Drivers for the private HealthCare Industry in India

Decision: In context of the above study we can reason that the health care industry in India is poised for a quantum growing. The cardinal drivers being the favorable Political environment, regulative model, displacement to lifestyle related diseases, turning in-between category and their penchants for health care, Health insurance consciousness and range, promotion in engineering and last but non the least medical touristry. The construct of medical touristry is besides catching up really fast and is presenting a immense challenge for the participants in footings of presenting quality health care services and besides run intoing international safety criterions in order to vie in the international market. The participants are standing up to the challenge and are developing medical metropoliss where universe category cutting border health care services shall be provided meeting and transcending International criterions. This has besides attracted private equity financess and foreign investing in this sector.

The two leaders of this sector are constructing their growing scheme based on a intercrossed theoretical account where they are utilizing distinction for their goods and services alongwith either base cost minimisation or bring forthing low cost no frills services to bring forth test among the possible mark market. Industry Overview

The health care industry in India is chiefly divided into Indian authorities run Public health care system, private health care systems and a broad web of unregulated informal health care suppliers. There is another class of not- for- net income organisation including charitable establishments, missions trusts etc. This irregular and unregulated system has caused broad incompatibility in deriving entree, peculiarly in the distribution of healthcare substructure at the regional and rural degree.

The populace health care system is extremely unequal and overburdened to provide to the demands and demands of the Indian population. It besides lacks technological support and infrastructural base to run into the demands of the Indian market.

Indian Healthcare a US $ 34.2 Billion Market

Indian Healthcare market presently estimated at US $ 34.2 billion

Healthcare bringing and pharmaceuticals account for about 75 % of the entire health care market.

Private health care is estimated to be the largest constituent of the health care sector by 2012 expected to duplicate to US $ 38 billion B 2012

The Indian Healthcare market has grown from US $ 22.8 billion in the twelvemonth 2005. At a CAGR of 16 %

Market is expected to turn to US $ 50.2 billion and US $ 78.6 billion by 2011 and 2016 severally.

We would be concentrating our study on the Private Healthcare Sector in India. The accent will be Hospital services which will include services provided at the forte, super forte and other infirmaries being operated and managed by the two companies.

The two companies on which we have based our study are:

Apollo Hospitals.

Fortis Healthcare

Apollo Hospitals

Apollo infirmary manages a web of 50 forte infirmaries and clinics with a bed capacity of over 9000 across the state and abroad.

Apollo has launched a construct of Health City in Hyderabad and will establish similar in all over India.

To pull foreign patients Apollo has tied up with insurance companies like BUPA ( UK ) , Vanbreda ( Belgium ) and Mondial ( France ) .

Management Agreement with Singapore based Parkway Group Healthcare PTE Ltd.

To get down pharmaceuticss at Petrol station Apollo has done understanding with Indian Oil Corporation.

It has touched 18 million lives and has conducted 4 million preventative wellness cheques, has conducted more than 90000 cardiac surgeries- one merely 10 infirmaries in the universe to accomplish these volumes. Has besides performed over 7,50,000 major surgeries and a million minor surgical processs with exceeding clinical results.

In its endeavor to convey universe category health care services to semi-urban and rural India it has initiated Apollo range infirmaries which will put up 25 infirmaries across India within the following two old ages with an initial bed capacity of 100-150 with an ability to ramp-up to 200 bed forte infirmary.

The Chairmen has given a new motto of ‘Touch a Billion Lives ‘ redeveloping the old motto of ‘Touching Lives. ‘

FORTIS HEALTHCARE

Fortis has legion infirmaries under its umbrella with 1800 beds capacity

Fortis has its operations in Delhi, Noida, Mohali, Amitsar, Faridabad, Raipur and Srinagar

They are be aftering to make amalgamations and acquisitions as an enlargement programs

It is be aftering to put up new infirmaries with an investing of about US $ 1.5 billion by making join venture with DLF

Fortiess has started pharmacy “ Health World ” in all over India with an investing of US $ 195 million.

Has announced pre-IPO understanding for the allocation of 67,000 equity portions to VASCO Inc. with investing worth US $ 2.6 million.

