Indian Healthcare Industry

Page 6

Source: BMI Report, Frost & Sullivan, LSI Financial Services, IBEF Research, Hospital Market – India by Research on India, JP Morgan

Healthcare industry in India is poised to expand rapidly

Indian Healthcare Industry

Diagnostics Medical Devices Hospitals Others Pharmaceuticals

71% 9% 3% 12% 5%

US$ 80bn (FY12)

Key Focus Area

Indian Healthcare is among the fastest growing globally…

5.2%

2.2%

10.0%

17.0%

6.3% 8.4%

No

rth

Am

eri

ca

We

ste

rnE

uro

pe

Asi

a P

acif

ic

Ind

ia

La

tin

Am

eri

ca

Mid

dle

Ea

st&

Afr

ica

Global average – 5.6%

2011-15 CAGR

45 52 60

68 80

160

2008 2009 2010 2011 2012 2017E

…poised to become a US$160bn industry by 2017

Page 7

Shift from communicable to lifestyle diseases

Lifestyle related diseases have led to an increase in the demand for specialized care

Currently, c.50 per cent of spending on in-patient beds is for lifestyle diseases

Enhanced penetration of healthcare insurance

Gross healthcare insurance market has expanded at a CAGR of 28% from US$ 1.2bn from FY09 to US$ 2.8bn in FY13

Private insurers contributed c.38% of the total health insurance market in FY13

Source: IRDA, CII, Grant Thornton, Gartner, Technopak, IBEF Research

Increasing Trend of Medical Tourism

India is gradually emerging as a destination for elective and critical treatment on account of lower costs, better patient care and sophisticated medical technology

Accelerated Urbanization

Flourishing middle class

Rise in disposable income

Increase in “share of wallet” spend on healthcare services

Underpenetrated Market

Under-penetrated healthcare delivery market expected to provide a long-term sustainable growth opportunity

Favourable investment environment

100% FDI allowed through automatic route

Various fiscal and tax incentives related to healthcare Infra financing

Promotion of Public Private Partnership (PPP)

1

2

3

4

5

6

Robust Fundamentals Growing Demand

Page 8

Low expenditure on Healthcare as % of GDP1 … …with low per capita Healthcare expenditure1

17.9%

9.6% 9.0%

5.1% 4.1%

0.0%

4.0%

8.0%

12.0%

16.0%

20.0%

US UK Brazil China India

Global average – 9.4%

8,362

3,480 3,204

1,028 379 132

-

2,000

4,000

6,000

8,000

10,000

US UK Japan Brazil China India

(PPP basis US$)

Global average – 990

21

43

14 27

18 24 18

7 3

41

85

14

101

59

98

64

10 20

0

20

40

60

80

100

120

Ja

pa

n

Ru

ssia

Ch

ina

UK

Sin

ga

po

re

US

Bra

zil

Ind

ia

Ind

on

esi

a

Physicians Nursing

India has one of the lowest bed densities..

137

97

42 33 31 30 24 13 6

0

40

80

120

160

Ja

pa

n

Ru

ssia

Ch

ina

UK

Sin

ga

po

re US

Bra

zil

Ind

ia

Ind

on

esi

a

Global average – 30

Low bed density mostly due to low government investment on Healthcare

Physician Global average – 14.2

Nursing Global average – 28.1 Beds per 10,000 people

..With low physician and nursing staff density

1

Source: Barclays Research Note 1: WHO Statistics 2012

Underpenetrated Market

Page 9

Low Medium High

He

alt

hca

re s

pe

nd

–

Sh

are

of

wa

lle

t

Income Level

50 mn

2005 2025

600 mn

Income in US$

< 3,300

3,300 to 16,700

>16,700

Middle class

4% 7%

9%

13%

1995 2005 2015 2025

Source: MGI

Source: MGI & EY

Source: MGI & EY

2

Growing middle class with higher disposable income… …Resulting in enhanced Healthcare share of wallet

