Medical Diagnostics - India April 2009

Executive Summary SAMPLE Market Drivers & Challenges Rules and Regulations Competition Medical Diagnostic accounts for x% of the healthcare industry in India Diagnostics market comprises of Diagnostic Services Market : Estimated at INR XX bn in 2008 Diagnostic Products Market: Estimated at INR YY bn 2008 India has more than A laboratories Diagnostic equipments market is regulated by both central and state government Major governing authorities include U,V,W,X Regulatory process for diagnostics equipment is segmented into Critical - A Non critical - B Manufacturers need an import licence and product registration certificate to import diagnostic equipments Diagnostic test services market is highly fragmented with many unorganized players Some of the major players are A,B,C,D Foreign players (like U, V, W ) account for a% share in diagnostic equipment market Some of the major domestic manufacturers are X,Y,Z Drivers: Increase in lifestyle-related diseases, changing demographics, growth in medical outsourcing, medical tourism, nascent but growing medical insurance, rising PE/VC investments Challenges: Difference in import duty on diagnostic kits for public and private sector and Lack of accreditation/certification of diagnostic centers

Medical Diagnostic accounts for x% of the healthcare industry in India

Diagnostics market comprises of

Diagnostic Services Market : Estimated at INR XX bn in 2008

Diagnostic Products Market: Estimated at INR YY bn 2008

India has more than A laboratories

Diagnostic equipments market is regulated by both central and state government

Major governing authorities include U,V,W,X

Regulatory process for diagnostics equipment is segmented into

Critical - A

Non critical - B

Manufacturers need an import licence and product registration certificate to import diagnostic equipments

Diagnostic test services market is highly fragmented with many unorganized players

Some of the major players are A,B,C,D

Foreign players (like U, V, W ) account for a% share in diagnostic equipment market

Some of the major domestic manufacturers are X,Y,Z

Drivers: Increase in lifestyle-related diseases, changing demographics, growth in medical outsourcing, medical tourism, nascent but growing medical insurance, rising PE/VC investments

Challenges: Difference in import duty on diagnostic kits for public and private sector and Lack of accreditation/certification of diagnostic centers

Market Overview Drivers & Challenges Rules & Regulations for Manufacturers/Suppliers Competition Key Developments

Market Overview

Drivers & Challenges

Rules & Regulations for Manufacturers/Suppliers

Competition

Key Developments

Indian diagnostics market is witnessing significant growth with major contribution from the In-Vitro Diagnostic (IVD) segment Indian diagnostic market comprises of Diagnostic test services market Diagnostic products/instruments market Diagnostic market accounts for x% of healthcare sector India currently has over A hospitals and B diagnostic laboratories About c% of the treatments in India are based on lab diagnostic tests SAMPLE Market Overview Diagnostic Test Services Market Source: g% Microbiology h% Coagulation Immunology c% Haematology d% Critical care e% Urine Routine f% Others a% BioChemistry b% U 2006 V 2007 W 2008 b% INR bn IVD Instruments & Reagent Market IVD Test Segments (2008) 2006 Y 2007 Z 2008 a% INR bn X Market size estimation is difficult as diagnostic market is highly unorganized In 2008, IVD services market was INR XX bn

Indian diagnostic market comprises of

Diagnostic test services market

Diagnostic products/instruments market

Diagnostic market accounts for x% of healthcare sector

India currently has over A hospitals and B diagnostic laboratories

About c% of the treatments in India are based on lab diagnostic tests

Drivers & Challenges Increase in lifestyle-related diseases Changing demographics Rising PE/VC investments Increasing penetration of medical insurance Rapid growth of India as a destination for medical tourism Growth in medical outsourcing Drivers Lack of accreditation/certification of diagnostic centers Difference in import duty on diagnostic kits for public and private sector Challenges

Organized pathlabs are rapidly expanding using the hub and spoke model, including small, independent labs in the network Highly fragmented with ~X laboratories: Hospitals: a% Independent labs: b% Among the labs in India Automated – u% Semi - Automated – v% Manual – w% Organized players account for z% of market and expanding with ‘hub and spoke’ model: Reference labs act as regional hubs and are usually located in large metros Collection centres are located in hospitals, nursing homes, pathology labs, doctor’s clinics etc. Satellite labs and collection centres are either owned or franchised As organized players grows their share, small, independent labs are: Becoming franchisees in the hub and spoke model Partnering with large chains on referral basis Getting acquired by large chains, which lowers the cost of expansion and start-up time for the latter SAMPLE CC Reference Lab CC CC CC Satellite Lab Satellite Lab CC CC CC CC Diagnostic Testing Market Structure Hub and Spoke Model Reference labs : Hub with comprehensive or specialized testing capability Satellite labs : Limited testing capability; ‘feed’ reference labs Collection centres (CC) : Collect samples for forwarding to either a satellite lab or reference lab A variation in this model is the absence of satellite labs and the existence of only reference labs and collection centres Source:

