TechEmerge Innovator Bootcamp Series Webinar #1

1. Understanding the Basics:
HealthTech in India
TechEmerge Innovator Bootcamp Series
Webinar #1
In partnership with: Powered by:

2. Introductions
• Dheeraj Batra – Co-founder and Director of Arogya Finance as well as Co-
founder of DLabs at the Indian School of Business
• Dr. Ruchi Dass – Managing Director of Healthcursor Consulting Group
• Iris de Graaf – International Finance Corporation
• Loretta Foran – International Finance Corporation
• Jennifer David – Associate Director, Catalyst @ Health 2.0
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3. International Finance Corporation (IFC)
IFC, a member of the World Bank Group, is the largest global development
institution focused on the private sector in emerging markets.
Working with more than 2,000 businesses worldwide, we use our capital,
expertise, and influence, to create opportunity where it’s needed most. In FY15,
our long-term investments in developing countries rose to nearly $18 billion,
helping the private sector play an essential role in the global effort to end
extreme poverty and boost shared prosperity.
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4. Introduction to Healthcare
Dheeraj Batra
Co-founder and Director of Arogya Finance,
Co-founder of DLabs at the Indian School of Business

5. Our goal should be that every Indian should
be able to afford quality Healthcare
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6. But the sad reality is…
INSURANCE PENETRATION IS LOW
< 15%
Most of the remaining are unable to pay out-of-pocket
DISEASE BURDEN IS HIGH
India ranks near the top in terms of the non
communicable disease burden with an estimate that
60% of deaths in 2014 were due to these conditions
INDIA HAS AWFUL HEALTH STATS
India has among the worst mortality rates, lowest ratio
of hospital beds per capita, lowest ratio of doctors &
nurses per capita, etc
& THERE ARE NO EASY ANSWERS
@ ~1.5%, total expenditure on Healthcare as a
percentage of GDP, is among the lowest in the world
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7. But there are two sides to every coin
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8. Sure, insurance penetration is low, but…
• Lends to those who cannot afford
to pay for their expenses
• Ground-breaking psychometric
test
• Low cost micro-insurance
• Innovative partnership with
mobile carrier Telenor
• Low cost community
insurance model
• Pakistan originated, now
moving to India
Each one of those factors presents an
opportunity for innovation
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9. Sure, the disease burden is high,
• Low cost cardiac chain
• Now expanding to include other
areas
• Also expanding geographically
• PPP partnership to prevent and
treat TB patients
• Growing internationally
• Low cost diagnostic manufacturer
• Raised several rounds of funding
from marquee investors
Each one of those factors presents an
opportunity for innovation
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10. Sure, India has awful stats
• Low-cost maternity care
chain
• Dramatically lower costs
than traditional providers
• Primary care chain
• Multiple locations with a
professional management
team and millions raised
• Telemedicine innovator to
leverage existing resources more
efficiently
Each one of those factors presents an
opportunity for innovation
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11. The problems are real but so are the
opportunities
1. Population
- Growing middle class able to
pay for services
- Increasingly concerned
about health issues
2. Attractive
- Investment into Healthcare
sector at an all time high
- But still in search of good
ideas with great teams
3. Government coming
around
- Increasing acceptance of
PPP models
- Willingness to engage and
work with startups
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12. The Indian
Healthcare Industry
Dr. Ruchi Dass
Managing Director of Healthcursor Consulting Group

