Healthcare Franchise Knowledge Series (HFKS) 30 th & 31 st August 2013 Overview of Healthcare Industry: The Connect & Crossroads Dr. Praneet Kumar Chief Executive Officer Radiant Life Care Pvt. Ltd., New Delhi, India praneet.kumar@radiantlifecare.com; ceo@blkhospital.com 04-09-2013 1 Managed by Radiant Life Care Pvt. Ltd.
CURRENT STATUS OF HEALTH SECTOR IN INDIA 04-09-2013 2 Managed by Radiant Life Care Pvt. Ltd.
Constitutional Directives • Healthcare in India features a universal health care system run by the constituent states and territories of India • Health is a state subject in India (on concurrent list in the Constitution of India) with expenditure being borne as o Three-fourth (3/4) by State Governments o One-fourth (1/4) by Central Government • Goals and strategies for the public sector in health care are established through a consultative process involving all levels of government through the Central Council for Health and Family Welfare. • Joint association with states for initiating various programmes and projects to improve efficiency in the allocation for use of health resources through policy and institutional development 04-09-2013 3 Managed by Radiant Life Care Pvt. Ltd.
Health Statistics of India Comparative Health Indices* Health Expenditure Hospital Area Doctors per 1000 % GDP beds/1000 India 0.9 0.47 0.8 World 2.6 1.5 3.3 Developed Countries 6.1 2.8 7.2 * Verified data from 2009 04-09-2013 4 Managed by Radiant Life Care Pvt. Ltd.
Expenditure on Health in India • In 2011-12 expenditure on health – 1.4 % of GDP • Target for 12 th Five Year Plan – raise it to 2.5 % of GDP • Allocation for National Rural Health Mission (NRHM) increased to Rs. 20822 Crores, an increase of 14.9 % over 2011-12 • Launch of National Urban Health Mission (NUHM) • Out of Pocket expenses remain at 75 % - highest in the world Source: Budget Speech of Finance Minister (Finance Bill FY 2012-13) 04-09-2013 5 Managed by Radiant Life Care Pvt. Ltd.
Size of Health Sector & its Components • Indian Healthcare sector currently represents a USD 40 Billion industry • A break-up of the sector as of 2009 is o Insurance & Medical Equipment - 15% o Diagnostics - 10% o Pharma - 25% o Hospitals - 50% Source: IDFC Securities Hospital Sector November 2010 04-09-2013 6 Managed by Radiant Life Care Pvt. Ltd.
Healthcare Provider Network • Consists of o Medical care providers like physicians, specialist clinics, nursing homes, hospitals o Diagnostic service centers and pathology laboratories o Medical equipment manufacturers o Contract research organizations (CRO's), pharmaceutical manufacturers o Third party support service providers (catering, laundry etc.) 04-09-2013 7 Managed by Radiant Life Care Pvt. Ltd.
Recent Health Improvements Source: Budget Speech of Finance Minister (Finance Bill FY 2012-13) Maternal Infant Mortality Under 5 Mortality Total Fertility Rate Mortality Rate Rate (IMR) Rate (U5MR) (TFR) (MMR) 398 / 100000 live 80 / 1000 live 118 / 1000 live 2.9 births / woman births in 1997-98 births in 1990 births in 1990 in 2005 212 / 100000 live 50 / 1000 live 64 / 1000 live 2.7 births / woman births in 2007-09 births in 2009 births in 2009 in 2007 • Institutional births , a main focus of the National Rural Health Mission, have increased from 41% in 2004 to 47% in 2008 ...however, meeting the Millennium Development Goal (MDG) for infant mortality rate (IMR) of 27/1000 live births by 2015 represents a formidable challenge 04-09-2013 8 Managed by Radiant Life Care Pvt. Ltd.
Newer Initiatives in Recent Past • Focussing on investment that is closely linked to providing better medical infrastructure, rural health facilities etc. o 100 per cent foreign direct investment (FDI) is permitted for health and medical services under the automatic route o Investment-linked deduction of capex of 100% for new hospitals set up with 100 beds u/s 35AD (increased to 150% in Finance Bill 2012) o National Rural Health Mission (NRHM) allocated US$ 10.15 billion for the up gradation and capacity enhancement of healthcare facilities o Rashtriya Swasthiya Bima Yojana (RBSY) for BPL Families o Allocated an additional US$ 1.23 billion for six upcoming AIIMS-like institutes and up gradation of 13 existing Government Medical Colleges 04-09-2013 9 Managed by Radiant Life Care Pvt. Ltd.
