The Emerging Trends in Indian Healthcare & the Role of Franchising

Transcription

1 The Emerging Trends in Indian Healthcare & the Role of Franchising

2 Preview India & Indian Healthcare Industry Key Facts Key Opportunities and Emerging Trends The Franchise Fit in healthcare industry The Rx for franchising a healthcare business PwC

3 GDP/Capita ($), 2011 High growth and under penetrated markets pose substantial opportunities in emerging economies 60,000 * Bubble size indicates country s population 50,000 40,000 Japan United States France Germany United Kingdom Developed nations with low growth forecasts 30,000 20,000 Under-penetrated markets Emerging economies with high growth potential as well as large under-penetrated population Brazil Argentina 10,000 South Africa Mexico Algeria Indonesia Angola China Egypt Kenya India 0 Senegal Pakistan Nigeria ,000 Real GDP Growth, 2011 (%) Rich (>$12,000) Middle ($12,000 - $4,000) Lower Middle ($4,000 - $1,000) Low (<$1,000) Source: IMF and World Bank

4 Our Next 4 billion research suggests that by 2021, India will have about 600 million people constituting the emerging middle class segment India s Population Distribution (millions) 1.19 billion 1.36 billion Household income/year (INR) $*/day per capita 2010 CAGR (%) 2021(Projection) (%) > 8,50,000 Upper middle + >$10 9.7% 14% 3,00,000 8,50,000 Middle $5-$10 6.3% 23% 1,50,000 3,00,000 Emerging middle $1.7-$5 1.9% 42% < 1,50,000 Low <$ % 21% Strong domestic growth accompanied by a decrease in the numbers of the lower segments will drive the expansion of the emerging middle income class The middle will also see a far larger number of people pass through it, which implies that those who have a strong understanding and presence in the emerging middle will be able to build loyalty early But this middle is not monolithic, it has a number of languages and customs that make it complex Sources: PwC Analysis, NCAER (National Centre for Applied Economic Research), CMI. * The emerging-middle income bracket, PPP adjusted is $5 - $15 per capita per day. Alternatively $1,850 - $5,550 per capita per year All figures are reported at 2010 constant prices

5 Healthcare expenditure to increase from 5% to 7.5% by end of this decade Indian household expenditure distribution As the share of wallet increases for products and services such as healthcare, transport, education, durables, etc significant opportunity exists for the companies targeting this income segment - Necessities like healthcare is accessed by choice in private corporate setups - Besides, Indian households save a considerable portion of their income for non-routine expenses such as weddings, medical, children s education, travel, etc Sources: Rajesh Shukla (2010), `How India Earns Spends and Saves, Sage Publications; PwC Analysis;

6 Indian Healthcare $65 Bn Medical Services $44 Bn Delivery $40.6 Bn Market Size Others: $3 Bn Medical Devices: $4 Bn Indian Healthcare a $65 Bn Industry and Growing at 15% CAGR Pharma $14 Bn Laboratory $1.9 Bn Diagnostics $3.4 Bn Radiology $1.5 Bn Industry Growth Source : Indian Healthcare: The Opportunity Today, PwC Rising disposable incomes Increased Accessibility Increase in disease burden Population growth Insurance coverage Others* 5.5% 3.5% 2% 1.5% 1% 1.5% *Increasing Government spending, Increased Health awareness, Quality of Care, Lower costs, Newer delivery formats, Demand for life enhancing procedures are among the other drivers Growth Drivers

7 Growth factors are propelling the market to an inflection point Increasing Coverage of Health Insurance Increasing Government Spending India has one of the lowest share of public healthcare spend. Covered under prepaid schemes Health Expenditure as % of GDP Health Premium Collected Public Private USD millions Standalone Private GIC Public GIC Govt. plans to increase spending from 1.1% to 2.5% of GDP from 12 th 5 Year Plan starting Source : Indian Healthcare: The Opportunity Today, PwC

8 Rising Burden of Diseases Causes of Mortality 2004 Changing Disease profile Others Non Communicable Diseases Communicable, Maternal, Perinatal & Nutritional India has 17% of world population, it accounts for 21% of global disease burden Source : Indian Healthcare: The Opportunity Today, PwC