Apart from this Fortis has besides forayed into telemedicine and has built a web which connects each of its installations so that the expert attention is ever within range. Fortis Healthcare provides services covering ICU Management, ER Management, OPD Management, Radiology Reporting, Pathology Reporting every bit good as Training and Education Opportunities. Fortis is utilizing HIS ( Hospital Information system ) to hive away patient informations and guarantee confidentiality.

Scheme for Apollo

The Business Model at Apollo Hospitals has been successful as it has been able to bring forth net incomes even though the operations are capital intensive.

The mission is to maintain on bettering the quality of health care services provided to the sections and strive to convey health care services of international criterions within everyone ‘s range.

The focal point is besides on bring forthing strong fiscal public presentation and presenting appropriate returns through disciplined and balanced executing of comprehensive concern scheme which reinforces both quality of attention and fiscal strength.

It has a scheme to place itself as a taking health care service supplier by successfully distinguishing their service offerings and increasing the graduated table of operations.

The scheme is to rule the health care infinite by increasing the bed strength in the metropoliss where they are already present and commissioning of new infirmaries in Tier 2 and Tier 3 metropoliss through the “ Reach Initiative ” . The Reach Model is a “ no-frills ” theoretical account, which will supply cost effectual quality health care.

The installations shall be supplying higher secondary and acute attention, capable of developing into a third attention Centre. Each installation shall be supplying for nursing colleges to augment the deficit in the nursing substructure.

Further to leverage the rational belongings and sphere cognition has laid accent on making “ Centre of Excellence ” of high terminal medical attention services in planetary health care at the new and bing installations. To portion best patterns across all the locations to enable addition tenancy at freshly launched infirmaries. Maximize plus use across all infirmaries.

The company will do important investing in human capital to run into in-house demands every bit good as the demands of the consultancy services concern through set uping nursing schools, medical colleges and hospital disposal colleges.

It will drive the Pharmacy gross by new shop rollouts every bit good as adulthood of bing shops. To follow the Strategy of supplying ‘across the health care spectrum services ‘ and adding new service lines in the bing markets.

They will put in new engineerings desired by doctors and patients to show sustained quality. Will drive the cost benefit and perforate the healthcare touristry section. To utilize direction contracts with infirmaries overseas as an enlargement scheme.

STRATEGY FORTIS HEALTHCARE

Operating multi forte infirmaries supplying health care in cardinal forte countries.

Originating dress shop manner infirmaries, Fortis La Femme, concentrating entirely on the adult females ‘s wellness and pregnancy attention.

Differentiation scheme by following alone infirmary design, services and plans that comply with international criterions.

To tap the chance provided by the demographic displacement and higher length of service of Indian population the company has adopted a hub and spoke theoretical account.

To blunt competition the company has adopted a scheme to get other infirmaries.

It besides has a scheme to incorporate backwards and put up medical colleges, nursing colleges and research labs.

PESTEL ANALYSIS FACTORS

Notes

Impact

Political

Government policies, Funding, grants and enterprises

Government/ Political Stability

ECONOMIC

National Growth rate ( GDP )

Market size

Lack of Government disbursement

Medical Tourism

SOCIAL

Consumer attitudes and sentiments.

Increasing demand in forte health care

TECHNOLOGICAL

Promotions in engineering

Technology entree, licensing, patents

History of medical specialty in India

Associated/dependent engineerings

Information and communications

Internet

ENVIROMENTAL

Sanitation and Pollution

Extreme clime alterations and natural catastrophes due to planetary heating.

Emergence of Superbug.

LEGAL

Deregulation of the health care industry.

Relaxation in amalgamation and acquisitions.

Addition in budgetary allotment

Focus on rural health care

Health Insurance for Below Poverty Line households

Exemption/concessions in responsibilities and revenue enhancements for import of medical equipment.

Relaxation in FDI norms.

Encouragement to private endeavor for investing in health care.

Extension of visa periods for medical tourers

The brotherhood authorities which is driving economic reforms is popular and stable.

The GDP growing rate in 2010 is 8.6 % in comparing to 6.7 % in the twelvemonth 2009.

Per capita income is turning and was at US $ 2946 for the twelvemonth 2010 taking to increase in disposable income.

The value of Healthcare sector in 2007 was $ 34 billion which is expected to turn to $ 77 billion by 2012 and to $ 190 billion in two decennaries.

