Indian Hospital Industry

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

Indian Hospital Industry

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