20mn of primary investment from PE investors
plans to increase the network to 100 over the next 3yrs
Majorly acquisition based
Recently acquired New Vision Laser Centre and Shree Hi-Tech Clinics
Looking to raise US$30mn PE
Both greenfield & brownfield
Plans to invest to US$ 20mn to open 40 new hospitals in tier II and tier III towns in states of Punjab, Gujarat, Haryana and Uttar Pradesh by FY16
Recently merged with Hyderabad based eye care chain Maxivision Hospitals
Looking to raise US$30mn through PE for expansion
Greenfield
Recently raised US$10 mn for expansion
Target to have 30 centres operating by 2014 in North & Central India
Location
Healthcare Services / Hospitals in India Ophthalmic Care: Industry Landscape
Source : Company websites, Secondary Search, EY Research
Note (1) – Consolidated Revenue for Medfort – Maxivision operations
Assumed US$/INR 60; MCap as on 12.11.2014
Page 26
Healthcare Services / Hospitals in India Urology & Renal Care: Overview
Source : Da Vinci Q4, FY2013 investor presentation, Investor Presentations, company Websites & EY Research
Assumed US$/INR 60
Indicative List of Major Urological Procedures
Urological Procedure Volume – MSH (2013)(2)
Urology Care in India
Leading Private Sector Urological care hospitals in India
Focus Key players
National Chains (MSH)
Apollo Hospitals, Fortis Hospitals, Max Healthcare
Pan India Presence
RG Stone Hospital, Vattikuti Urology Institute
South Nephroplus, Nephrolife, Alliance Medicorp, Apex Kidney Care
West Muljibhai Patel Urological Hospital, Apex Kidney Care
Lithotripsy (US$410-500)
Female Urology (US$1,300-2,500)
Uro-endoscopy (US$1,300-2,000)
Urologic Oncology (US$4,200-6,700)
TURP (US$1,000-1,160)
Pediatric Urology (US$1000-1,700)
Andrology (US$1,000-1,700)
Cystoscopy (US$800-2,500)
Laparoscopy (US$1,300-1,700)
PCNL – Keyhole Surgery (US$1,300-1,700)
Urethral Strictures Treatment (US$800-1,700)
Radical Prostatectomy (US$2,500-3,300)
Concentrates on the diseases of the female and male urinary tracts along with male reproductive organs
Combines management of both surgical as well as non-surgical problems:
– Surgical conditions include correction of congenital abnormalities, cancers and correction of stress incontinence among others
– Non-surgical problems include benign prostatic hyperplasia and urinary tract infections among others
Recent trends observed in India:
– Urological conditions have witnessed the fastest advent & growth of robotic surgery driven procedures in India
o Accounts for 60-70% of overall robot-assisted procedures performed in India
o Currently, 23 Da Vinci Si robots, used for performing high-precision robot-assisted surgeries, are installed in India(1)
5,000
12,500
15,000
0
4000
8000
12000
16000
Max Fortis Apollo
Page 27
Healthcare Services / Hospitals in India Urology & Renal Care: Industry Landscape
No. of Centers 16 26 14 8 25
FY13 Sales (US$mn)
17 1(1) 1.7(1) NA 2.3
Private Equity Investors
IEP -40% stake (2010) ICICI Ventures – Erstwhile
investor
Bessemer invested US$5mn in Dec-2011
IFC & Bessemer invested US$ 10mn Jun’14
NEA, Da Vita Inc. invested US$ 8.3mn for 45% stake in 2012
Vattikuti Foundation NA
Specialty Focus Nephrology, Lithotripsy,
Uro-Oncology, Endo-Urology
Nephrology, HD, CAPD, Minor Urology based Procedures
Nephrology, HD, CAPD, Minor Urology based Procedures
Robot-Assisted Urological procedures, MAS, Endo-Urology
Nephrology, HD, CAPD
Business Model Highlights
Cluster based operational strategy
Focused on Metros / Tier-I cities
Significant presence in North, East & West India
Plans to raise around US$170mn of PE to expand to 35 hospitals in 5 years
Operates both Standalone & SIH formats
Physician partnership based model
Primary focus on South India market with recent expansion across North India
Targeting 110 centres across 15 to 20 states in the next five years
Operates both Standalone & SIH formats
Physician partnership based model
Majority stake acquired by US based Da Vita Inc.
