Healthcare September 2006 HEALTHCARE Healthcare Market Size Growth

Healthcare September 2006

HEALTHCARE Healthcare: Market Size & Growth • • • Healthcare emerged as one of the largest service sectors in India In 2004, national healthcare spending equaled 5. 2% of GDP, or about US$ 34. 9 bn Healthcare spending in India is expected to rise by 12% per annum through 2005 -09 (in value terms) Expected to scale up to about 5. 5% of GDP, or US$ 60. 9 billion, by 2009 Other estimates suggest that by 2012, healthcare spending could contribute 8% of GDP and employ around 9 million people Indian Healthcare Industry Projections India's Health Indicators No of Doctors Hospitals 15, 097 No of Beds 8, 70, 161 No of medical colleges No of Nurses Source: Economist Intelligence Unit 5, 03, 900 162 7, 37, 000

HEALTHCARE Investment destination Incentives for Private Investment Incentive for International Investors • Limited government investment • Needs US$ 32 to US$ 50 billion to reach • Unmet demand for health care facilities • Changing demographics • Increasing private spending on half of China’s current bed per 10, 000 population over 10 years • Government likely to meet only 15 -20 per cent of the demand • 10 -15 per cent commitment from International donors • Shortfall of nearly 70 %, could be funded by private companies healthcare • Readily available intellectual pool

HEALTHCARE Trends pointing towards robust future growth • • • Growing incomes, literacy and awareness bode well for the Indian healthcare services market Proportion of households in the low -income group has declined Rising income expanding rich and middle income group Shift in disease profiles from infectious to lifestyle-related diseases are expected to raise expenditures In the inpatient market, the share of infectious diseases is expected to decline from 19 per cent in 2004 to 16 percent in 2008.

HEALTHCARE Key Opportunity Segments Hospital Services Medical Tourism Pathology Services Medical Devices Tele Medicine Health Insurance

HEALTHCARE Medical Tourism – India, the new heaven for health & holiday • About 1, 80, 000 patients arrived in 2004 from across the globe for medical treatment • Medical tourism market in India estimated at US$ 333 million in 2004, grew by about 25 % • Predicted to become a US$ 2 billion-a-year business opportunity by 2012 • India seeing a surge of patients from developed countries as well as from Africa , South and West Asia • Cost of comparable treatment in India is on average 1/8 th to 1/5 th of those in the West • Quality of Indian healthcare delivery second none to

HEALTHCARE High quality low cost treatmentattracting foreign patients • Overburdened health infrastructure and high costs in the west, a key driver for looking at India • Around 50 mn citizens are uninsured in US • India offers highly cost-competitive and technologically advanced treatments options Key Areas Surgerical Specialty Cardiology Cardiac bypass surgery Cosmetics Hip replacement Orthopedics surgery Organ transplants Dentistry Cosmetic surgery Eye care Dental surgery Preventive health checks Vision correction

HEALTHCARE Hospital Services – Attracting private investors • The market for hospital services in India is estimated at over US$ 4 billion. • Private players account for almost 78 % of the healthcare delivery market. • Increasing spending power of 250 -300 strong middle class driving growth opportunities for corporate healthcare providers • An estimated 95% of new hospital beds have come up in the private sector • Reportedly at least 20 international players vying to have a pie of the Indian hospital market • Several JVs (Parkway) or individual projects (Columbia Asia) underway

HEALTHCARE Foreign investors viewing for Indian market pie Parkway Group, Singapore based Parkway Group Healthcare PTE Ltd aggressively penetrating Indian market. It has entered into joint ventures with Apollo group to build Apollo Gleneagles, a 325 -bed multi-specialty hospital at a cost of US$ 29 mn and with Asian Hearth Institute and Research center to set up specialized center for medical excellence in Mumbai Pacific Healthcare Holding, Singapore Pacific Healthcare Holding, one of Singapore's leading healthcare provider, is coming up with Pacific Medical Centre, an international medical centre in Hyderabad in a JV with Vitae healthcare Pvt. Ltd. Two more medical facilities one for women and children's and other for stem cell bank are also coming up Columbia Asia, Malaysia based Columbia Asia has set up its first 75 bed hospital in Hebbal, Bangalore through the FDI route. The group has two more projects in the pipeline, a 150 bed tertiary care hospitals and another of 75 -100 bed in Bangalore

HEALTHCARE Medical Devices – Promising growth • India Market expected to touch US$ 1. 7 billion by 2010, against US$ 1. 2 billion in 2005 • The demand for hi-tech medical devices in India growing between 12 -15% annually • Hi-tech product constitutes close to 80% of overall market • Higher involvement of foreign players in hi-tech devices, which account for US$ 770 mn • 90 % of demand is being met by imports from countries like USA, Japan and Germany. • Changing disease profile and clinical needs, and growth of medical tourism are all expected to drive the potential for medical devices • Some foreign companies conduct first 500 surgeries in India after approval of a medical device or surgical treatment by US FDA German electrical engineering major Siemens plans to source medical equipment from the Goa facility in India for the regulated markets. The company has recently completed 40 per cent capacity expansion at its Goa unit and is in the process of receiving regulatory approval from the US FDA and European authorities.

