Indian Hospital Industry. The. Increase in per capita spending on healthcare and changing disease pattern to boost industry growth

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2 CARE Research believes that the healthcare sector is expected to grow at 10-12% CAGR up to FY17. growth would be driven by the hospital industry, which accounts for 70% the sector. Factors such as rise in per capita spending on healthcare, change in demographic prile, transition in disease priles, increase in health insurance penetration, and fast growing medical tourism market, are expected to spur industry growth. Increase in per capita spending on healthcare and changing disease pattern to boost industry growth Health insurance coverage to expand due to tax incentives and outreach expansion A young population in a growing economy and a fast-globalising world is far more health conscious, and opts to have insurance coverage. Private health insurance has expanded in recent years. Government has also expanded the scope and coverage its insurance schemes. Its Rashtriya Swasthya Bima Yojana (RSBY) launched to provide health insurance to Below Poverty Line (BPL) families. CARE Research expects the government to continue with personal tax incentives to encourage the participation people under the insurance umbrella and increase the level health insurance penetration. Private spending on health care has always been at higher levels in India. Though its contribution to total health expenditure has fallen in recent times, the fall has been marginal. It is still among the highest in the world. Private health care spending to remain elevated Rising healthcare facilities in Tier II and Tier III cities Increasing rural incomes and generous health care and insurance schemes the government have enhanced the affordability better health care facilities in Tier II and III cities. Low cost projects due to cheap real estate and lower employee costs are now possible, which enable, most the corporate hospitals are expanding their operations beyond Tier-1 cities. Many the hospitals are experimenting with new business In India, most the health care service providers are clinics run by individuals or small nursing homes run by individual or group doctors. se form more than 90% private healthcare facilities while large corporate hospitals (with 100 or more beds) account for the remaining. 90% health care industry run by individual centres/small nursing homes Challenges to hospital Despite numerous growth potential, the hospital industry faces multiple challenges. major challenge to the sector is the availability health care pressionals. As per the XIIth Plan document, the country faces a shortage physicians and nurses. Despite the steps to increase number colleges and training institutes, the number such pressionals in India would be far less than desired. re is a lack regulatory standards for public and private hospitals in India due to the absence a national body to prescribe such standards or determine the benchmarks. Furthermore there is a lack faith in public delivery system in India. current state government-run hospitals and other health care delivery systems leave a lot to be desired. CARE Research believes that the government would have to regain the faith the people in public health facilities by investing in the state--art technology, hiring adequate specialists and ensuring proper supply therapeutic drugs.

3 Outlook Öutlook on the Table Section- I Care Research's Outlook Health Infrastructure & Resources Rural Infrastructure Ürban Infrastructure Ḧealthcare Resources Section- II Section Healthcare Resources Framework Primary Healthcare Sub-Centres (SCs) Primary Health Centres (PHCs) Community Health Centres (CHCs) District s Secondary Healthcare Tertiary Healthcare Features and Service capabilities Healthcare: Demand Drivers ẌIIth Five Year Plan Ïncreasing per capita income Rise in private spending Rising insurance penetration Demographic changes Changes in disease prile Newer forms delivering services Medical tourism Healthcare Demand Analysis by major ailments Disease Burden in India Communicable Diseases Non Communicable Diseases (NCDs) Cardiovascular Diseases Diabetes Öncology Public Health Scenario Constitutional position Budget State/Union Territory-wise health spending State/Union Territory-wise number doctors Government hospitals and beds bed additions in key cities including Tier II and III centres Domination individual/small health centres Ëxpansion corporate hospitals

4 Table Ähmedabad Bengaluru Ḧyderabad Ïndore Patna Pune Surat Project Analysis opening a new hospital Capex analysis Öperating parameters analysis Financial analysis Regulatory Scenario Ïnvestment Policy Fiscal Policy Registration & Regulation Statistics Apollo s Enterprise Ltd. Background Ännual Performance Growth Strategy Financial snapshot Shareholding pattern Stock price performance Ëxpansion Plan Fortis Healthcare Ltd. Background Ännual Performance Growth Strategy Financial snapshot Shareholding pattern Stock price performance Ïnternational presence SECTION- III Company Section Dr. Agrawals Eye Ltd Background Ännual Performance-standalone Financial snapshot-standalone Shareholding pattern Stock price performance