Primary focus on South India market with recent expansion across North India
Exclusively operates via SIH model in India
Parentage – Vattikuti Urology Centre: Henry Ford Hospital, USA
Tie-up with leading quaternary care facilities in India such as Medanta, Apollo, Kokilaben Hospital, Manipal, KIMS etc.
Operates both Standalone & SIH formats
Physician partnership based model
Apex is planning to escalate to 50-55 centres by 2016
Location
Source : Company websites, annual reports, secondary search
Assumed US$/INR 60
Page 29
Healthcare Services / Hospitals in India Investment proposition – Strategic evaluation
Primary Care Secondary Care Tertiary Care
Healthcare Services Value Chain Low - end High - end
Single - Specialty Multi - Specialty
Caters to low realization / low ARPOB generating
minor investigations & low – risk procedures
Segments on the priority list of government’s
healthcare initiatives
Lion’s share of government’s funding on
healthcare is channeled to these 2 segments
Offers low value proposition from RoI standpoint
Limited investment platforms / formats available
from an investment perspective
Caters to high realization / high ARPOB generating
complex procedures
Limited government presence, with private players
expected to dominate this segment
Advent of lifestyle diseases & accelerated
urbanization results in an enhanced capacity to
pay for both critical and elective procedures
Witnessed plenty of interest strategic & financial
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 30
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 31
Healthcare Services / Hospitals in India Single Specialty – Key transaction linked sector insights
Key PE Deals in Singe Specialty Hospitals (2010-YTD14)
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
Date Target Investor Speciality Deal Value (US$
mn) Stake
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%
Page 34
Diagnostic Services Overview
Source : Espicom Q4’2013 Indian Medical Devices Report
Assumed US$/INR 60
Diagnostic Service Industry
0.7 3.0
10.2
0.3 1.2
3.8
2009 2015 2020
Radiology Pathology
1.0 4.3 13.9 Overall 27.6%
CAGR
26.8%
CAGR
25%
CAGR
US$bn
Key Highlights
The Indian diagnostic industry, including clinical pathology, imaging and radiology, accounts for 3% of the healthcare industry
The diagnostics industry expected to grow at a CAGR of 27.5% (2009-2015) to US$4.2bn
Factors driving growth include:
— growing incidence of lifestyle diseases
— increasing consumer awareness
— importance of preventive healthcare
The industry is unregulated, unorganized and highly fragmented with over 50,000 path labs due to low entry barriers and no specific accreditation requirements
The organised players account for only c.9%, and operate under a hub and spoke model
Key Players
SRL is the largest player in the Indian diagnostics industry with ~48% share
Other key players include Dr. Lal Path Labs, Metropolis and Thyrocare
Organised, 9%
Unorganised, 91%
SRL, 48% Dr Lal
Path Labs, 25%
Metropolis, 20%
Thyrocare, 7%
Indian Diagnostic Industry Market Break-up
Page 35
Diagnostic Services Benchmarking
Source : Company websites, VCC Edge, secondary search
Assumed US$/INR 60
Revenue FY13 (US$mn) 97 71 34 25
EBITDA Margin FY13 14% 31% 32% 53%
No. of Labs 280 150 120 1
Central Lab - Navi Mumbai
No. of Collection Centres 5,500 2,000 750 700 franchises
Number of Tests 3,500 4,000 4,000 208
Presence 450 cities 125 cities 39 cities 700 cities
Tests processed daily 80,000 30,000 28,000 30,000
International Presence
SAARC
Middle East Others
Other services
Wellness
Clinical Research
Lab Management
Page 37
Diagnostic Services Investment proposition – Strategic evaluation
High-end diagnostics High-end imaging
Offers standard diagnostics & basic radiology
services - low value proposition
Lack of high-end infrastructure, regional
presence & limited opportunity to scale up – Low
market share & restricted customer base
Witnessed low / negligible interest from growth
