1. HealthCare Sector Pitch
XLRI Jamshedpur
Team Number 9
Pranay Roop Chatterjee
Karneek Patel
Siddhant Ranjan

2. Sector Overview
Market Cap. - $111.6 Bn | GDP contribution – 17.5% | Annual Expenditure - $ 3 Tn
Sector Trends
Top Issues 2017
Industry disruption through technology, data analysis and AI
Technological advancements
Artificial Intelligence : Digitized supply chain, efficient billing, accelerated R&D
3D Printing: Customized implants, prosthetics and transplants, on demand inventory
Internet of Things: Inventory control, remote patient monitoring, digitized operations
Virtual Reality: Stress relief and patient distraction, medical school education
Value based payment models on the rise
Payment models
Bundled payment arrangements: Patients pay a single payment for a specific episode of care
Accountable Care Organization: Applying for this CMS status ensures there is no duplication of services
Collaborations: Increased partnerships in 2016 to survive the shift to value based models
Significant legislation in the US Healthcare space
Regulations
MACRA: Merit-Based incentive payment system, quality reporting program, advanced care information
ACA: Affordable Care Act repeal-and-replace proposals uncertain, health care coverage at stake
Diet related health issues and nutrition, obesity
Use of emerging technology like block chain and AI
High-deductible heath plans; Payment systems are based on volume, not value
Regulation of drug prices
Competitive Landscape
Insurers
Top 2 insurers hold 50% of the market making premiums higher
Chart 1: Expenditure as a percentage of GDP
Chart 2:
Change in wages per US sector
Hospitals
Highly concentrated markets – 1,412 mergers from 1998 to 2015
Physicians
Physicians joining hospitals - 12% jump from 2012 to 2015
Sources: CMS, Becker Hospital Review, PwC: Top Health Industry Issues of 2017, Deloitte: Health Care Outlook 2017, NY Times Markets, Forbes Opinion – Martin Gaynor

3. Screening Process
Total listed healthcare companies - 814| Companies satisfying given criteria - 55
Further filters applied for shortlisting of favourable companies to invest in.
19 companies shortlisted on the basis of below filters
Qualitative Analysis
P/E Ratio: The P/E ratio should be less than the sector average
P/B Ratio: The P/B ratio should be less than the sector average
EV/EBITDA: The EV/EBITDA ratio should be less than the sector average
D/E: The D/E ratio should be less than 100
EMA: 13 EMA should be greater than 55 EMA
21 companies shortlisted on the basis of below filters
Quantitative Analysis
Chairperson Tenure: A higher chairperson tenure indicates stability in the management of the company
% shared held by chairperson: Higher the % shared held by chairperson, the better it is for the stakeholders of the company
CEO Duality: CEO duality is not preferred in the management of the company
Independent Chairperson:
Weights assigned to each factor: Chairperson Tenure-0.3, % shares held by chairperson-0.3, CEO Duality-0.1, Independent Chairperson-0.3
3 companies were satisfying both the quantitative and qualitative filters
Average volume traded in market
Final shortlisting filter
Average volume traded in market: Higher the volume traded, better the company to invest in.
So, on the basis of all the above analysis, Thermo Fisher Scientific is chosen as the company to invest in.

4. Screening Process Healthcare sector – X companies-814
After applying given criteria – 55
Further criteria:
P/E ratio < Sector Average
P/B ratio < Sector Average
E/V EBITDA < Sector Average
D/E ratio < 100
13 EMA > 55 EMA
Remaining companies – 19
Quantitative factors –management:
Chairperson tenure
% shares held by chair
CEO DUALITY
Independent chairperson
Final filter: avg Volume traded indicating liquidit

5. Thermo Fisher Scientific Inc.
6 Key Strengths of Thermo Fisher Scientific 5
Ecosystem of life sciences devices and its massive scale provides the company a competitive edge in this space. 1
History of strong acquisitions. 3
Largest research and development budget in this industry
Thermo Fisher Scientific Inc.
The company was founded in 2006 by a merger of Thermo Electron and Fisher Scientific
Thermo Fisher Scientific, Inc. provides analytical instruments, equipment, reagents and consumables, software and services for research, analysis, discovery and diagnostics
Four Business segments: Analytical Technologies, Specialty Diagnostics, Life Sciences Solutions and Laboratory Products and Services 2
Diversity of Revenue sources 4
Plants to strengthen its foothold in emerging markets like China and India 6
High Profitability Margins indicating excellent operational and financial management of the company

6. Thank you