Highly fragmented with ~X laboratories:

Hospitals: a%

Independent labs: b%

Among the labs in India

Automated – u%

Semi - Automated – v%

Manual – w%

Organized players account for z% of market and expanding with ‘hub and spoke’ model:

Reference labs act as regional hubs and are usually located in large metros

Collection centres are located in hospitals, nursing homes, pathology labs, doctor’s clinics etc.

Satellite labs and collection centres are either owned or franchised

As organized players grows their share, small, independent labs are:

Becoming franchisees in the hub and spoke model

Partnering with large chains on referral basis

Getting acquired by large chains, which lowers the cost of expansion and start-up time for the latter

Reference labs : Hub with comprehensive or specialized testing capability

Satellite labs : Limited testing capability; ‘feed’ reference labs

Collection centres (CC) : Collect samples for forwarding to either a satellite lab or reference lab

A variation in this model is the absence of satellite labs and the existence of only reference labs and collection centres

Manufacturers – IVD Products/Instruments Market The IVD products market in India is primarily dominated by foreign companies Global IVD companies like A,B,C,D have strong presence in the Indian market Domestic players have forayed into the market and are establishing themselves by producing cost effective and quality goods a% of diagnostic medical equipment and supplies is imported Low-cost reagent kits are being imported from X,Y and Z SAMPLE Players in the market IVD Products Market Share (2008) Foreign Players b% Domestic Players a% Source: 14%

The IVD products market in India is primarily dominated by foreign companies

Global IVD companies like A,B,C,D have strong presence in the Indian market

Domestic players have forayed into the market and are establishing themselves by producing cost effective and quality goods

a% of diagnostic medical equipment and supplies is imported

Low-cost reagent kits are being imported from X,Y and Z

Major Players – Diagnostic Test Services Market (1/2) SAMPLE Note: This list is not exhaustive Source: Established an international alliance with U for testing Planning to set up -- labs and -- collection centers by 20-- Expand operations in southern and western regions investing INR X mn Planning to invest INR Z mn in brand building Started in 19-- A labs and B sample collection centers Accreditation: NABL, CAP Y Growing inorganically It is looking at overseas expansion as well as outsourcing opportunities Plans on increasing their portfolio to X more labs Targeted revenue of INR X bn by 20-- In 20--, acquired two labs in North India and a majority stake in Bangalore based YY Started in 19-- U laboratories across V cities globally, W laboratories in India, X collection centers Capability to carry over A routine investigations with over B technologies - e.g. biochip, DNA sequencing, pathology, radiology ICICI Ventures owns a% of the company Accreditation: CAP, NABL Z Entered into a JV with V to set up a diagnostic laboratory in Hyderabad at an investment of USD YY mn Started in 19-- Diagnostic facilities in their subsidiary U Facilities allow for investigation in Biochemistry, Haematology, Clinical Pathology, Microbiology, X-ray, Ultrasound with Color Doppler, ECG, Echo Cardiography and Treadmill X Business Outlook Overview Company

Established an international alliance with U for testing

Planning to set up -- labs and -- collection centers by 20--

Expand operations in southern and western regions investing INR X mn

Planning to invest INR Z mn in brand building

Started in 19--

A labs and B sample collection centers

Accreditation: NABL, CAP

Growing inorganically

It is looking at overseas expansion as well as outsourcing opportunities

Plans on increasing their portfolio to X more labs

Targeted revenue of INR X bn by 20--

In 20--, acquired two labs in North India and a majority stake in Bangalore based YY

Started in 19--

U laboratories across V cities globally, W laboratories in India, X collection centers

Capability to carry over A routine investigations with over B technologies - e.g. biochip, DNA sequencing, pathology, radiology

ICICI Ventures owns a% of the company

Accreditation: CAP, NABL

Entered into a JV with V to set up a diagnostic laboratory in Hyderabad at an investment of USD YY mn

Started in 19--

Diagnostic facilities in their subsidiary U

Facilities allow for investigation in Biochemistry, Haematology, Clinical Pathology, Microbiology, X-ray, Ultrasound with Color Doppler, ECG, Echo Cardiography and Treadmill

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