capital funding perspective
Facing extreme competition from bigger players
Critical service offerings such as high-end
diagnostics & imaging acts as the key differentiator
Pan-India footprint backed by state-of-the art central
labs leading to extremely to low error rates & faster
turnarounds – High market share & sticky
institutional client base
All leading pan-India chains have witnessed
significant PE interest over the years
The landscape is poised to enter the consolidation
phase, to derive next phase of growth, presenting an
attractive investment opportunity
Regional Diagnostics Setup Pan India Diagnostics Chains
Low-end diagnostics Basic radiology
Page 38
Diagnostic Services Key Transactions
Date Target Acquirer Deal Value
(US$mn) Stake
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%
Key Transactions in Diagnostic Services Segment (2010-YTD14)
Source : VCC Edge, News Articles
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
Page 41
Medical Devices Overview
2,061 2,028 2,479 2,830 3,174
3,651 4,437
5,522
6,701
7,919
9,378
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Indian Medical Devices Industry (US$ mn)
Indian Medical Devices Industry by category – 2013
Consumables, 18%
Diagnostic Imaging,
33%
Dental, 3%
Orthopaedic, 8%
Pateint Aids, 10%
Others, 27%
US$ 3,651mn
Source : Espicom Q4’2013 Indian Medical Devices Report
• Medical devices is essentially a multi product industry that comprises of broad range of products from MRI equipment to surgical needles
• Domestic manufacturer dominate the market for low value add products like syringes, catheters, etc. High end equipment, on the other hand are imported from international majors like Braun, FMC, etc.
• Key stakeholders in the industry chain includes manufacturers, distributors, hospital chains, path labs and diagnostic chains
Page 42
Medical Devices Key Segments
Orthopaedic
Implants &
Prosthetics
Dental
Consumables
Others
Patient Aids
Diagnostic
Imaging
Limb, hip, knee, shoulder, ear, nose, throat and mouth implants; jaw
prosthetics; and orthopaedic braces, plates, supports and shoes
Dental equipment and supplies, dental implants and prosthetics, dental
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
register paper, drainage bags, feeding bags, and wound management
and compression products
This segment includes all other devices including stents, wheelchairs,
ophthalmic devices etc.
Portable aids, including hearing aids and pacemakers & Therapeutic
appliances, including mechano-therapy and artificial respiration apparatus
Electrocardiographs, Ultra Sounds, MRIs, Other electro diagnostic
apparatus, CT scanners, Other X-Ray apparatus, imaging parts and
accessories
287
128
668
970
377
1,220
1,036
399
1,595
2,085
1,241
3,023
29%
Segment Description Market Size (US$ mn)
2013 2018
CAGR
2013-18
25%
19%
17%
27%
20%
Source : Espicom Q4’2013 Indian Medical Devices Report
Page 43
Medical Devices Benchmarking of Key Indian Players
Source : Espicom Q4’2013 Indian Medical Devices Report, Medical Buyer, Market Research
Assumed US$/INR 60
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
FY
13
Reve
nu
es
(US
$ m
n)
Segment Growth Rate (2008-13)
Hospital Furniture and Others
Growth 14.6%
Diagnostic Imaging and IV Diagnostics
Growth 15.3%
Medical Consumables
Growth 17.4%
Cardiac Stents, Pacemakers, Implants
Growth 34.4%
In a market dominated by exports, medical
consumables is the only trade surplus sub segment
10
20
50
150
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Medical Devices Investment proposition – Strategic evaluation
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
Hospital furniture Medical consumable
Medical Devices Value Chain
Low - end High - end
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Medical Devices Key Transactions
Date Target Investor Deal Value (US$
mn) Stake
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
Key Deals in Medical Devices Segment (2010-YTD14)
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