Accelerated Urbanisation

The Middle class segment of the population tends to have the maximum share of wallet on healthcare expenditure

The growing middle class population in India is supporting the growth in the healthcare share of wallet

Page 10

Number of hospitalized cases (million)

► Increased incidences of lifestyle diseases

contributing to rising healthcare spending by

individuals

► Lifestyle diseases accounted for 48 per cent of the

in-patient revenue in 2013 (c.US$ 17bn)

2.9 2.0

1.2

5.2

3.1 2.3

8.3

4.2 3.4

Cardiac Oncology Diabetes

2008 2013F 2018F

Source: JP Morgan Research

► India’s population above 45 years of age is

expected to increase from 22% of total population

in 2012 to 26% by 2021E

► This segment of population is expected to have

greater requirement for healthcare services

3

35 32 29 27 25 23

27 28 29 28 26 24

20 20 20 21 23 24

11 12 14 15 16 16

7 8 8 9 11 12

2001 2007 2012E 2017E 2021E 2026E

0-14 yrs 15-29 yrs 30-44 yrs 45-59 yrs 60+ yrs

Demographic shift with population over 30 yrs increasing

Source: MOSPI, CRISIL

Shift from Communicable to Lifestyle diseases

Page 11

Indian health insurance market size (US$ bn) ► The health insurance industry expanded at a CAGR

of 23% from FY09–13

► Over the next 5 years the Healthcare Insurance

market is expected to grow at a CAGR of c.19%, to

be a US$ 6.5bn market by FY18

► Awareness and rising healthcare cost are

expected to increase penetration within the

retail segment

► Increase in organized labour force is expected

to result in the growth of the corporate

segment

► The share of population having medical insurance is

likely to rise to 20 per cent by 2015 from the

present 2 per cent

► With increasing number of companies offering

insurance cover to their employees, the healthcare

insurance business in India is set to expand further

1.2

1.5

2.0

2.4

2.8

FY09 FY10 FY11 FY12 FY13

Source: IRDA, Towers Watson IBEF Research

4

Note: Conversion at constant rate of INR55/US$

Enhanced penetration of healthcare insurance

Page 12

Cost of surgeries in different countries (US$’000)

► India is emerging as a destination for elective and

critical treatment for citizens of other nations

(medical tourism) given:

► Lower cost,

► Availability of skilled doctors/nursing staff,

► World class hospitals

► Sophisticated medical technology and

► Excellent patient care

► High influx of patients from Africa, CIS countries,

Gulf and SAARC nations, Pakistan, Bangladesh and

Myanmar witnessed currently 100

250

300

48 45

290

200

50 20

60 75

10 20

150 140

20 5

25 45

8

Heart surgery Bone marrowtransplant

Liver transplant Kneereplacement

US UK Thailand Singapore India

Source: Ministry of Health, RNCOS, KPMG, LSI Financial Services, Apollo Investor Presentation, CRISIL

5

Medical Tourism in India

1.1 2.2

2.5

4.5

2012 2015

Revenues (US$ bn) Medical tourists (mn)

Increasing trend of medical tourism

Page 13 Source: DIPP, Health Ministry, IBEF

Fiscal incentives

Public – Private

Partnership

Promotion of medical tourism

oriented cities

Tax benefits 100% FDI

(Automatic Route)

Healthcare Infra Financing

Highly favourable healthcare investment regime

6 Favourable investment environment

Page 16

Healthcare Services / Hospitals in India Overview

20% of overall healthcare services – Catered through the govt. channels

80% spend of overall healthcare services – Catered primarily by private sector

Healthcare Services / Hospitals (US$ 55 bn Industry)

Primary Care Secondary Care Tertiary Care

Mainly at the grass root level

Minimal involvement of private players in

this segment

Primarily includes nursing homes and

recovery rooms

Investment in such centres to reduce

ALOS of tertiary care centres

Capital Intensive & higher gestation

period

Diversified specialty mix with higher patient volume

Less capital intensive & low gestation

periods

Niche play

Multi-specialty Single-specialty

Low share of govt. spending and strong demand trends has led to increasing investment by private players