9 Diabetes Distribution Rising Prevalence of diabetes among Indian population has made India the Diabetes Capital of the world. The diabetes prevalence over the past 4 years have increased fourfold.. Diabetes Distribution In India 1.40 Bn Distribution of Diabetics Individual in Indian Population 1.20 Bn URBAN 28% of Total Population ~ 17.9 million diabetic individuals 50.8 Million 87 Million Total Population No. of Diabetics V RURAL 72% of Total Population ~ 33 million diabetic individuals Urban Rural Source PwC : IDF Diabetes Atlas, 4th Edition, International Diabetes Federation, 2010

10 Rising incidence of lifestyle diseases in India Key Lifestyle Diseases Prevalence (% of population) Patients (mio.) Coronary Diabetes Asthma Obesity Cancer heart disease Source: WHO Country Cooperation Strategy

11 Coronary heart disease presents a huge, future threat to the health of Indians The probability of an Indian getting a heart attack is 4 times greater than an American, 6 times greater than a European, 7 times greater than a Chinese and 20 times higher than a Japanese Source: WHO

12 Indian Market Out of Pocket and Consumer Led % of total healthcare costs Employee reimbursements Third Party Insurance 16 State & Local Government Individuals India China US UK Germany Source: PwC Literature Searches

13 Changing Consumer Trends Paradigm shifts Prescriptive Preventive Illness Wellness Fast growing lifestyle disease segment Diabetes, CAD Evidence based medicine (70% Diagnosis based on investigations) PwC

14 Dr Lal PathLabs Creation of a Branded Platform PwC

15 Typical Business Model Types of Units Product Portfolio Activity National Reference Lab Delhi 1,650 Tests High End Tests Regional Reference Lab Labs Metro 500 Tests High End & Routine Tests Mini Metro Satellite Lab 300 Tests Routine Tests Collection Centers Other Towns (1000) Collection of Sample PwC

16 Customer Centric Innovation Hi-Touch One brand, one customer experience Hi-Speed Anytime, Anywhere services Hi-Tech Best in class quality Hi-Spread Entire range of pathology tests PwC

17 PwC Dr Lal PathLabs : Leader Today

18 Franchising model that worked for Dr Lal PathLabs in the Healthcare space Getting It Right Servicing our Franchisee Partners Hub and Spoke strategy SAT LAB CENTER SAT LAB PUP SAT LAB CENTRAL LAB LAB CENTER CENTER Convenience - Speed and Customer Service are Crucial Elements PwC

19 Key Opportunity & Emerging Trends PwC

20 Healthcare Delivery Market Primary Care Secondary Care Tertiary Care Dynamics Highly fragmented and localized Fragmented and Localized Organized, Mostly in Metros & Tier-1 cities Level of Care First level of contact. Outpatient Consultation Diagnostics/Immunization Minor Procedures Basic Specialty care: Medicine, General Surgery, Gynecology & obstetrics, Orthopedics. Cardiology, Neurology, Nephrology etc Advanced Diagnostics, Acute Care Level of Corporatization Market Share 25% ~ 9.85 Billion US$ 44% ~17.5 Billion US$ 31% ~12.5 Billion US$ Major Players Apollo clinics, Razi Healthcare,Wellspring Healthcare, Nationwide, Manipal Cure and Care, Star clinics, Vitalife etc. Columbia Asia, Max,Vatsalaya Pan India Players: Apollo, Fortis, Care, Manipal, Max Regional Players: Sterling, Global Hospitals, AMRI, Yashoda,Vikram Source : Indian Healthcare: The Opportunity Today, PwC

21 Primary care market Major/ Emerging Players Operating Locations Organized Unorganized $4.8 Bn 8.3 $9.3 Bn % CAGR $20 Bn Apollo Clinics Viva Sehat Clinics Wellspring Healthcare Vitalife Nation Wide Primary Healthcare Services Express Clinics Pvt Ltd Manappuram Health Care Pan India Hyderabad Chennai, Bangalore, Kerala Pune, Bangalore and Chennai Bangalore Pune, Maharashtra Kochi Manipal Cure and Care Bangalore Healthspring Mumbai Traditional Primary Care Centers Cuts and commission/ referrals charges* Characteristics Single Doctor owned & Operated Mostly Single Speciality Unqualified & Untrained Staff Mostly standalone units Services Consultation Referrals Shift 5% Others Pharmacy Diagnostics Services Consultation Diagnostics Pharmacy Counseling Referrals Others Organized Primary Care Centers Consultation Characteristics Mostly Corporate Owned Multi Speciality Qualified & trained Staff Mostly Chain/ multi location March *from 2012 other hospitals, diagnostic centres and pharmacies Source : Indian Healthcare: The Opportunity Today, PwC