HEALTHCARE Healthcare BPO – USD 4. 5 billion opportunity by 2008 • Healthcare business processes outsourced to India can result in cost savings of 20 -30% • Estimated opportunity for India is US$ 4. 5 bn by 2008, employing about 200, 000 people. • Apart from regular business processes, companies are further involved in converting existing data to HIPPA format Healthcare BPOs services spectrum Data Capture Documentation Commercial Administration Human Resource Customer Care

HEALTHCARE Key players Indian Healthcare BPOs players Apollo Group Manipal Education and Medical Group Hinduja TMT Foreign Healthcare BPOs players Integreo Inc Health. Scribe Integreo Inc. , an Atlanta based healthcare BPO, plans to invest US$ 10 million in its facility at Hyderabad, a 60, 000 sq. feet facility and it expects to increase its headcount from 600 employees currently, to 3, 000 people by January, 2008. Spheris, a US-based medical transcription company, has invested about US$ 2. 2 million on its facility at Coimbatore, which covers an area of 35, 000 sq feet. It intends to ramp up its headcount to 3, 000 from the existing 2, 000 in India.

HEALTHCARE Pathology Services – Brisk growth • US$ 500 mn domestic pathology industry has been growing over the last 5 years at an estimated CAGR of 20% • Currently comprises almost 2. 5 per cent of the overall healthcare delivery market • With 40, 000 independent pathology laboratories in the country, the industry is highly competitive and price driven • Presently, the lab testing market is largely serviced by small unorganized players and hospitals • Molecular diagnostic and pharmacogenomic testing to be future growth drivers • By 2010, two million patients are expected for clinical trials in India; translating into 20 million tests • Outsourcing of pathology tests by foreign hospital becoming a huge opportunity. From UK alone its 450 million pounds or US$ 800 mn • Preventive healthcare and health insurance will drive domestic growth West. Bridge Capital Partners picked up a 26% stake in Dr. Lal’s Pathlabs for US$ 9. 7 million. Dr Lal Path. Labs plans to build South Asia’s biggest laboratory in Delhi besides expanding in the country. Apollo Hospitals Enterprise Ltd has entered into a joint venture with Amcare Labs, an affiliate of Johns Hopkins International of the US, to set up a diagnostic laboratory in Hyderabad.

HEALTHCARE Tele Medicine – Technology breaking barriers • 80% of the medical facilities are concentrated in the urban area while 73% of the population resides in the rural area • Exponential growth in Information and Communication Technology and plummeting telecom cost making India highly competitive • Government and public sector initiatives lend credence to telemedicine opportunity • Corporate sector taking lead in telemedicine Leading Telemedicine Players Wockhardt Hospitals Fortis Hospitals Max Healthcare Asian Heart Hospitals Apollo Hospitls

HEALTHCARE Teleimaging – Opportunities abound • Indian health Imaging market expected to get double from existing US$350 Million by 2010 • Radiologists are in short supply world over while demand growing • 50% of the 6000 hospitals in US do not have the technology for teleradiology Teleradiology Solutions, first Indian company to provide teleradiology services in US is market leader in the imaging market serving 50 hospitals in US with an accuracy rate of 99. 8 % against the accepted us standard of 96 -97 percent

HEALTHCARE Health Insurance – Gaining penetration • Health insurance premium set to touch US$ 533. 3 mn at the end of 2005 -06 as against US$ 385 mn in 2004 -05 • Industry analysts believe the figure could go up to US$ 777. 8 mn by 2007 • The number of lives covered under health plans has improved from 4 -5 million about six years back to over 12 million today. • Increasing awareness and large-scale group insurance policies have pushed growth in the health insurance segment • Government policy spurs private initiatives e. g. IRDA has increased the FDI limit from 26% to 51% • Leading global players including Aetna, Brooke Shield, and Blue Cross are waiting to make a foray into the market Iffco Tokio has made an entry into the health insurance market. Chubb is another entrant into India. It has formed an alliance with HDFC for offering health insurance. Miliman is the latest multinational to make a foray into the Indian health insurance sector.

HEALTHCARE Policy Initiatives • National Accreditation Board to provide accreditation to all public and private hospitals to ensure quality • Clinical Establishment Act by 2006 to make sure quality healthcare services • Government to issues “Medical Visas” to Overseas patients within a month or less time to promote Medical Tourism • 100 % FDI through FIPB route • Amending Drug & Cosmetic Rules to Include medical devices • National Rural Mission Launched in 2005 to provide effective healthcare to rural population • Government institutionalizing a mechanism of Public Private Partnership In healthcare National Commission recommendations formation or reorganization of Institutions • Federal Drugs Authority • Indian Medical Devices Regulatory Authority • Expanding Public Procurement Systems of drugs, devices and vaccines • National Institute for Health Information and Disease Surveillance National Commission for Quality Assurance National Institute for Health Research • • • Commission for Excellence in Medical and Health Education

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