Currently, Private sector’s share in hospital beds is estimated at 40%

Page 2

Private and confidential

In the short term the organized sector will continue to form asmall proportion of the healthcare delivery landscape

61%

Public

39%

Private

Others 40,000

Yashoda 900

Vikram 1,000

Metro 1,000

Kamineni 1,000

Medanta 1,000

Miot 1,000

CA 1,000

Sterling 1,500

KIMS 1,650

Max 1,850

Global 2,000

Care 2,400

Fortis 4,800

Manipal 4,900

NH 6,200

Apollo 8,600

Other Private

92%

Private chains

8%

► Despite the strong growth in bed capacity expected by private chains over the next few years, these arelikely to remain a small proportion of the hospital delivery landscape

1.6 mn beds 1.0 mn beds 0.08 mn beds

Source: EY analysis, McKinsey 2010, ASSOCHAM July 2013

Current private bed landscape (2013)

Total beds Private beds Private chains

8% 10%

92%

20%8-10%

90%

2013 Private chaingrowth

Other privategrowth

2020

1.0 mn beds 2.0 mn beds

Projected private bed landscape

Page 17

Healthcare Services / Hospitals in India Single Specialty vs. Multi Specialty – Key Contours

Assumed US$/INR 60

Parameters Single Specialty Multi-Specialty

Capital Investment Low - <US$2 - 5mn per centre High - >US$12 -15mn for 100 bed hospital

Business Model

10-50 bed facilities

Mostly Out-patient day care centres

High patient throughput

Facilities - <5,000 sq. ft. rental locations

Faster roll-out

>100 beds across multiple specialties

Real estate intensive

Greenfield project execution gestation period of c.2years for 200 bedded facility

Profitability

Typical EBITDA margins: c.20%

EBITDA break even within 1 year

Medium realization & ARPOB procedures

EBITDA breakeven in 2- 3 years

Typical EBITDA margins:17 – 20%

Earnings diversification – multiple specialties

High realization & ARPOB procedures

Key Challenges

Talent acquisition

Management

Scale up across new markets

Project execution

Equipment up gradation

Talent acquisition & retention

Page 21

Source: EY Research, Research report (HSBC, Nomura, Axis Capital, D&B, Barclays, Investor presentation of Fortis and Apollo, Economic Times) Note: US$/INR 60

Particulars

Listed Yes Yes No No No No No No

Region Focus Pan India Pan India S-W India South India S-W India North India S-W India North India

Total Beds 9,000 4,500 7,100 5,000 1,200 1,560 1,912 1,250

Owned Beds 6,900 3,500 NA 5,000 NA 1,560 NA 1,200

O&M Beds 2,100 1,000 NA Nil NA Nil NA Nil

Capacity

Utilization 71% 74% NA NA 45% 74% NA >85%

Operating Parameters

ALOS 4.8 4.03 NA NA NA 4.10 NA NA

ARPOB (US$/

Day) 463 512 NA NA 1304 c.533 NA c.500

Fragmented industry set to enter the consolidation phase with top 8 players currently controlling c.25% of the organized private healthcare market in India

Healthcare Services / Hospitals in India Industry Landscape

Page 23

Healthcare Services / Hospitals in India Single Specialty – Overview

Source : Espicom Q4’2013 Indian Medical Devices Report

Assumed US$/INR 60

Urology 25%

Opthal 24%

Gastro 14%

Ortho 8%

Gyne 7%

Plastic Surgery

3%

ENT 10%

General 5%

Oncology 4%

Emergence of single specialty and short – stay format hospitals as an attractive healthcare segment

(#) Centres – Distribution across Specialties

Robust EBITDA Margins

27-30%

25-28% 22% - 25%

19% - 20% 17%

Eye Cardiac Care Urology Cancer MSH

Average Operating Margins Across MSHs and various SSHs

Significant growth & scale potential amongst various short – stay format medical specialities

