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Healthcare Industry Orientation

Industry under focus:


The health care industry is one of the world's largest and fastest-growing industry. Consuming over 10 percent of gross domestic product (GDP) of most developed nations, health care can form an enormous part of a country's economy.

Group members
Shruti Sharma (Group Leader) Siddhartha Kapoor Shreeya Bora Vilina Kandroo Siddhant Bisht Shubham Tyagi Palak Kapoor Shivani Sholapurwala

Healthcare Sector structure / Market size


The sector comprises hospital and allied sectors that include:
(a) Medical care providers that includes physicians, specialist clinics, nursing homes and hospitals (b) Diagnostic service centers and pathology laboratories (c) Medical equipment manufacturers (d) Contract research organizations and pharmaceutical manufacturer. (e) Third party support service providers.

Industry size

No. of companies
Medical service provider companies 21% 17% Diagnotics service centers and pathology companies 12% 29%

Medical equipment manufacturers


Contract research organizations & farmacueticals Third party support service providers

21%

Industry players
Pharma OTC Company of the year 2011 award winner Ranbaxy Laboratories Limited:
Revenue INR99.769 billion (US$1.99 billion)(2011) Net income INR18.299 billion (US$365.07 million)(2011)

Cipla Limited:
Revenue INR6,422.88 crore (US$1.28 billion) (2011) Net income INR960.39 crore (US$191.6 million) (2011)

Cadila Healthcare Limited:


Revenue INR 39 billion (2010) Net income INR 3 billion (2010)

Industry capital
The health care industry is presently worth $65 billion.
Second largest service sector employer in the country. Provide jobs for 4.5million people directly or indirectly. Rating agency estimates doubling of size of the sector to $100 billion by 2015.

Industry growth

US$ in Billions

The Indian healthcare sector is expected to reach US$ 100 billion by 2015 from the current US$ 65 billion, growing at around 20 per cent a year, according to rating agency Fitch. Some of the major factors driving the growth in the sector include increasing population, growing lifestyle related health issues, cheaper costs for treatment, thrust in medical tourism, improving health insurance penetration, increasing disposable income, government initiatives and focus on Public Private Partnership (PPP) models. Meanwhile, the Government of India has decided to increase health expenditure to 2.5 per cent of gross domestic product (GDP) by the end of the Twelfth Five Year Plan (2012-17), from the existing 1.4 per cent. Prime Minister, Dr Manmohan Singh also emphasized the need for increased outlay to health sector during the Twelfth Five Year Plan

200

2012

2013 2013 76.7

2014

2015 2014 90.506 2015 106.79708

Growth

2012 65

Future prospects
Infrastructure Prospects
A combined study by an industry body and Ernst & Young suggests that India will need as many as 1.75 million additional beds by the end of 2025. Further, an investment of US$ 86 billion is required to achieve 1 doctor, 2 beds and 2.3 nurses per 1000 population by 2025.

Medical Tourism Prospects Medical tourism in India has also received a boost with arrival of patients from countries with advanced medical systems. This underlines the fact that India has good infrastructure and talent. Insurance Industry Prospects
The Indian health insurance market is also on an upsurge providing lucrative growth avenue for both the existing players as well as the new entrants. According to the RNCOS report, the health insurance market is one the fastest growing and second largest nonlife insurance segment in the country. Posting tremendous growth in the last two fiscals, the health insurance premium is expected to grow at a CAGR of over 25 per cent for the period spanning from 2009-10 to 2013-14.

Industry career opportunities


India faces a huge need gap in terms of availability of number of hospital beds per 1000 population. With a world average of 3.96 hospital beds per 1000 population India stands just a little over 1.2 hospital beds per 1000 population. Moreover, India faces a shortage of doctors, nurses and paramedics that are needed to propel the growing healthcare industry. India is now looking at establishing academic medical centers (AMCs) for the delivery of higher quality care with leading examples of The Manipal Group & All India Institute of Medical Sciences (AIIMS) already in place.

Considering all the above facts and the massive growth in the healthcare industry, huge investments would offer several opportunities for Indian companies to create 'win-win' situations and there would be emerging opportunities for professionals as well in the near future.

Five force analysis


Threat of new competition
1. New Pharma companies are forcing the doctor to prescribe their medicines so that they can grow their sales and revenue both.

2. Medical Equipment Manufacturers are also moving towards the Pharma sector because in Healthcare Industry, Pharma sector is having a major role to play.
3. As the diseases which are related to lifestyle are increasing on the daily basis New Pharma companies are focusing to prepare the medicines for those only. 4. Price of the medicine also have to play a major role in Indian Healthcare Industry.

Five force analysis


Threat of substitute products or services
1. Infrastructure of Hospitals is playing a major role in Healthcare Industry of India. So hospitals are trying to give a better Infrastructure Facility to the Patient. 2. Generic Stores are also a big threat for Pharma sector of Healthcare Industry. 3. Yoga is a major threat for Healthcare Industry. 4. Ayurveda is also a substitute to the Pharma sector of Healthcare Industry.

Five force analysis


Bargaining power of customers
Apart from extreme cases, switching cost for buyer is high in terms of convenience, money comes second. Power of buyers diminishes when he moves from primary care to tertiary care . High quality treatment at a fraction of the cost, in comparison to western countries, makes India an ideal healthcare destination for highly specialized medical care (tertiary care )

Five force analysis


Bargaining power of suppliers
1. Facilitator of health care services are people (doctor, nurses, management stuffs), pharmaceutical companies, equipment manufacturer, insurance provider, government. Bargaining power of these facilitator does not affect every player in same manner. Government regulations are applicable for all, but cash-less treatment with collaboration among corporate, insurance firm and hospitals is a competitive advantage for organized player 2. Possibility of suppliers integrating forward is less compared to other industry because most of organization in this sector focuses on their core competency.

Five force analysis


Intensity of competitive rivalry
1. In Indian Healthcare Sector Ranbaxy Laboratories LTD is a dominant firm as it shows by its business in India.

2. Companies can only grow by stealing customers away from competitors.

3. Little differentiation between competitors products and services.