“Investment Opportunities in Healthcare” Gaurav Malhotra “Investment Opportunities in Healthcare” Gaurav Malhotra

2 Flow of Presentation Indian Healthcare Landscape Key Challenges Enablers and Growth Drivers Investment Opportunities Summary

INDIAN HEALTHCARE LANDSCAPE

4 Market Size, Growth and Infrastructure Needs Source: National Health Account Latest Publication , World health organization Statistics 2010, Existing (Million) Addition Required Today (Mn) Needed By 2020 (Mn) Beds No. of Doctors No. of Nurses Growing at about 15% CAGR, healthcare market is expected to reach about $120 Billion by 2015 and should continue to double every 5 years for the next 10 Years CAGR 15%

5 Indian Healthcare – Transition Phase Conventional hospital Long stays at hospitals Unorganized sector Curative Out of pocket payments Travel to urban areas for treatment Lack of system and accountability Driven by supply No quality check on service State of the art corporate hospitals Short stay and outpatient surgical centers Organized sector Preventive Insurer or employer paid Availability of facilities in tier II & III cities Working towards standardization Driven by demand Quality services & accreditation

6 Zonal Healthcare Characteristics Beds/ ‘000 Population Avg. Size of Providers Doctors/ Beds Occupancy North and East are witnessing change: Increased investment in North and East India. South scores better in almost all the healthcare indicators than North and East India. This can be attributed to higher concentration and larger average size of hospitals In West, Maharashtra and Gujarat have relatively good healthcare infrastructure. Madhya Pradesh has scarce healthcare infrastructure similar to North and East East falls way behind all the zones in healthcare. But the utilization of private nursing homes is one of the highest, as it has very few larger private hospitals.

7 Private Sector Takes The Lead Public-Private Share of Hospitalization Rural Urban Rural Urban 2004 Source: NSSO 60 th Round Round Morbidity and Healthcare Survey Rural Urban Non- Hospitalization Treatment Expected Trend 2014 ~80% use the private sector for outpatient curative services as a first line of treatment in both urban and rural areas ~ 60% of the population today prefer to undergo hospitalization at private hospitals

8

9 Key Issues in Investing in Healthcare Real Estate High cost impacting viability Non availability in dense population pockets Adherence to Statutory Guidelines Workforce Quality Accreditation Clinical Outcomes Data for Comparables Regulatory Compliances Medical, Nursing and Allied Professional Managers Inadequate skill sets Inadequate focus NABH/ JCI/NABL Protocols No Central Repository Non Disclosure of Sentinel Events Lack of Enforcement Antiquated legislation

GROWTH DRIVERS

11 Growth Drivers Others: Regulatory Impact, Increased Awareness, Quality up gradation, corporatization, etc.

12 Indian Consumer Spend 2010 $800b 2020 $2500b The share of average household spend on Healthcare in India, is expected to increase from 7% to 10% in the next decade. Source: National Accounts Statistics 2015 $1400b

14 Investment Opportunities in Healthcare Healthcare Delivery Single Specialty Hospitals Secondary Care and Tertiary Care Hospitals Neighborhood Clinics Diabetes Centers Rehabilitation Centers Day Care Surgery Centers Mother and Child Care Medical Education Medical College Nursing College Paramedical/ Allied College

15 Investment Opportunities in Healthcare Alternative Medicine Hospitals Wellness Diagnostics Laboratories Radiology Comprehensive Diagnostic Centers Others Operation & Management Senior Assisted living/ Hospice Care Healthcare Management Consulting Healthcare IT Home Healthcare Medical Value Travel Medical Devices/Equipment

16 Key Investment Criteria Market PotentialResource AvailabilityScalabilityReturn On InvestmentExit Valuation MultipleFaster EBITDA BreakevenPatient AwarenessReimbursement/Insurance CoverageStrategic Sale/Exit OpportunityExisting Success Stories

17 Attractive Investment Opportunity in Healthcare INVESTMENT OPPORTUNITIES Eye Care Clinics Day Care Surgery Centers Home Healthcare Infertility Treatment Clinics Lab/ Diagnostic Cancer Care centers MARKET POTENTIALHHHHMH STRATEGIC SALE/EXIT OPPORTUNITYHMMHHM RESOURCE AVAILABILITYHHHMHM SCALABILITYHHHHHM ROIHMHHHH EXIT VALUATION MULTIPLE HMHHHH FASTER EBITDA BREAKEVENHHHHHM PATIENT AWARENESSHHMHHH REIMBURSEMENT/INSURANCE COVERAGEYYNNYY EXISTING SUCCESS STORIESYYYYYY

18 Comparative Analysis of Various Growth Options Greenfield Model Brownfield Model (shop-in-shop) Management Operations Model "STAR" Practitioner Model CAPEXHLMM ROIMMLM RISKHHHH SCALABIITYHLLL CLINICAL GOVERNANCEHHLL EXIT VALUATION MULTIPLEHMLL EBITDA BREAKEVEN TIMINGHLML LOSS FUNDINGHLMH MARKETING EXPENSEHMML EQUITY DILUTIONNAHLM

Summary 19

20 Overall we believe that the investment opportunity in healthcare services is sound and attractive due to the following reasons: Almost a US$ 240 Billion opportunity by 2020 Private sector to remain the engine of growth for healthcare delivery. Innovations needed in delivery of low-cost, high-impact business models Government shift from provider to payer Increased Demand, Enablers, Awareness and Affordability levels

21