Page 25

No. of Centers 180 51 (12 in Africa) 49 30 13 15

Financial Summary

Revenue (13 – US$mn)

100 31 12.5 7.2 10(1) 2.8

Revenue Growth (Y-o-Y)

34% 22% 32% 87% — 41%

Private Equity Investors

Sequoia GIC, Singapore Westbridge

Ventures

Listed Company Market Cap – US$

15mn Evolvence Life

Sciences

Matrix Partners Song Investments Nexus Partners Helion Ventures

TVS Capital ePlanet Ventures

Sequoia India

Business Model Highlights

Both greenfield & brownfield

Diversifying into dental

Focusing on expansion in northern region

SA's Net Care recently in talks for a majority stake

Greenfield & Brownfield

Looking to raise US$ 20mn of primary investment from PE investors

plans to increase the network to 100 over the next 3yrs

Majorly acquisition based

Recently acquired New Vision Laser Centre and Shree Hi-Tech Clinics

Looking to raise US$30mn PE

Both greenfield & brownfield

Plans to invest to US$ 20mn to open 40 new hospitals in tier II and tier III towns in states of Punjab, Gujarat, Haryana and Uttar Pradesh by FY16

Recently merged with Hyderabad based eye care chain Maxivision Hospitals

Looking to raise US$30mn through PE for expansion

Greenfield

Recently raised US$10 mn for expansion

Target to have 30 centres operating by 2014 in North & Central India

Location

Healthcare Services / Hospitals in India Ophthalmic Care: Industry Landscape

Source : Company websites, Secondary Search, EY Research

Note (1) – Consolidated Revenue for Medfort – Maxivision operations

Assumed US$/INR 60; MCap as on 12.11.2014

Page 26

Healthcare Services / Hospitals in India Urology & Renal Care: Overview

Source : Da Vinci Q4, FY2013 investor presentation, Investor Presentations, company Websites & EY Research

Assumed US$/INR 60

Indicative List of Major Urological Procedures

Urological Procedure Volume – MSH (2013)(2)

Urology Care in India

Leading Private Sector Urological care hospitals in India

Focus Key players

National Chains (MSH)

Apollo Hospitals, Fortis Hospitals, Max Healthcare

Pan India Presence

RG Stone Hospital, Vattikuti Urology Institute

South Nephroplus, Nephrolife, Alliance Medicorp, Apex Kidney Care

West Muljibhai Patel Urological Hospital, Apex Kidney Care

Lithotripsy (US$410-500)

Female Urology (US$1,300-2,500)

Uro-endoscopy (US$1,300-2,000)

Urologic Oncology (US$4,200-6,700)

TURP (US$1,000-1,160)

Pediatric Urology (US$1000-1,700)

Andrology (US$1,000-1,700)

Cystoscopy (US$800-2,500)

Laparoscopy (US$1,300-1,700)

PCNL – Keyhole Surgery (US$1,300-1,700)

Urethral Strictures Treatment (US$800-1,700)

Radical Prostatectomy (US$2,500-3,300)

Concentrates on the diseases of the female and male urinary tracts along with male reproductive organs

Combines management of both surgical as well as non-surgical problems:

– Surgical conditions include correction of congenital abnormalities, cancers and correction of stress incontinence among others

– Non-surgical problems include benign prostatic hyperplasia and urinary tract infections among others

Recent trends observed in India:

– Urological conditions have witnessed the fastest advent & growth of robotic surgery driven procedures in India

o Accounts for 60-70% of overall robot-assisted procedures performed in India

o Currently, 23 Da Vinci Si robots, used for performing high-precision robot-assisted surgeries, are installed in India(1)

5,000

12,500

15,000

0

4000

8000

12000

16000

Max Fortis Apollo

Page 27

Healthcare Services / Hospitals in India Urology & Renal Care: Industry Landscape

No. of Centers 16 26 14 8 25

FY13 Sales (US$mn)