Requirement of extra 450000 infirmary beds by 2010, which is an investing of $ 25.7 billion.

Opportunity for private endeavor.

Is expected to touch $ 1 billion grade by 2012.

Addition in urbanisation will take to a rise in emphasis and life style related unwellnesss.

Boom in Indian population which is presently at 1.1 billion and is increasing at an one-year rate of 2 % .

By 2025, an estimated 189 million Indians will be at least 60 old ages of age, thanks to greater richness and better hygiene.

The adult females workforce in India is besides turning which is further hiking the buying power of Indian families.

With turning disposable income Indians will get down populating more flush lives giving rise to lifestyle related diseases such as high blood pressure, malignant neoplastic disease and diabetes.

There are rapid betterments in engineering being used in the health care sector.

New intervention engineerings being developed.

Access to new and better nosologies and allied engineerings.

Use of health care Information direction system to record, shop and recover patient information and infirmary direction.

Development in telemedicine

India is good known for alternate medical specialty like Ayurveda, Pranic Healing, Aroma Therapy, Music Therapy, Meditation and Yoga internationally. Alternate medical specialty therapies could pull medical tourers.

Drinking contaminated H2O and hapless sanitation leads to decease of 1 million kids below the age of 5.

Increasing pollution is adding to the health care jobs.

Extreme conditions conditions repeating often. Rise in natural catastrophes. Frequent coming of New Diseases.

Regulative conditions eased to promote growing.

t Orgin of new superbug from India due to inordinate prescription of antibiotics and its opposition.

High

Medium

Medium

High

High

High

High

High

Medium

High

Medium

High

High

High

Low

Low

Low

The cardinal drivers of growing in the sector:

One driver of growing in health care sector in India is India ‘s dining population which is presently at 1.1 billion and is increasing at an one-year rate of 2 % .

India ‘s dining economic system is making an of all time spread outing in-between category with more disposable income to pass on health care. Working category population to turn to 36 % by the twelvemonth 2016 from 32 % in the twelvemonth 2006. Enhanced general consciousness, increased literacy rates will besides hike demand for better health care.

With turning disposable income Indians will get down populating more flush lives giving rise to lifestyle related diseases such as high blood pressure, malignant neoplastic disease and diabetes. It is estimated that by the twelvemonth 2025 the diabetic population will make 73.5 million and the estimated cost of intervention would be $ 30 billion.

With turning disposable income Indians will get down populating more flush lives giving rise to lifestyle related diseases such as high blood pressure, malignant neoplastic disease and diabetes. It is estimated that by the twelvemonth 2025 the diabetic population will make 73.5 million and the estimated cost of intervention would be $ 30 billion.

will make 73.5 million and the estimated cost of intervention would be $ 30 billion.

The adult females workforce in India is besides turning which is further hiking the buying power of Indian families.

The outgrowth of India as a hub for medical touristry to supply best in category intervention in Fieldss such as cardiology, joint replacing, orthopaedic surgery, gastroenterology, ophthalmology, grafts and urogenital medicine at well cheaper monetary value.

The outgrowth of wellness insurance which is projected to turn to $ 5.75 billion by 2010.

Growth of telemedicine, as merely 3 % of the specializer doctors reside in rural countries and 25 % in semi urban countries the telemedicine is a fast emerging tendency in India, supported by the exponential growing in information and communicating engineering sector and low telecom costs.

Need for healthcare substructure enlargement, presently India has about 860 beds per million population which is one-fifth as compared to the universe norm of 3960, harmonizing to World Health Organisation. It is estimated that an extra of 450,000 infirmary beds will be required by 2010- an investing estimated at $ 25.7 billion. The part from the authorities is expected at 5-20 % , opening an mammoth chance for the private sector to bridge the spread ( CRISIL )

With a rejuvenated health care substructure, together with the outgrowth of medical touristry and telemedicine, there will be a rush in demand for medical equipment.

The addition in disposable income and rush in life manner related diseases, there will be an chance for planetary pharmaceutical houses.

With amendments in statute law and harmonizing to a survey by Rabo bank finance, a subordinate of the Netherland based Rabo Bank, the immense patient population of huge familial diverseness doing the state ‘an ideal site for clinical tests.

