Market Size
INR 4 lakh crore in FY17
Annual Growth Rate
Growing at 16-17% CAGR annually to reach INR 8.6 lakh crore in FY22
Landscape
74% of the hospitals in India are privately run. However, 60% of the total number of hospital beds available in the country are owned by public hospitals. 70% of India's healthcare infrastructure is limited to the top 20 cities.
Industry Median EV/EBITDA
19.8x (ttm)
Industry Median EV/Bed
INR 90 lakh
Industry Median Revenue/Bed
INR 32 lakh
The Indian healthcare market is expected to reach ₹ 24 lakh crore by 2022 from ₹ 9 lakh crore in 2016 growing at a CAGR of 17.7% driven by rising incomes, greater awareness, prevalence of lifestyle diseases and increasing penetration of medical insurance. Over 55,000 hospitals and lakhs of clinics and other healthcare delivery centres constitutes the largest segment of the Healthcare Industry in India together contributing to over 68% of the industry’s total revenue. The Hospital sector alone was valued at ₹ 4 lakh crore in FY17 and is expected to grow at a CAGR of 16-17% to reach ₹ 8.6 lakh crore in FY22[1]. With India having allowed 100% FDI in the hospital sector since the year 2000, the private sector has enjoyed strong capital inflows with ₹ 34,000 crores coming into the hospital and diagnostics business through FDI between April 2000 and June 2018. Access to capital continues to remain as one of the biggest roadblocks to the growth of the Indian Healthcare Sector and there is great scope for enhancing the penetration of healthcare delivery services in India.
Facts
- India while accounting for 17.5% of the world population disproportionately bears 20% of the global disease burden and accounts for 27% of the neonatal deaths in the world every year. [2]
- According to a Lancet study, India ranks 145th among 195 countries in terms of quality and accessibility of healthcare [3]
- 70% of India’s healthcare infrastructure is limited to the top 20 cities with most healthcare service providers clustered around the cities of Mumbai, Delhi, Kolkata, Chennai, Vellore and Bangalore
- Additionally, three million beds needed for India to achieve the target of 3 beds per 1,000 people by 2025
- Additionally, 1.54 million doctors and 2.4 million nurses required to meet the growing demand for healthcare; 58,000 job opportunities are expected to be generated in the healthcare sector by the year 2025
- The Global Burden of Disease Study (2017) mentioned that India has witnessed significant improvements in health care access and quality since 1990 India’s healthcare access and quality score being 41.2 in 2016 up from 24.7 in 1990 [4]
Segmentation of Healthcare Services
|
Indian Healthcare Sector |
|
|
Hospitals & Clinics- Healthcare Delivery Systems |
Government hospitals – Includes healthcare centres, district hospitals and general hospitals |
|
Private hospitals – Includes nursing homes, private hospitals, and clinics |
|
|
Pharmaceutical |
Includes manufacturing, extraction, processing, purification and packaging of chemical materials for use as medications for humans or animals |
|
Diagnostics |
Comprises of businesses and laboratories that offer analytical or diagnostic services, including body fluid analysis |
|
Medical Equipment and Supplies |
Includes establishments primarily manufacturing medical equipment and supplies, e.g. surgical, dental, orthopaedic, ophthalmologic, laboratory instruments, etc. |
|
Medical Insurance |
Includes health insurance and medical reimbursement facility, covering an individual’s hospitalisation expenses incurred due to sickness |
|
Telemedicine |
Telemedicine has enormous potential in meeting the challenges of healthcare delivery to rural and remote areas besides several other applications in education, training and management in health sector |