17 1(1) 1.7(1) NA 2.3

Private Equity Investors

IEP -40% stake (2010) ICICI Ventures – Erstwhile

investor

Bessemer invested US$5mn in Dec-2011

IFC & Bessemer invested US$ 10mn Jun’14

NEA, Da Vita Inc. invested US$ 8.3mn for 45% stake in 2012

Vattikuti Foundation NA

Specialty Focus Nephrology, Lithotripsy,

Uro-Oncology, Endo-Urology

Nephrology, HD, CAPD, Minor Urology based Procedures

Nephrology, HD, CAPD, Minor Urology based Procedures

Robot-Assisted Urological procedures, MAS, Endo-Urology

Nephrology, HD, CAPD

Business Model Highlights

Cluster based operational strategy

Focused on Metros / Tier-I cities

Significant presence in North, East & West India

Plans to raise around US$170mn of PE to expand to 35 hospitals in 5 years

Operates both Standalone & SIH formats

Physician partnership based model

Primary focus on South India market with recent expansion across North India

Targeting 110 centres across 15 to 20 states in the next five years

Operates both Standalone & SIH formats

Physician partnership based model

Majority stake acquired by US based Da Vita Inc.

Primary focus on South India market with recent expansion across North India

Exclusively operates via SIH model in India

Parentage – Vattikuti Urology Centre: Henry Ford Hospital, USA

Tie-up with leading quaternary care facilities in India such as Medanta, Apollo, Kokilaben Hospital, Manipal, KIMS etc.

Operates both Standalone & SIH formats

Physician partnership based model

Apex is planning to escalate to 50-55 centres by 2016

Location

Source : Company websites, annual reports, secondary search

Assumed US$/INR 60

Page 29

Healthcare Services / Hospitals in India Investment proposition – Strategic evaluation

Primary Care Secondary Care Tertiary Care

Healthcare Services Value Chain Low - end High - end

Single - Specialty Multi - Specialty

Caters to low realization / low ARPOB generating

minor investigations & low – risk procedures

Segments on the priority list of government’s

healthcare initiatives

Lion’s share of government’s funding on

healthcare is channeled to these 2 segments

Offers low value proposition from RoI standpoint

Limited investment platforms / formats available

from an investment perspective

Caters to high realization / high ARPOB generating

complex procedures

Limited government presence, with private players

expected to dominate this segment

Advent of lifestyle diseases & accelerated

urbanization results in an enhanced capacity to

pay for both critical and elective procedures

Witnessed plenty of interest strategic & financial

investors alike in the recent past

Offers multitude of investment opportunities such

as multi-specialty vs. single specialty focus,

standalone vs. regional vs. national chains

Page 30

Healthcare Services / Hospitals in India Multi Specialty - Key transaction linked sector insights

Date Target Acquirer/Investor Deal Value (US$ mn) Stake

Private Equity

Jun-14 KIMS, Hyderabad ICICI Ventures 36 28%

Dec-13 Medica Synergie Quadria, Swedfund, DEG 34 60%

Oct-13 Medanta Carlyle 163 28%

May-13 Fortis Healthcare IFC 146 17%

Aug-12 Manipal Hospitals India Evolving Fund, IVF 107 32%

Mar-12 Quality Care India Advent 105 80%

Jan-12 Aster DM Healthcare Olympus Capital 97 26%

May-10 Fortis Healthcare GIC 100 8%

M&A Transactions

Jul-14 Max Healthcare Institute Life Healthcare Group 66 20%

Feb-14 Soni Hospitals Manipal Health Enterprises 20 100%

Jan-13 Saket City Hospital Spice Global Investment 74 100%

Jun-12 Imperial Hospital and Research Apollo Hospitals Enterprise 18 49%

Oct-11 Max Healthcare Institute Life Healthcare Group 105 26%

Key underlying themes observed across transaction spectrum in multi-specialty segment:

Marquee investor interest

Capacity enhancement driven high intrinsic growth potential

Scalability of the healthcare delivery platform

Multitude of options available in terms of niche sector play

− Standalone vs. healthcare chains, regional dominance, tertiary / quaternary care focus, Centre of excellence (core specialties) among others

Page 31

Healthcare Services / Hospitals in India Single Specialty – Key transaction linked sector insights

Key PE Deals in Singe Specialty Hospitals (2010-YTD14)

Key underlying themes observed across transaction spectrum in single-specialty segment:

Enhanced level of interest across specialties catering to lifestyle diseases with high realization & heavy

surgical mix such as ophthalmic, urological care as against chains offering low value procedure mix such as

dental & renal (dialysis) care

Niche specialties such as oncology & IVF attracting next wave of growth capital

Certain key segments such as ophthalmic & renal / urological care are set to enter the consolidation phase

Date Target Investor Speciality Deal Value (US$

mn) Stake

Aug-14 DCDC Health Pragati India Fund Renal 10.0 n/a

May-14 Vasan Eye Sequoia, GIC, WestBridge Ophthalmic 50.0 n/a

Sep-13 Kids Clinic Matrix Partners, Sequoia Paediatric 15.9 n/a

Mar-13 HCG Temasek Oncology 24.0 17.3%

Jul-12 Dr. Agarwal’s Evolvence India Ophthalmic 12.5 n/a

Aug-12 Nova Medical NEA IV Fertility 53.6 41.4%

Mar-12 Vasan Eye GIC Ophthalmic 100.0 19.2%

Sep-11 Eye-Q Vision Helion Venture, Nexus India Ophthalmic 12.0 40.9%

Dec-11 Nephrocare Bessemer Renal 37.0 70.6%

Oct-10 Centre for Sight Matrix Partners Ophthalmic 11.3 21.3%

Page 34

Diagnostic Services Overview

Source : Espicom Q4’2013 Indian Medical Devices Report

Assumed US$/INR 60

Diagnostic Service Industry

0.7 3.0

10.2

0.3 1.2

3.8

2009 2015 2020

Radiology Pathology

1.0 4.3 13.9 Overall 27.6%

CAGR

26.8%

CAGR

25%

CAGR

US$bn

Key Highlights

The Indian diagnostic industry, including clinical pathology, imaging and radiology, accounts for 3% of the healthcare industry

The diagnostics industry expected to grow at a CAGR of 27.5% (2009-2015) to US$4.2bn

Factors driving growth include:

— growing incidence of lifestyle diseases

— increasing consumer awareness

— importance of preventive healthcare

The industry is unregulated, unorganized and highly fragmented with over 50,000 path labs due to low entry barriers and no specific accreditation requirements

The organised players account for only c.9%, and operate under a hub and spoke model