SWOT Analysis: –

SWOT Analysis – Phoebus Hospitals

Competitive Advantage by virtuousness of Strategic Capabilities

We are utilizing the Bowman ‘s scheme clock to analyze the Competitive place in comparing with the merchandises and services offered by the competition.

Bowman ‘s Strategy Clock

Apollo ‘s Competitive place

The Company is seeking to construct a repute as a supplier of premium quality health care of International criterions. It has adopted a construct of making Hospotels in which the hotels are included within the infirmary campus. The enterprise is to distinguish on the footing of quality of the services provided in a five star environment. They want to make this at a lower cost in comparing to any other service supplier.

As per the Bowman ‘s scheme clock we can see they are following a intercrossed theoretical account to distinguish at a low cost base.

Fortis ‘s Competitive place

The Company is seeking to construct a repute as a supplier of wellness services in cardinal forte countries such as cardiac attention, nephritic attention, neuro-sciences, orthopedicss etc. It has adopted a scheme of acquisitions for growing. The way is to distinguish on the footing of being identified as the taking supplier of cutting border health care engineering in the country of critical diseases. They besides want to come in the grade II and tier III metropoliss and supply no frills basic health care and to bring forth trade name consciousness for their chief ace forte infirmaries.

As per the Bowman ‘s scheme clock we can see that they are following a intercrossed theoretical account to distinguish on the footing of leader ship in critical diseases healthcare serves and besides to supply a low cost option for making test chances for the possible clients.

Porter ‘s Five forces model:

The five forces model is used to analyze the attraction of an industry. It helps to entree the current strength of the competitory place and the strength of the place an administration is be aftering to achieve.

porters-five-forces-model

1 ) Potential entrants

Menace of new entrants depends on entry and issue barriers. Since the health care industry requires immense investings and nucleus competences are difficult to get, hence menace of new entrant is low therefore the industry attraction is high.

2 ) Industry competition

Industry competition denotes the strength of competition among the bing participants in the market. Rivalry in private health care industry is low as there is no cut pharynx monetary value competition amongst rivals hence the industry attraction is high.

3 ) Dickering power of Buyers

Dickering power of the purchaser means the sum of control purchaser has over the merchandises monetary value. In this industry there are tonss of options available to the clients and the shift cost is about negligible. Hence the bargaining power of the Customer is high. This creates a focus country for the companies runing in this industry.

4 ) Dickering power of Suppliers

It signifies how strong the place of the marketer is. In this sector the dickering power of the providers is low as there are tonss of available options for the clients. Besides the cost of exchanging between the providers is low thereby increasing the industry attraction.

5 ) Menace of replacements

If the clients can easy exchange between the rivals merchandise, so the menace of replacements is high. This menace is low as there is a low chance of an alternate medical specialty process being acceptable for super forte health care. This will do the industry attractive.

If we apply the Porter ‘s five forces model in this instance, it can be ascertained that the two companies have a strong competitory advantage and they are following a intercrossed scheme to derive and prolong distinction and besides concentrating on costs. This is giving them a sustainable competitory advantage in the industry. They will be advised to concentrate on the countries of supplying perchance unparalleled health care services so that the exchanging cost in the psychological head set of the client additions which will cut down the bargaining power of the purchaser and will go an chance country alternatively of a job country.

SWOT Analysis – Fortis Healthcare

Helpful

To accomplishing the aims

Harmful

To accomplishing the aims

Internal Beginning

( Properties of the administration )

Strengths

Failings

Lower bringing cost.

Well placed to tap turning possible of health care industry.

World category installations.

Costly healing medical services.

Limited wellness benefits to employees.

Limited figure of quality medical establishments for Doctors of high quality for specialized services.

External Beginning

( Properties of the environment )

Opportunities

Menaces

Investing of more than $ 80 Billion to acquire 1.85 Beds per 1000 individuals in India.

Booming medical touristry.

Lack of quality resources – In India for every 1000 individuals 0.3 physicians and 0.8 nurses are at that place while remainder of universe it is 1.23 physicians and 2.56 nurses.

Highly competitory industry

Ever upgrading medical equipment.

Highly capital intensifier.

Menace from US to supply low cost medical intervention will ensue in lower grosss from Foreign Medical Tourists.

Recession

Spread of superbugs due to lax pharmaceutics regulations in India.