13. Per Capita Healthcare Spending, 2009 - 2014
Introduction to Indian Healthcare Industry
• Dynamics of healthcare industry in India are largely influenced by
government initiatives. These initiatives in the form of investment
policies play a significant role in attracting investments from private
entities both domestically and through foreign sources.
• The industry was estimated to be worth INR 6,802.7 billion in 2015.
• Rural India, which constitutes for over 70% of the country’s
population, is a major demand source keeping in view healthcare
spending as a percentage of India’s population. Per capita
healthcare spending rose by about 9% over the past five years.
• Spending is expected to gain further traction considering increasing
per capita income levels, better access to healthcare facilities, and
government’s universal healthcare plan that is aimed at providing
guaranteed benefits at a cost of INR 1.6 trillion.
• With increasing population and access to healthcare facilities, there
is expected to be a requirement for approximately 650,000
additional beds over the next five years (over 3 million in the next 20
years). These figures suggest an investment opportunity of about INR
2.04 trillion (USD 30 billion).
Source: World Bank, WHO Health Expenditure Database
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14. Growth Potential
• With eased FDI norms and increased investment size of
private equity funds in hospital chains (from USD 15 million to
USD 25 million), the hospital sector is expected to register
tremendous gains in the future.
• Healthcare IT, is also expected to benefit from the e-health
initiative a part of Digital India drive. The Government of
India’s ‘SEHAT’ initiative, a common service platform to
empower rural citizens regarding telemedicine is a major
determinant of the segment’s prospects, considering the
contribution of rural population towards the overall healthcare
industry.
• The medical devices sector in India is registering gains
partially due to awareness among populace regarding early
disease detection & prevention, changing disease prevalence
patterns, and socio-economic inclusion of rural population.
• However, major growth driving factors such as the
development of healthcare infrastructure, increased FDI
inflows, and product development & manufacturing
outsourcing to India shall allow for a more sustained growth.
India Healthcare Expenditure, 2014 & 2020
Source: IBEF, AIMED, Dept. of Pharmaceuticals, IRDA, NABH, Dept. of Health & Welfare, Dept. of Commerce, WHO, KoL
Interviews, Company Annual Reports
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15. Market Segmentation
India Healthcare Expenditure by Sector, 2012-2020, (INR Billion)
Source: IBEF, AIMED, Dept. of Pharmaceuticals, IRDA, NABH, Dept. of Health & Welfare, Dept. of Commerce, WHO, KoL Interviews, Company Annual Reports
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16. Healthcare Delivery
• Healthcare delivery services in India is highly dominated by the
private sector which accounts for nearly 70% of the overall
services. As of 2013, overall government hospitals numbered at
nearly 59,300 or approximately one quarter of the available
facilities.
• The private sector over the past has attracted investments in the
form of FDI, and high levels of integration, mergers, and joint
ventures along the primary, secondary, and tertiary care levels.
Recent initiatives include Apollo Hospitals’ venture with Datar
Genetics and Sanofi’s USD 13.5 million investment in Apollo
Sugar Clinics.
India Government Healthcare Services, 2012-2020, (INR Billion)
2012 2013 2014 2015 2016 2017 2018 2019 2020
900.5 970.0 1,122.8 1,554.7 1,989.1 2,425.2 2,861.9 3,298.6 3,733.6
India Private Healthcare Services, 2012-2020, (INR Billion)
2012 2013 2014 2015 2016 2017 2018 2019 2020
2,438.1 2,443.9 2,615.3 3,579.7 4,527.4 5,456.9 6,366.4 7,254.9 8,119.2
• Traditionally, government spending on healthcare delivery as compared to private has
been substantially lower, accounting for 30% of the overall expenditure. As of 2013,
of nearly 2 million government hospital beds, only 28% of them accounted for rural
hospitals considering nearly 68% of the population lives in rural areas.
• Private healthcare delivery services are the dominant segment with their value
estimated at over INR 2,500 billion in 2014. Eased FDI norms and increased private
sector investment size are key driving factors for the private hospital services market
growth.
• Major hospital chains are actively increasing their bed capacities and expanding into
Tier II and Tier III cities. Hospital spending patterns suggest that majority of their
expenditure is aimed at improving bed capacities in rural and suburban areas either
through acquisitions or through joint ventures with foreign healthcare delivery firms
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17. Major Trends
• Shift from communicable to ‘lifestyle’ diseases With the increasing pace of life and growing urbanization, many
modern day problems like obesity, hypertension, blood sugar etc. are emerging as major ailments shifting the disease
profiles from infectious to lifestyle diseases.
• High demand here has been an exponential growth in demand for high quality and specialized healthcare services in
tier II and tier III cities and smaller towns and the Government of India has also relaxed the tax burden on hospitals in
these areas for the first five years (IBEF, 2011).
• Emergence of tele-medicine and technology driven healthcare services Supported by the robust ICT sector in India,
tele-medicine is rapidly growing in most parts of the country. Several major providers like Apollo, AIIMS, Narayana
Hrudayalaya etc. have adopted telemedicine services and a number of others have also developed private-public-
partnerships (PPP) in this domain.
• Increase in investor interest and rising private equity and merger and acquisition (M&A) activity In the last decade, this
sector has also seen a high interest from investors especially in new product development, research, as well as the
