The Emerging Trends in Indian Healthcare & the Role of Franchising
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
High growth and under penetrated markets pose substantial opportunities in emerging economies 60,000 * Bubble size indicates country’s population Developed nations with low growth forecasts 50,000 United States Japan Germany France 40,000 United Kingdom GDP/Capita ($), 2011 30,000 Emerging economies with high growth potential Under-penetrated markets as well as large under-penetrated population 20,000 Brazil Argentina South Africa Mexico 10,000 Indonesia Algeria Angola China Kenya India Egypt Senegal 0 Pakistan -2 0 2 4 6 Nigeria 8 10 12 Real GDP Growth, 2011 (%) -10,000 Rich (>$12,000) Middle ($12,000 - $4,000) Lower Middle ($4,000 - $1,000) Low (<$1,000) Source: IMF and World Bank
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 $*/day 2010 CAGR 2021(Projection) (%) income/year (INR) per capita (%) > 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 <$1.7 -4.6% 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
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;
Market Size Others: $3 Bn Indian Healthcare a $65 Bn Industry and Growing at 15% CAGR Medical Devices: $4 Bn Industry Growth Pharma $14 Bn Laboratory $1.9 Bn Diagnostics Radiology $3.4 Bn $1.5 Bn Rising disposable incomes 5.5% Growth Drivers Increased Accessibility 3.5% Increase in disease burden Indian Healthcare Medical Services 2% Population growth 1.5% Insurance coverage 1% $40.6 Bn Delivery Others* 1.5% $65 Bn $44 Bn *Increasing Government spending, Increased Health awareness, Quality of Care, Lower costs, Newer delivery formats, Demand for life enhancing procedures are among the other drivers Source : Indian Healthcare: The Opportunity Today, PwC
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. Health Expenditure as % of GDP Covered under prepaid schemes Public Private Health Premium Collected USD Standalone 307 millions 107 214 1383 Private GIC 977 Govt. plans to increase spending from 1.1% 765 to 2.5% of GDP from 12 th 5 Year Plan 606 453 470 Public GIC starting 2012. ’08 -09 ’09 -10 ’10 -11 2008-09 2009-10 2010-11 Source : Indian Healthcare: The Opportunity Today, PwC
Rising Burden of Diseases Causes of Mortality 2004 Changing Disease profile India has 17% of world population, it Others accounts for 21% of global disease Communicable, burden Maternal, Perinatal & Nutritional Non Communicable Diseases Source : Indian Healthcare: The Opportunity Today, PwC
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.. Distribution of Diabetics Individual Diabetes Distribution In India in Indian Population 1.40 Bn URBAN 28% of Total Population 1.20 Bn ~ 17.9 million diabetic individuals 87 Urban V Million Total Population Rural No. of Diabetics 50.8 RURAL Million 72% of Total Population ~ 33 million diabetic individuals 2010 2030 Source : IDF Diabetes Atlas, 4th Edition, International Diabetes Federation, 2010 PwC
Rising incidence of lifestyle diseases in India Key Lifestyle Diseases 4.91 2005 2015 Prevalence 3.7 (% of population) 3.31 2.8 2.7 2.7 2.5 1.3 0.18 0.2 Coronary Diabetes Asthma Obesity Cancer heart disease Patients 36 62 31 55 27 34 14 34 2.0 2.5 (mio.) Source: WHO Country Cooperation Strategy
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
Indian Market – Out of Pocket and Consumer Led % of total healthcare costs 3 4 9 18 Employee 24 22 reimbursements 44 16 Third Party Insurance 80 72 21 State & Local 71 Government 60 35 Individuals 11 10 India China US UK Germany Source: Literature Searches PwC
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
Dr Lal PathLabs Creation of a Branded Platform PwC
Typical Business Model Types of Units Product Portfolio Activity Delhi National Reference 1,650 Tests High End Tests Lab Labs Metro Regional High End & 500 Tests Reference Lab Routine Tests Mini Metro Satellite Lab 300 Tests Routine Tests Other Towns (1000) Collection of – Collection Centers Sample PwC
Customer Centric Innovation Hi-Speed Hi-Spread Hi-Touch Hi-Tech ‘Anytime, Anywhere’ Entire range of pathology One brand, one customer Best in class quality services tests experience PwC
Dr Lal PathLabs : Leader Today PwC
Franchising model that worked for Dr Lal PathLabs in the Healthcare space Getting It Right – Servicing our Franchisee Partners PUP SAT CENTER SAT LAB Hub and Spoke LAB strategy CENTER CENTRAL LAB LAB SAT LAB CENTER Convenience - Speed and Customer Service are Crucial Elements PwC
Key Opportunity & Emerging Trends PwC
Healthcare Delivery Market Primary Care Secondary Care Tertiary Care Organized, Mostly in Metros & Highly fragmented and Fragmented and Localized Dynamics Tier-1 cities localized First level of contact. Basic Specialty care: Medicine, Cardiology , Neurology, Nephrology Outpatient Consultation General Surgery, Gynecology & Level of Care etc Advanced Diagnostics, Diagnostics/Immunization obstetrics, Acute Care Minor Procedures Orthopedics. Level of Corporatization + ++ +++++ 25% 44% 31% Market Share ~ 9.85 Billion US$ ~17.5 Billion US$ ~12.5 Billion US$ Apollo clinics, Razi Healthcare Pan India Players: Apollo, Fortis, ,Wellspring Healthcare, Nationwide, Manipal Cure Care, Manipal, Max Major Players Columbia Asia, Max ,Vatsalaya Regional Players: Sterling, Global and Care, Star clinics, Vitalife etc. Hospitals, AMRI, Yashoda,Vikram Source : Indian Healthcare: The Opportunity Today, PwC
Primary care market Major/ Emerging Players Operating Locations Apollo Clinics Pan India Organized Viva Sehat Clinics Hyderabad 7 Wellspring Healthcare Chennai, Bangalore, Kerala 0.2 1 15% CAGR $4.8 Bn $9.3 Bn Vitalife Pune, Bangalore and Chennai 2011 2016 2021 Nation Wide Primary Bangalore 4.6 $20 Bn Healthcare Services 8.3 Unorganized Express Clinics Pvt Ltd Pune, Maharashtra 13 Manappuram Health Care Kochi Manipal Cure and Care Bangalore Healthspring Mumbai Traditional Primary Care Centers Organized Primary Care Centers Shift 5% Others Cuts and commission/ Pharmacy referrals charges* Services Consultation Consultation Services Characteristics Diagnostics Consultation Characteristics Single Doctor Pharmacy Referrals Mostly Corporate Owned Counseling owned & Operated Referrals Multi Speciality Mostly Single Speciality Others Qualified & trained Staff Unqualified & Untrained Staff Mostly Chain/ multi location Mostly standalone units Diagnostics *from other hospitals, diagnostic centres and pharmacies March 2012 Source : Indian Healthcare: The Opportunity Today, PwC
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