Key Players

SRL is the largest player in the Indian diagnostics industry with ~48% share

Other key players include Dr. Lal Path Labs, Metropolis and Thyrocare

Organised, 9%

Unorganised, 91%

SRL, 48% Dr Lal

Path Labs, 25%

Metropolis, 20%

Thyrocare, 7%

Indian Diagnostic Industry Market Break-up

Page 35

Diagnostic Services Benchmarking

Source : Company websites, VCC Edge, secondary search

Assumed US$/INR 60

Revenue FY13 (US$mn) 97 71 34 25

EBITDA Margin FY13 14% 31% 32% 53%

No. of Labs 280 150 120 1

Central Lab - Navi Mumbai

No. of Collection Centres 5,500 2,000 750 700 franchises

Number of Tests 3,500 4,000 4,000 208

Presence 450 cities 125 cities 39 cities 700 cities

Tests processed daily 80,000 30,000 28,000 30,000

International Presence

SAARC

Middle East Others

Other services

Wellness

Clinical Research

Lab Management

Page 37

Diagnostic Services Investment proposition – Strategic evaluation

High-end diagnostics High-end imaging

Offers standard diagnostics & basic radiology

services - low value proposition

Lack of high-end infrastructure, regional

presence & limited opportunity to scale up – Low

market share & restricted customer base

Witnessed low / negligible interest from growth

capital funding perspective

Facing extreme competition from bigger players

Critical service offerings such as high-end

diagnostics & imaging acts as the key differentiator

Pan-India footprint backed by state-of-the art central

labs leading to extremely to low error rates & faster

turnarounds – High market share & sticky

institutional client base

All leading pan-India chains have witnessed

significant PE interest over the years

The landscape is poised to enter the consolidation

phase, to derive next phase of growth, presenting an

attractive investment opportunity

Regional Diagnostics Setup Pan India Diagnostics Chains

Low-end diagnostics Basic radiology

Page 38

Diagnostic Services Key Transactions

Date Target Acquirer Deal Value

(US$mn) Stake

Private Equity

Feb-13 Dr. Lal PathLabs Westbridge, TA Associates 45.5 15.8%

Sep-12 Thyrocare Technologies Norwest Venture Partners 22.7 11.7%

Jun-12 SRL Ltd. IFC, NYLIM Jacob Ballas 65.4 23.5%

May-11 SRL Ltd. Spring Healthcare Fund 11.1 4.2%

Apr-11 SRL Ltd. Avigo Capital Partners 22.1 9.3%

Dec-10 Thyrocare Technologies CX Partners, Samara Capital 45.5 26.6%

Aug-10 Dr. Lal PathLabs TA Associates Advisory 35.0 15.9%

Jun-10 Metropolis Healthcare Warburg Pincus India 85.0 26.9%

M&A Transactions

Mar-14 Medinova Diagnostic Vijaya Diagnostic Centre 0.3 36%

Mar-14 Medinova Diagnostic (Bangalore) Chaparral Health Services 1.2 100%

May-13 Ekopath Metropolis Lab Services Metropolis Healthcare n/a 100%

Feb-13 Quest Diagnostics India DHR Holding India n/a 100%

Feb-13 Amins Pathology Laboratory Metropolis Healthcare n/a 100%

Dec-12 Eins Edutech Westfield Apparels 0.2 65%

Apr-12 Primex Healthcare and Research Mr. Agnivesh Aggarwal n/a 60%

Aug-11 Vijaya Diagnostic Vijaya Diagnostic Centre n/a 96%

Apr-11 SRL Ltd. Fortis Healthcare 178.8 75%

Key Transactions in Diagnostic Services Segment (2010-YTD14)

Source : VCC Edge, News Articles

1. Almost all sizeable diagnostic player in India is backed by multiple PE funds – a testimony of high interest in this segment

2. M&A on the other hand is limited to small deals with larger players acquiring single lab companies to either increase market share or penetrate into newer geographies

Page 41

Medical Devices Overview

2,061 2,028 2,479 2,830 3,174

3,651 4,437

5,522

6,701

7,919

9,378

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Indian Medical Devices Industry (US$ mn)

Indian Medical Devices Industry by category – 2013

Consumables, 18%

Diagnostic Imaging,

33%

Dental, 3%

Orthopaedic, 8%

Pateint Aids, 10%

Others, 27%

US$ 3,651mn

Source : Espicom Q4’2013 Indian Medical Devices Report

• Medical devices is essentially a multi product industry that comprises of broad range of products from MRI equipment to surgical needles

• Domestic manufacturer dominate the market for low value add products like syringes, catheters, etc. High end equipment, on the other hand are imported from international majors like Braun, FMC, etc.

• Key stakeholders in the industry chain includes manufacturers, distributors, hospital chains, path labs and diagnostic chains

Page 42

Medical Devices Key Segments

Orthopaedic

Implants &

Prosthetics

Dental

Consumables

Others

Patient Aids

Diagnostic

Imaging

Limb, hip, knee, shoulder, ear, nose, throat and mouth implants; jaw

prosthetics; and orthopaedic braces, plates, supports and shoes

Dental equipment and supplies, dental implants and prosthetics, dental

cements, teeth and other fittings, dental drills etc.