introduction of specialized delivery models.
• Evolution in delivery models New delivery models to reach un-serviced areas are also being developed and some have
already demonstrated sustainability while others are informative pilot projects.
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18. Technology Spend - Medical Devices
India Medical Expenditure by Govt. Hospitals, 2012-2020, (INR Billion)
2012 2013 2014 2015 2016 2017 2018 2019 2020
Disposables 22.7 25.3 32.7 37.9 44.6 52.4 61.7 72.5 85.3
Medical Electronics
& Equipment
30.7 35.8 39.9 46.7 54.2 62.9 72.9 84.5 97.9
Implants 4.6 5.8 6.8 8.3 10.1 12.1 14.6 17.6 21.1
Surgical Instruments 9.0 12.8 15.1 17.7 21.2 25.3 30.1 36.0 43.0
Others 4.8 6.3 6.8 8.1 9.5 11.0 12.9 15.0 17.5
Total 71.8 86.1 101.3 118.8 139.5 163.7 192.2 225.5 264.7
India Medical Expenditure by Private Hospitals, 2012-2020, (INR Billion)
2012 2013 2014 2015 2016 2017 2018 2019 2020
Disposables 56.7 62.6 80.0 91.9 107.1 124.7 145.3 169.2 197.1
Medical Electronics
& Equipment
77.7 89.8 98.9 114.5 131.3 150.7 172.9 198.2 227.4
Implants 12.9 16.1 18.8 22.8 27.3 32.5 38.9 46.4 55.3
Surgical Instruments 20.5 28.9 33.6 39.0 46.1 54.5 64.2 75.9 89.6
Others 15.5 20.3 21.6 25.6 29.6 34.1 39.4 45.4 52.4
Total 183.3 217.7 252.9 293.8 341.4 396.6 460.7 535.2 621.8
Source: IBEF, AIMED, Dept. of Pharmaceuticals, IRDA, NABH, Dept. of Health & Welfare, Dept. of Commerce, WHO, KoL Interviews, Company Annual Reports
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19. Technology Spend - Diagnostics
India Diagnostic Services Expenditure by Hospital, 2012-2020, (INR Billion)
2012 2013 2014 2015 2016 2017 2018 2019 2020
Government 58.5 49.3 41.6 64.4 88.7 114.3 141.4 169.8 199.6
Private 207.6 172.4 143.2 212.8 280.9 347.7 413.0 477.0 539.6
Total 266.1 221.8 184.8 277.2 369.6 462.0 554.4 646.8 739.2
Source: IBEF, AIMED, Dept. of Pharmaceuticals, IRDA, NABH, Dept. of Health & Welfare, Dept. of Commerce, WHO, KoL Interviews, Company Annual Reports
• Diagnostics market in India is marked by the presence of very large unorganized sector. In FY 2014-2015, there were
nearly 100,000 Diagnostic Laboratories in the country out of which Pathology service accounted for around 70% and
Imaging Services for 30% of the total market share.
• SRL Diagnostics (Fortis Healthcare) accounts for nearly 9% of the total India’s Diagnostics sector and for nearly 40% in the
organized sector. Lack of stringent government regulations in the diagnostics sector, low per capita healthcare
expenditure, and lack of reimbursement infrastructure are the key reasons for the presence of unorganized diagnostic
services.
• Due to the presence of such a large unorganized sector Government and Private hospitals accounted for a mere 35%
collectively of the total Diagnostics services. Of which private hospitals accounted for the majority of the market share.
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20. Technology Spend - Healthcare IT
Healthcare IT Spending by Govt. Hospitals
Access to technology in government facilities is limited to central govt. hospitals and medical institutions that provide healthcare delivery services. In
order to enhance capabilities of govt. hospitals and integrate their services to a large rural base, the Government of India has initiated policies such as
Health Management Information System (HMIS) portal through Digital India drive.
Healthcare IT Spending by Private Hospitals
From a private sector perspective, hospitals entering into alliances with IT & KPO giants such as GE Healthcare, IBM, HP, TCS and Cisco for better
integration of IT services with healthcare to provide e-health and m-health platforms are also to drive the segment growth over future.
Access to technology among private healthcare facilities is highly prevalent with is significantly higher among hospital chains that aim to centralize their
database and offer a single window access to patients. One of the major factors driving healthcare IT spending among private hospitals is the increasing
penetration of smartphone usage in India. Access to internet and smartphone applications enables healthcare service providers to connect consumers
through e-health and m-health platforms.
India Healthcare IT Expenditure by Hospital, 2012-2020, (INR Billion)
2012 2013 2014 2015 2016 2017 2018 2019 2020
Government 6.2 7.2 8.6 10.1 11.7 13.3 15.1 16.8 18.5
Private 45.5 50.3 57.3 64.5 71.6 78.6 85.6 91.4 97.1
Total 51.7 57.5 65.9 74.6 83.3 92.0 100.7 108.2 115.6
Source: IBEF, AIMED, Dept. of Pharmaceuticals, IRDA, NABH, Dept. of Health & Welfare, Dept. of Commerce, WHO, KoL Interviews, Company Annual Reports
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21. Foreign Healthcare companies
• Not conducting market research- not been able to understand the ground realities.
• Not able to create viable offerings.
• Getting the business model wrong.
• Not being able to change the fundamental profit formulas and operating models, consigning these companies to sell
largely in the highest income tiers, which in most emerging markets aren’t big enough to generate sufficient returns.
• Following a non- systematic process for reconceiving the business model
• Not seeking local assistance and guidance related to IP protection and other legal matters.
Factors that affect market entry, adoption, scale, growth and overall success includes:
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22. Questions?
www.techemerge.org
Contact Jennifer David,
jenniferd@health2con.com

23. Medical Devices
Special section
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24. Market Entry Barriers for Foreign Medical
Device Companies in India
Source: HealthCursor Primary research,, KoL Interviews 2016
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25. Opportunities for Foreign Medical Device
Companies
Source: HealthCursor Primary research,, KoL Interviews 2016
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26. Guidance Required- Medical Device
Companies
Source: HealthCursor Primary research,, KoL Interviews 2016
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