5 Outlook Table List Graphs and Tables Section- I Care Research's Outlook Total health expenditure as a percentage GDP (CY00&09) Percentage health expenditure in total government expenditure (CY00&09) Private spending on health as a percentage total spending on health (CY00&09) Government investment in new hospital projects Bed additions in Mumbai Bed additions in Delhi Bed additions in Chennai Bed additions in Kolkata Ävailability HR During XIth Plan and projections for the XIIth Plan Health Infrastructure & Resources Number SCs at the end Five Year Plans Number PHCs at the end Five Year Plans Number CHCs at the end Five Year Plans Section- II Section Snapshot rural healthcare infrastructure and resources Top 20 populated urban agglomerations in India Ïndia's doctor density ( ) Ïndia's doctor density compared to other countries State-wise number medical colleges Medical college density highly populated states Number medical colleges in Allopathic, Dental and AYUSH programmes Ïndia's nurse density ( ) Ïndia's nurse density compared to other countries India's Healthcare Resources Framework India's healthcare service delivery model Public healthcare system in rural India Primary Health structures and their population norms Features and service capabilities Service capabilities different types hospitals Healthcare: Demand drivers Sums allocated by Centre and States to Core and Broad Health as a proportion respective GDP in Xth and XIth Five Year Plan Sums allocated, released and spent under various heads Sums spent under XIth Plan and allocated for XIIth Plan under various heads Per capita net national income (FY51 to FY12) Medical expenses and total private consumption in domestic market Public and Private spending on health( ) Breakup private spending on health( ) Ḧealth insurance premium and policies sold (FY05-11) Äge-wise break up population

6 Table Äge-wise number people estimated to be affected by diabetes\ Äge-wise number people estimated to be affected by coronary heart disease Country-wise comparison cost few elective surgical procedures Healthcare Demand Analysis by major ailments Categorization deaths by major diseases/causes Diseases with high-case fatality in 2011 Trends communicable diseases in India Communicable diseases accounting for maximum deaths during 2011 Number cardiovascular cases in India (mn) Break-up cardiovascular diseases in India Number estimated cases coronary heart diseases in India (mn) Number estimated cases diabetes in India (mn) Projected cases cancer for selected types and time periods Public Health Scenario Planned allocation to various departments as per Budget State/Union Territory-wise expenditure on health as a percentage to aggregate expenditure (FY01-13E) State-wise Doctors possessing recognized medical qualifications (under I.M.C Act) registered with State Medical Councils/MCI State/Union Territory-wise total and per capita availability government hospital/beds in rural/urban areas Ḧospital bed additions in key cities including Tier II and III centres Ähmedabad Bengaluru Ḧyderabad Ïndore Patna Pune Surat Project Analysis opening a new hospital Ḧospital capex requirement (INR mn/bed) Break-up initial capital investment RoCE sensitivity to real estate costs (REC) in the fifth year operation Shelf-life various equipments used in hospitals Framework hospital player revenue segments Snapshot hospital revenue drivers Snapshot hospital cost drivers Financial model a 200 bed hospital Key financing assumptions Debt repayment schedule Change in hospital IRR due to key sensitive variables (5th year operation) statistics Ḧealth spending in India v/s world (CY00&09) Ḧealthcare infrastructure and resources (per 10,000 people) in India v/s world (CY09) Number government hospitals and beds in India ( )

7 Table State-wise number government hospitals and beds in India (2010) Number medical colleges in Allopathic, Dental and AYUSH programmes (FY05-10) State analysis MBBS Medical Colleges as in FY10 Number institutions and admissions in nursing/para-medical colleges in India Ëstimated birth rate, death rate and infant mortality rate State-wise birth rate in India (rural/ urban and combined) in 2009 Gender-wise life expectancy at birth in India ( ) State-wise projected life expectancy at birth (male and female; ) State-wise death rate in India (male/female and total) in 2009 Äge-wise number estimated cases diabetes in India (2010 & 2015) Äge-wise number estimated cases coronary heart disease in India (2010 & 2015) Total expenditure on health as a percentage GDP ( ) select countries Government expenditure on health as a percentage total government ( ) select countries Per capita total expenditure on health (PPP int. US$) select countries ( ) Per capita government expenditure on health (PPP int. US$) select countries ( ) SECTION- III Company Section Apollo s Enterprise Ltd. Number beds (FY00-12) owned and managed Financial snapshot consolidated Total revenue and EBITDA Margin Break-up operating cost Shareholding pattern as on 31st Dec, 2012 Stock price performance (up to 28th Feb, 2013) Ëxpansion Plan Fortis Healthcare Ltd. Ḧospital segment revenues (in-patient and out-patient) and growth (FY08-12) Financial snapshot consolidated Total revenue and EBITDA Margin Break-up operating cost Shareholding pattern as on 31st Dec, 2012 Stock price performance (up to 28th Feb, 2013) Ïnternational presence Dr. Agrawals Eye Ltd Financial snapshot standalone Shareholding pattern as on 31st Dec, 2012 Stock price performance (up to 28th Feb, 2013)

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