Top Players - Healthcare Delivery
|
Multi-Speciality Hospitals |
|
Apollo Hospitals |
|
Fortis Healthcare |
|
Manipal Healthcare |
|
Max Healthcare |
|
Columbia Asia Hospitals |
|
CARE Hospitals Group |
|
Kovai Medical Center and Hospital |
|
Vatsalya Healthcare |
|
KMC Speciality Hospitals |
|
Narayana Health |
|
Wockhardt Hospitals |
|
Global Hospitals |
|
KIMS Hospitals |
|
Aster DM Healthcare |
|
Mewar Hospitals |
|
Sterling Hospitals |
|
Seven Hills Healthcare |
|
VPS Healthcare – Rockland |
|
Shalby Hospitals |
|
Single-Speciality Hospitals |
|
|
Hospital Name |
Primary Speciality |
|
Healthcare Global Enterprises |
Oncology |
|
Tata Memorial Cancer Hospital |
Oncology |
|
Aravind Eye Hospital |
Eyecare |
|
Lotus Eye Hospital and Institute |
Eyecare |
|
Vasan Eye Care Hospital |
Eyecare |
|
Sankara Nethralaya |
Eyecare |
|
L. V. Prasad Eye Institute |
Eyecare |
|
Rainbow Hospitals |
Obstetrics & Paediatrics |
|
Motherhood |
Obstetrics & Paediatrics |
|
Cloudnine |
Obstetrics & Paediatrics |
|
Hosmat |
Orthopaedics & Trauma care |
Private Equity and M&A Activity
In 2017, Private Equity investments in the Hospitals sector nearly doubled compared to 2016 i.e ₹ 4,173 crore against ₹ 2,334 crore [5]
|
Year |
Acquirer |
Target |
EV (₹ crore) |
Target/Transaction – Note |
Type |
|
2018 |
KKR - Radiant Hospitals |
Max Health |
4,266 |
Max India runs Max Hospitals, India's third largest hospital chain |
PE [6] |
|
2018 |
General Atlantic |
KIMS |
2,700 |
Leading multi-disciplinary provider of healthcare services in Andhra Pradesh and Telangana |
PE [7] |
|
2018 |
IHH Healthcare Berhad |
Fortis Healthcare |
12,807 |
India’s second biggest hospital chain with 30 hospitals and 6,500 beds |
M&A [8] |
|
2017 |
Temasek Holdings |
Manipal Health Enterprises |
7,800 |
Manipal Health is India’s 3rd largest hospital chain and is part of the Manipal Group |
PE [9] |
|
2017 |
True North |
KIMS |
3,250 |
KIMS has over 1,500 beds spread across six hospitals operating in Kerala and the Middle East |
PE [10] |
|
2017 |
KKR |
Radiant Life Care |
2,652 |
Radiant Life Care runs two super-speciality hospitals in the country |
PE [11] |
|
2016 |
Aster DM |
Ramesh Hospitals |
370 |
Ramesh Hospitals runs two multispecialty tertiary healthcare centres in Andhra Pradesh |
M&A [12] |
|
2016 |
TPG Group |
Rhea Healthcare |
NA |
Bengaluru-based healthcare chain operates a network of mother and child care centres under the Motherhood brand |
PE [13] |
|
2016 |
Abraaj Group |
CARE Hospitals |
1,805 |
CARE India is one of the largest multi-speciality healthcare providers in the country |
PE [14] |
|
2016 |
IFC |
HCG |
NA |
Bangalore-based cancer treatment hospital chain |
PE [15] |
|
2016 |
Sabre Partners |
HCG |
NA |
Bangalore-based cancer treatment hospital chain |
PE [16] |
|
2015 |
Carlyle |
Metropolis Healthcare |
2,432 |
Chain of pathology laboratories with presence in Asia and Africa; has a network of 130 laboratories |
PE [17] |
|
2015 |
IFC |
Eye-Q Vision |
NA |
Chain of super-specialty eye-care clinics providing services to nearly 3,50,000 patients per year |
PE [18] |
|
2015 |
Apollo Health and Lifestyle |
Nova Speciality Hospitals |
145 |
Nova Specialty Hospitals is a chain of 11 Short Stay Surgery Centres equipped with advanced medical facilities |
M&A [19] |
|
2015 |
TPG Group |
Manipal Health Enterprises |
3,868 |
Manipal Health is India’s 3rd largest hospital chain and is part of the Manipal Group |
PE [20] |
|
2015 |
India Value Fund |
Cloudnine Hospitals |
1,500 |
Cloudnine is a chain of single speciality hospitals who provide maternity and infant care |
PE [21] |
|
2015 |
IHH Healthcare Berhad |
Global Hospitals |
