View our June webinar titled "Will Medical Devices be the next growth catalyst in Indian Healthcare?" with speakers - Gautam Dhawan (Partner, Aurum Equity Partners LLP) and Probir Das (Managing Director, Terumo India Pvt. Ltd.).
2. 2
Speaker profiles
Previous Work Experience:
• Axis Capital
• Ambit Corporate Finance
• Lazard Brothers
• Pepsi
QualificaOons and Memberships
• Business Management Diploma from IIPM (New Delhi)
• Bachelor of Commerce from Sydhenam College, University of Mumbai
• Speaker at various industry forums
Gautam Dhawan
Partner - Aurum Equity Partners
Gautam has over 15 years of experience spread across several
transacPons in Healthcare & Pharma, Consumer Markets and
other sectors. Has advised many Indian and MNC companies in
implemenPng their strategic iniPaPves
3. 3
Speaker profiles
Current Role:
• Started with Terumo in 2012 and responsible for expanding the
subsidiary’s footprint in India and driving its long-term strategy
• Heads Terumo’s businesses in India for Cardiac & Vascular and
Hospital Products segments
QualificaOons and Memberships
• BSc Physiology, University of CalcuYa
• Business Management Diploma from BharPya Vidya Bhawan
• Co-Chair of Nathealth’s Medical Technology Forum
• Over a decade teaching experience with Becton Dickinson’s “BD
University”
Probir Das
Managing Director – Terumo India Pvt. Ltd
Previous Work Experience:
• Becton Dickinson
• Boston ScienPfic
• Herbalife
• US Surgical CorporaPon
• Johnson & Johnson
Probir has over 25 years of experience spanning wellness,
medical surgical and diagnosPcs domains in the healthcare
space.
6. 6
Indian Medical Devices is under-penetrated
Market segmentaOon of the healthcare Industry
§ Medical Devices (esOmated at ~USD 3.8
bn) accounts for only 4% of the USD 100 bn
Indian healthcare industry
§ Low representaOon in the global scenario
o India accounts for ~1% of the global USD
375 bn industry
§ Lowest per capita spend on Medical
Devices
o For e.g. India has 1 MRI per million
populaPon, compared with 47 for Japan and
36 for USA
Total Healthcare Market: USD 100 bn
Source: NATHEALTH, IBEF, CRISIL, OECD
2015
Healthcare
Delivery (59%)
Pharma (15%)
DiagnosPcs (6%)
Medical Devices* (~4%)
Others (17%)
Various demand and supply side challenges have resulted in the under-penetraOon of the industry
* Medical Devices market size as of 2014
7. 7
Classical challenges facing the industry
Government & Regulatory
§ Low public spending
§ S k e w e d i n f r a s t r u c t u r e
distribuPon
§ No separate regulaPon
§ Unfavourable duty structure
Manufacturing
§ Difficulty in senng up local
manufacturing & approvals
§ L a c k o f a c o m p o n e n t
manufacturing ecosystem
Medical Technology
§ Limited adopPon of medical
technology
§ Lack of skilled manpower
InnovaPon
§ No focus on local innovaPon
§ Lack of funding
§ Lack of global partnerships
ResulOng in very
few market
appropriate
products
8. 8
Indian healthcare vs peers
Source: World Bank, WHO, Interna9onal Diabetes Federa9on
Metrics India USA UK Australia China Brazil
PopulaPon (bn) 1.31 0.32 0.06 0.02 1.37 0.21
Healthcare spend as % of GDP 4.7% 17.1% 9.1% 9.4% 5.5% 8.3%
Total aged populaPon (65+age in mn) 79 48 12 4 137 17
Birth rate per 1,000 populaPon 20 12 13 13 12 15
Maternal mortality raPo (per 100,000
live births)
174 14 9 6 27 44
Diabetes cases (mn people) 65.1 24.4 3.0 1.6 98.4 11.9
Probability of dying from non-
communicable diseases between age
30 and age 70 (%)
26.2% 14.3% 12.0% 9.4% 19.4% 19.4%
Note: Indicators as per latest available data
17. 17
Scarcity of quality assets has led to few PE deals
Source: VCCEdge
PE investments in Medical Devices
SegmentaOon of # of deals
155
119
24 17 7
2012 2013 2014 2015 2016 YTD
§ CumulaOvely USD 326 mn has been invested in
the Medical Devices segment (2012-2016 YTD)
§ 2012 and 2013 witnessed few high Ocket size
deals:
• 2012: Trivitron (USD 74 mn), Sutures India
(USD 38 mn)
• 2013: Trivitron (USD 25 mn), Lotus Surgicals
(USD 24 mn), Sutures India (USD 23 mn)
Less than $2
mn, 21%
$2-$5 mn, 21%
$5-$15 mn,
38%
Greater than
$15 mn, 20%
Total number of deals with disclosed
value (2012-2016 YTD): 29 § Most deals (~40%) are small Ocket size with less
than USD 5 mn investment
§ Private equity interested in players with
innovaOve products and technologies – scarcity
of quality assets
§ Key segments being funded: DiagnosOc Imaging,
Sutures etc.