Key Challe�ges… • Maternal and child health • Childhood nutrition • New diseases on the rise • Unfinished agenda of communicable diseases • Financial burden 04-09-2013 10 Managed by Radiant Life Care Pvt. Ltd.
Systemic Constraints • Low Effectiveness of Public Health Spending • Unregulated Private Provision of Health Care • Lack of Adequate Health Insurance • Little Emphasis on Communication to o Improve Health, and o Create Demand for Health Services 04-09-2013 11 Managed by Radiant Life Care Pvt. Ltd.
Entry of Private Sector • In 1980's realizing that the government on its own would not be able to provide for health care, the government allowed the entry of private sector to reduce the gap between supply and demand for healthcare • Private sectors venture in the health care sector consisted of only solo practitioners, small hospitals and nursing homes till about 20 years ago • Quality of service provided was excellent especially in the hospitals run by charitable trusts and religious foundations • In eighties, corporate healthcare marked its entry with Apollo Hospital at Chennai after a chain of diagnostic centres established by United Group in seventies 04-09-2013 12 Managed by Radiant Life Care Pvt. Ltd.
Transition of Contemporary Health Infrastructure of upto early Eighties • Not for profit sector (charitable)hospitals o Were mainstay before organized private sector hospitals emerged o Have stagnated / decayed just like public sector hospitals because of lack of fund to upgrade – both physical assets and technology • Nursing Homes – Mom & Pop like shops o Have started dwindling o Find challenging to survive o Cannot match newer hospitals 04-09-2013 13 Managed by Radiant Life Care Pvt. Ltd.
Growth of Private Sector • Last three decades have witnessed a huge growth of private sector healthcare services • Various types of models have evolved / developed including corporatization of health sector o Hospitals chains – units in multiple locations, as national chains, although none has a real pan India presence o Regional Hospital Chains o Emergence of single speciality models Eye care and Dental care chains Single Speciality Hospitals – Cardiac, Cancer, Renal, Neuro etc. o Diagnostic Centres & Laboratories o Opco-Propco model is evolving (similar to hotel industry) o Few successes in Public Private Partnership Models o Expansion in international arena 04-09-2013 14 Managed by Radiant Life Care Pvt. Ltd.
Medical Tourism • Medical Tourism is a relatively new concept, which is becoming popular globally • India has several advantages in favor of medical tourism o Infrastructure o Technology o Cost effective medical care and hospitalization o Qualified and skilled doctors o Traditional Indian rejuvenation methods like yoga, ayurvedic massage …people in western countries and corporate hospitals and wellness centers are cashing on this opportunity Source: Indian Academy of Science 04-09-2013 15 Managed by Radiant Life Care Pvt. Ltd.
Clinical Research • India has become a more attractive market for clinical testing • Government amended Schedule Y of the Drugs and Cosmetics Act to make rules on clinical trials more consistent with international practices • India became compliant with the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Agreement and formally recognized product patents in Jan 2005 • Growth triggered in Indian clinical trial activity by o Contract Research Organizations Quintiles, Omnicare, PharmaNet and Pharm-Olam o Multinational Corporations Novo Nordisk, Sanofi-Aventis, Novartis and GSK. 04-09-2013 16 Managed by Radiant Life Care Pvt. Ltd.
FDI Inflows – Health Sector • According to the latest data from Department of Industrial Policy & Promotion (DIPP) for FDI inflow during April 2000 and September 2011, it has been o Hospital and diagnostic centres – US$ 1.1 billion o Medical and surgical appliances – US$ 417.79 million o Drugs and pharmaceuticals sector – US$ 4.9 billion 04-09-2013 17 Managed by Radiant Life Care Pvt. Ltd.
FUTURE OF HEALTH SECTOR IN INDIA 04-09-2013 18 Managed by Radiant Life Care Pvt. Ltd.
Healthcare Industry • Healthcare industry o US$ 40 billion industry today o Growing at 15 % CAGR o Expected to be US$ 280 billion by the year 2020 04-09-2013 19 Managed by Radiant Life Care Pvt. Ltd.
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