NA |
Hyderabad based hospital chain specializing in liver transplants |
M&A [22] |
|
2015 |
Temasek Holdings |
Medanta |
3,946 |
Gurgaon based super speciality hospital |
PE [23] |
Listed Players
|
Company Name |
Exchange |
No. of Beds |
EV (in ₹ hundred crore) |
EV/Revenue |
EV/EBITDA |
EV/Bed (in ₹ lakh) |
Revenue/Bed (in ₹ lakh) |
|
Apollo Hospitals Enterprise Limited [24] |
NSE |
10,084 [25] |
158 |
1.9x |
20.1x |
157 |
82 |
|
Fortis Healthcare Limited [26] |
NSE |
4,600 [27] |
99 |
2.3x |
50.3x |
207 |
91 |
|
Narayana Hrudayalaya Limited [28] |
NSE, BSE |
6,000 [29] |
54 |
2.1x |
23.7x |
90 |
43 |
|
HealthCare Global Enterprises Limited [30] |
NSE, BSE |
1,684 [31] |
23 |
2.5x |
19.5x |
138 |
54 |
|
Shalby Limited [32] |
NSE, BSE |
2,012 [33] |
20 |
5.2x |
23.2x |
100 |
19 |
|
Kovai Medical Center and Hospital Limited [34] |
BSE |
894 [35] |
8 |
1.3x |
6.1x |
88 |
66 |
|
Indraprastha Medical Corporation Limited [36] |
NSE, BSE |
525 [37] |
4 |
0.5x |
4.5x |
67 |
143 |
|
Fortis Malar Hospital [38] |
BSE |
180 [39] |
1 |
0.8x |
107.5x |
66 |
83 |
|
Lotus Eye Hospital and Institute Limited [40] |
NSE, BSE |
120 [41] |
0.6 |
1.6x |
16.8x |
50 |
32 |
|
Median |
1.9x |
19.8x |
90 |
66 |
|||
Growth Drivers
Emerging middle class and growing population
Growing Health Awareness amongst people
Ageing Population
Increasing incidences of lifestyle diseases
Growing health insurance penetration
Growing medical tourism
Increased Government expenditure on healthcare
Increased investments from PE funds
Encouraging policies for FDI
Foreign players setting R&D centres and hospitals
Medical Tourism
Treatment for major surgeries in India costs approximately 20% of that in developed countries
The presence of world-class hospitals and skilled medical professionals has strengthened India’s position as a preferred destination for medical tourism
Superior quality healthcare, coupled with low treatment costs in comparison to other countries, is benefiting Indian medical tourism which has, in turn, enhanced the prospects of the Indian healthcare market
India also attracts medical tourists from developing nations due to the lack of advanced medical facilities in many of these countries
As of April 2017, medical tourism market in India was valued at ₹ 195 billion in size and is expected to double in 2018-2019 due to easier norms for medical visa approvals
Source: Ministry of Health, RNCOS, KPMG, Deloitte, Medical Tourism Association, LSI Financial Services, TechSci Research
Allopathy and other traditional methods of treatment including Yoga, Meditation, and Ayurveda are major service offerings that attract medical tourists from European nations and the Middle East to India
The Ministry of AYUSH, Government of India has been implementing various initiatives to promote Ayurveda, Yoga and other AYUSH systems of medicine on an international level and was allocated ₹ 15.28 crore in 2017-18 for this purpose
The Government of India liberalised its policy by providing 100% FDI in the AYUSH sector for wellness and medical tourism segment
Key Trends
In India, private healthcare costs about four times more than the public sector yet, a large majority of all cases are treated by the private sector
There is a strong preference for private hospitals as average household income increases
Single- Speciality healthcare delivery companies gaining ground with the emergence of specialized hospitals focussing on eye-care, dental care, mother-and-child care, orthopaedics and oncology. There still exists tremendous opportunities across dermatology, In Vitro Fertilization (IVF), cosmetology, urology, diabetes etc
The significant demand-supply mismatch has led healthcare to emerge as an attractive sector for PE investments with PE funds investing over USD 3.4 billion in Indian Hospitals between 2007 and 2017 [42]