22 Eye Care has successfully made the transition from an acute care to an outpatient setting Burden of Ophthalmic Disorders in India Large Market in Unorganized Sector Distribution of Market by Services $ 0.48 Bn Unaddressed $ 1.6 Bn $ 0.88 Bn Unorganized Total Market $ 0.26 Bn Organized Organized/ Unorganized Major players Number of Units Location Vasan Eye Care 106 Primarily south India. Now expanding pan India Centre for Sight 15 North India Eye Q 5 North India Source : Indian Healthcare: The Opportunity Today, PwC

23 The Diagnostic market is the fastest growing segment in Healthcare Diagnostics Market is 5% of total healthcare A $3.4 Bn Market: Fragmented and Unorganized Fastest growing segment in healthcare Healthcare Market Diagnostics Market Radiology $1.5 BN 44% Laboratory $1.9 BN 56% MRI & CT facilities are limited to Tier I and Tier II cities. ~40,000 laboratories 90% in unorganized sector USD Billions Drivers of Growth Issues Complex disease and availability of complex testing Growth of chronic disease which requires frequent testing Focus on wellness and preventive medicine Increasing medical liability on doctors Future Trends Rise in esoteric and gene based testing Convergence of radiology and labs M&A of smaller players Brand awareness to facilitate growth Outsourcing of smaller labs Source : Indian Healthcare: The Opportunity Today, PwC Higher cost of acquiring customer Competition from unorganized and institutional players Players yet to achieve significant scale Absence of credible reimbursement mechanism from government

24 Healthcare Continuum Preventive Care Primary Care Immediate Care Specialist Visit Diagnostics Treatment Ancillaries e.g. surgery Emergency Care Inpatient Care Rehab Care Long-term Care Skilled Nursing Residential Care End-of- Life Growing focus on primary and preventive care, Technology will push the delivery of care from the Hospital to home Private Healthcare providers have been concentrating here Extension of Care Extension of Care Acute Care Residential Care Home Care ICU Community Hospital Specialty Clinic Assisted Living Skilled Nursing Facility Community clinic Doctor s Office Chronic Disease Management Health, Independent Living Source : Indian Healthcare: The Opportunity Today, PwC

25 Unmet demand for healthcare offers a huge potential,but its own unique challenges India has lowest total & government per capita spending amongst BRIC nations BRIC Nations Per capita total expenditure on health at average exchange rate (US$) Per capita total expenditure on health (PPP int. $) Per capita government expenditure on health at average exchange rate (US$) Per capita government expenditure on health (PPP int. $) India Brazil Russia China Challenges Potential Huge shortage of beds: India has the lowest number of hospital beds per 10,000 people amongst the top 9 economies of the world Huge need for physicians, nurses & paramedical staff: India has the lowest number of physicians per 10,000 people amongst the top 9 economies Heavy out-of-pocket spending: With a predominantly unorganized healthcare sector and low government protection, 77% of healthcare costs are borne by patients themselves Low government spend Innovative, low capex models Technology Adaptation Attaining operational efficiency Need to lower service costs Replicating & scaling success Source : Indian Healthcare: The Opportunity Today, PwC

26 Information Technology leading the way for innovation and enhancement of healthcare Check on Patients Remote check on family Check on parents aging in place Smart- patient beds Wireless connectivity/ real time monitoring Monitor patient information Remote temperature sensors Glucose meter and insulin pumps Remote body monitoring Fall detection Use of Wireless Technology for Healthcare Implantable pacemaker Home defibrillator Wireless weight scale

27 The Franchise Fit in Healthcare Industry PwC

28 The Franchise Fit in Healthcare Industry Delivery through Specialized/Superspecialized Medical manpower Delivery through Paramedical / Non Medical Staff PwC

29 The Rx for Franchising Healthcare Industry PwC

30 Return on Investment Investment: ~ Rs. 4 lacs (Hypothetical Projections) Revenue (15 samples x 25 x Rs.500/ sample x 12): ~ Rs. 20 lacs/annum Margin (25% commission): ~ Rs. 5 lacs/annum Running Cost: ~ Rs. 3 lacs/annum Net Margin: ~ Rs. 2 lacs PwC