(USD mn)
Note: Includes PE and VC deals
18. 18
And strategic investments
Source: VCCEdge
M&A in Medical Devices
23
29
15
2013 2014 2015
§ CumulaOvely ~USD 70 mn has been invested by strategic players across 5 disclosed deals (2013-2015)
§ Average deal size in the range of USD 15 mn
§ Key Deals:
• 2013: Smith & Nephew+Adler Mediequip (USD 23 mn)
• 2014: Peters Surgical + Stericat Gutstrings (USD 12 mn); Arkray+ Span diagnosPcs (USD 12 mn)
• 2015: Cipla+Jay Precision (USD 15 mn)
• Key segments of interest: Orthopedic, IVD, Respiratory
• Scarcity of quality assets given the extreme fragmentaOon in the industry
(USD mn)
Note: Includes domes9c and inbound deals
# deals 3 5 2
Deals with
disclosed value
1 3 1
Few deals with disclosed
transac9on values
19. 19
Will recent iniOaOves give the required impetus?
Source: NATHEALTH, Govt websites
Initiative
§ Promote domesPc manufacturing and
innovaPon
§ Benefits: Capital and technology grants,
training, best-in-class infrastructure
Make in India
Remarks
§ Drax NaPonal Medical Device Policy sPll
under implementaPon
§ Inverted duty structure
§ TradiPonal challenges (labor laws,
power supply) persist
Challenges
§ Both in brownfield and greenfield
projects
§ PromoPng interest by MNCs in local
manufacturing
100% FDI through
automaOc route § Impact of the policy will be gradual
§ Includes provisions for clinical trials of
medical devices
§ Provision for creaPon of a Medical
Devices Technical Advisory Board to
advise the Government on technical
maYers
Dran Drugs &
CosmeOcs
(Amendment) Bill,
2015
§ No risk based regulatory classificaPon of
Medical Devices
§ Bill pending with the Government for
approval
22. 22
Aurum view
Ø Indian Medical Devices Industry at an inflecOon point offering significant opportuniOes for players
to build scale
o Nascent industry and opportuniPes across the board
o Opportunity to focus on low cost yet innovaPve products, manufacturing hub for exports
o Stated vision of achieving USD 50 bn size by 2025
Ø Growth potenOal of the industry will keep private equity and overseas strategic interest elevated
o DomesPc companies with a focus on frugal innovaPon solving the classic access and affordability issue across
India healthcare will aYract investor interest
o India is a fast growing medical device player – will conPnue to interest overseas strategic investors
Ø Segment to witness increased acOvity
o Government will drive through regulatory and policy impetus
o Greater investments will be made by local entrepreneurs
o Global MNCs look to emerging markets such as India for fuelling growth
o Increased collaboraPons (Technical, markePng, manufacturing)
o Changing regulatory regime with higher conformity standards will push out smaller players
Medical Device has the necessary ingredients to grow rapidly and emerge as a significant global
player in manufacturing in the long term