Private sector partnerships through health (Public Private Partnership’s) PPPs are gradually gaining acceptance, thereby improving access to care. However, they are yet to meaningfully impact the healthcare delivery system
Government Initiatives
Conducive policies for encouraging FDI, tax benefits, favourable government policies coupled with promising growth prospects have helped the industry attract private equity, venture capitals and foreign players
In March 2018, the Union Cabinet of India approved the continuation of National Health Mission with a budget of Rs 85,217 crore from 1st April 2017 to 31st March 2020
With the recently announced Ayushman Bharat (AB), National Health Protection Scheme (NHPS), a precursor to Universal Health Coverage (UHC), the government is increasingly moving towards the role of being a payor as opposed to being a provider
The implementation of the AB-NHPS program will increase the penetration of medical insurance from 34% to 50% in India in addition to creating 100,000 jobs [43]
Notes
Exchange Rate: 1 USD = 65 INR = 0.75 GBP = 0.85 Euro
All multiples as on 10 December 2018
Disclaimer: This information has been collected through secondary research and SMERGERS is not responsible for any errors in the same
Figures
[a] NSS 2014, Ministry of Statistics and Programme Implementation; https://www.aljazeera.com/indepth/interactive/2017/08/india-healthcare-private-public-sector-170831125534448.html
[b] https://www.ey.com/Publication/vwLUAssets/ey-re-engineering-indian-health-care/$FILE/ey-re-engineering-indian-health-care.pdf
[c] https://www.ey.com/Publication/vwLUAssets/ey-re-engineering-indian-health-care/$FILE/ey-re-engineering-indian-health-care.pdf
[d] https://www.pwc.in/assets/pdfs/publications/2014/india-healthcare-market-potential-opportunities-for-market-entry.pdf
[e] https://www.crisil.com/content/dam/crisil/our-analysis/reports/Research/documents/2018/july/CRISIL-Opinion-Ayushman-Bharat-Programme-12July2018.pdf
[f] http://download.dionglobal.in/admin/Reports/DRHP220520171.PDF
[g] IBEF Healthcare Report - July 2017
[h] https://www.hindustantimes.com/india-news/public-health-system-in-crisis-too-many-patients-not-enough-doctors/story-39XAtFSWGfO0e4qRKcd8fO.html
[i] https://timesofindia.indiatimes.com/business/india-business/indias-health-spend-just-over-1-of-gdp/articleshow/64655804.cms
[j] Computed based on figures from IBEF Healthcare Report - July 2017 and the Indraprastha Annual Report FY18
[k] https://cic.gov.in/sites/default/files/2017/ac/p6.pptx
[l] Fortis Healthcare Annual Report FY18
[x] IBEF Healthcare Report - November 2018
References
[1] IBEF Healthcare Report - November 2018
[2] https://timesofindia.indiatimes.com/city/ahmedabad/india-bears-20-of-global-disease-burden-senior-economist-of-the-world-bank/articleshow/56485089.cms
[3] https://timesofindia.indiatimes.com/india/india-145th-among-195-countries-in-healthcare-access-quality-lancet/articleshow/64283179.cms
[4] https://timesofindia.indiatimes.com/india/india-145th-among-195-countries-in-healthcare-access-quality-lancet/articleshow/64283179.cms
[5] https://www.ventureintelligence.com/downloads/pe-trend-report-2018.pdf
[6] https://www.businesstoday.in/current/corporate/kkr-radiant-life-buys-stake-in-max-healthcare-hospitals/story/282641.html
[7] https://economictimes.indiatimes.com/industry/banking/finance/icici-venture-sells-30-in-kims-to-general-atlantic-for-rs-850-crore/articleshow/64609864.cms
[8] https://www.businesstoday.in/current/deals/malaysia-ihh-healthcare-to-own-over-30-hospitals-in-india-after-fortis-deal/story/280276.html