General disposable equipment and supplies including gloves, syringes,

catheters, electrodes, bandages, plasters, first-aid kits, sutures, medical

register paper, drainage bags, feeding bags, and wound management

and compression products

This segment includes all other devices including stents, wheelchairs,

ophthalmic devices etc.

Portable aids, including hearing aids and pacemakers & Therapeutic

appliances, including mechano-therapy and artificial respiration apparatus

Electrocardiographs, Ultra Sounds, MRIs, Other electro diagnostic

apparatus, CT scanners, Other X-Ray apparatus, imaging parts and

accessories

287

128

668

970

377

1,220

1,036

399

1,595

2,085

1,241

3,023

29%

Segment Description Market Size (US$ mn)

2013 2018

CAGR

2013-18

25%

19%

17%

27%

20%

Source : Espicom Q4’2013 Indian Medical Devices Report

Page 43

Medical Devices Benchmarking of Key Indian Players

Source : Espicom Q4’2013 Indian Medical Devices Report, Medical Buyer, Market Research

Assumed US$/INR 60

Note:

1. Opto Circuits derives only c.4% revenues from India

2. Hospital furniture and others’ segment include hospital furniture, wheelchairs, ophthalmic instruments, dental products, amongst others

3. Cardiac stents, pacemaker and implants’ segment includes orthopaedics & prosthetics devices and patient aids segment

4. Revenue figures are approximate and have been sourced from public sources

FY

13

Reve

nu

es

(US

$ m

n)

Segment Growth Rate (2008-13)

Hospital Furniture and Others

Growth 14.6%

Diagnostic Imaging and IV Diagnostics

Growth 15.3%

Medical Consumables

Growth 17.4%

Cardiac Stents, Pacemakers, Implants

Growth 34.4%

In a market dominated by exports, medical

consumables is the only trade surplus sub segment

10

20

50

150

Page 45

Medical Devices Investment proposition – Strategic evaluation

Diagnostic Imaging Implants

High-end segments such as implants, diagnostics imaging & equipment manufacturer offers a high growth,

high value proposition

o However, limited number of investment opportunities currently available in this segment including key

players such as TTK Healthcare, BPL Healthcare, Trivitron, Transasia etc. to name a few

Certain fast growing & sizeable medical consumable platforms such as Polymed & Sutures India also offer a

attractive investment opportunity in the medical devices segment

Hospital furniture Medical consumable

Medical Devices Value Chain

Low - end High - end

Page 46

Medical Devices Key Transactions

Date Target Investor Deal Value (US$

mn) Stake

Jun-14 Prognosys Medical Sys. Somerset Indus Healthcare 3.3 n/a

Jun-14 Cura Healthcare Peepul Capital LLC 6.0 n/a

Dec-13 Forus Health IDG, Accel, Asian Healthcare Fund 8.0 n/a

Nov-13 Trivitron Healthcare India Value Fund 24.6 n/a

Sep-13 Lotus Surgical Specialities Samara Capital Partners 24.2 n/a

Sep-13 Panacea Medical Tech New Enterprise Associates 5.6 49%

Aug-13 Sutures India TPG Capital Inc. 22.5 22%

Aug-13 Skanray Technologies Ascent India Fund 12.4 40%

May-13 BPL Medical Technologies Goldman Sachs 20.2 49%

Dec-12 Perfint Healthcare Norwest Venture 11.0 12%

Oct-12 Trivitron Healthcare Fidelity Growth Partners 74.1 n/a

Sep-12 Sutures India CX Partners Fund 38.4 36%

Total 250.3

Key Deals in Medical Devices Segment (2010-YTD14)

1. Around 30 private equity investments have been made in the Indian medical devices sector with a combined deal value of USD 275 mn

2. Investments have picked up in the last 2 years with CY12 and CY13 accounting for 20 such investments with total deal value of USD 260 mn.

3. Segments which have got funded primarily include diagnostic imaging and medical consumables

Source : VCC Edge, News Articles