[9] https://economictimes.indiatimes.com/industry/healthcare/biotech/temasek-to-buy-true-norths-18-in-manipal-health-for-rs-1400-crore/articleshow/57844966.cms ; https://economictimes.indiatimes.com/industry/healthcare/biotech/healthcare/temasek-looking-to-exit-manipal-hospitals-in-talks-to-sell-stake-to-promoters/articleshow/63208280.cms
[10] https://www.livemint.com/Money/gQ8jGhtaTGoW1hfC86e45L/True-North-invests-200-million-in-KIMS-Hospital.html
[11] https://www.livemint.com/Companies/7ARB1D3IroOQudyUuFSswI/KKR-acquires-49-stake-in-Radiant-Life-Care-for-200-million.html
[12] https://economictimes.indiatimes.com/industry/healthcare/biotech/healthcare/aster-dm-healthcare-buys-25-percent-in-ramesh-hospitals/articleshow/52512432.cms
[13] https://economictimes.indiatimes.com/small-biz/money/tpg-growth-picks-up-majority-stake-in-rhea-healthcare-for-33-million/articleshow/53279733.cms
[14] https://www.thehindu.com/news/cities/mumbai/business/Advent-sells-CARE-Hospitals-stake/article13998281.ece
[15] https://www.vccircle.com/ifc-sabre-capital-come-anchor-investors-oncology-chain-hcg/
[16] https://www.vccircle.com/ifc-sabre-capital-come-anchor-investors-oncology-chain-hcg/
[17] https://www.dnaindia.com/business/report-carlyle-buys-37-stake-in-metropolis-healthcare-for-rs-900-crore-2123691
[18] https://www.livemint.com/Companies/jwUeRDjdI9EXZp7aN7CklJ/IFC-invests-55-million-in-EyeQ-Vision.html
[19] https://www.vccircle.com/apollo-hospitals-acquires-nova-medicals-surgical-unit-24m
[20] https://www.ventureintelligence.com/downloads/pe-trend-report-2016.pdf
[21] https://timesofindia.indiatimes.com/business/india-business/Value-Fund-puts-Rs-400-crore-in-Cloudnine/articleshow/50317851.cms
[22] https://economictimes.indiatimes.com/industry/healthcare/biotech/healthcare/malaysias-parkway-hospital-acquires-74-stake-in-hyderabad-based-global-hospitals-for-rs-2150-crore/articleshow/48352513.cms
[23] https://www.livemint.com/Companies/3g974QgrzeEc8hX5zCR8YO/Temasek-acquires-Punj-Lloyds-stake-in-Medanta.html
[24] https://in.finance.yahoo.com/quote/APOLLOHOSP.NS/key-statistics?p=APOLLOHOSP.NS
[25] https://www.apollohospitals.com/apollo_pdf/ahel-investor-presentation-jun-17.pdf
[26] https://in.finance.yahoo.com/quote/FORTIS.NS/key-statistics?p=FORTIS.NS&.tsrc=fin-srch-v1
[27] https://d3frl090092vlr.cloudfront.net/22ndAnnualReportFY201718.PDF
[28] https://in.finance.yahoo.com/quote/NH.NS/key-statistics?p=NH.NS&.tsrc=fin-srch-v1
[29] https://www.narayanahealth.org/about-us
[30] https://in.finance.yahoo.com/quote/HCG.NS/key-statistics?p=HCG.NS&.tsrc=fin-srch-v1
[31] https://www.hcgel.com/wp-content/uploads/2018/09/HCG-Corporate-Investor-PPT-Aug18.pdf
[32] https://in.finance.yahoo.com/quote/SHALBY.NS/key-statistics?p=SHALBY.NS&.tsrc=fin-srch-v1
[33] https://www.shalby.org/wp-content/uploads/2018/01/InvestorPresentation.pdf
[34] https://in.finance.yahoo.com/quote/KOVAI.BO/key-statistics?p=KOVAI.BO&.tsrc=fin-srch-v1
[35] http://www.kmchhospitals.com/chairman/
[36] https://in.finance.yahoo.com/quote/INDRAMEDCO.NS/key-statistics?p=INDRAMEDCO.NS&.tsrc=fin-srch-v1
[37] Computed from Annual Report - FY18
[38] https://in.finance.yahoo.com/quote/FORTISMLR.BO/key-statistics?p=FORTISMLR.BO
[39] http://www.fortismalar.com/heart-transplant-at-fortis-malar
[40] https://in.finance.yahoo.com/quote/LEHIL.BO/key-statistics?p=LEHIL.BO&.tsrc=fin-srch-v1
[41] https://www.indiainfoline.com/company/lotus-eye-hospital-institute-ltd/summary/28967?PageSpeed=noscript
[42] https://timesofindia.indiatimes.com/business/india-business/why-are-investors-lining-up-for-indias-hospitals/articleshow/64985069.cms
[43] https://www.crisil.com/content/dam/crisil/our-analysis/reports/Research/documents/2018/july/CRISIL-Opinion-Ayushman-Bharat-Programme-12July2018.pdf
