Indian Health-care Industry


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5 Force Analysis for
Indian Health-care Industry

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Indian Health-care Industry

  1. 1. <ul><li>Abhirup Das </li></ul><ul><li>VGSoM, IIT Kharagpur </li></ul>
  2. 2. Indian Healthcare Industry : An Overview <ul><li>Constitutes of hospitals and allied services </li></ul><ul><li>Hospitals: Government & Private </li></ul><ul><li>Allied Services: Medical diagnostic and pathlabs , Retail pharma, </li></ul><ul><li>Insurance, Medical tourism </li></ul><ul><li>An underserved sector with high growth potential </li></ul><ul><li>According to a Yes Bank report current estimated size - US$ 35 billion (‘09) </li></ul><ul><li>expected to touch- US$ 77 billion (’12-’13) </li></ul><ul><li>Growth rate comparable to pharmaceutical and software industry </li></ul><ul><li>Private sector players achieved 42.4% increase (combined) in net profit in Q1 of ‘09 </li></ul>
  3. 3. Healthcare : Demand & Supply 90 % patients need primary and secondary care Health care industry currently represents more than 5% of GDP
  4. 4. Porter’s 5-Force Analysis for Health-care Sector <ul><li>Competition within industry players </li></ul><ul><li>As different players serves different needs of the </li></ul><ul><li>customer/patients based upon their area of living, </li></ul><ul><li>economic condition, convenience and the position </li></ul><ul><li>in health care spectrum, competitive environment </li></ul><ul><li>is not clearly defined. Differentiation is basically on </li></ul><ul><li>way of service delivery. </li></ul><ul><li>Though the sector is grossly under served there is some </li></ul><ul><li>competition in urban India in non specialty segment as </li></ul><ul><li>facilities mostly concentrated there. </li></ul>Health-care Spectrum RURAL (per 1000 population) Hospital Beds = 0.2 Doctors = 0.6 URBAN (per 1000 population) Hospital Beds = 3.0 Doctors = 3.4
  5. 5. Major Players <ul><li>Clinics & Nursing Homes </li></ul><ul><li>Single doctor or family of doctors </li></ul><ul><li>Good local network and word of mouth clientele </li></ul><ul><li>Limited range of services and facilities </li></ul><ul><li>Charitable Trusts </li></ul><ul><li>Multispecialty hospitals run by religious or social groups </li></ul><ul><li>Standard of care is driven by individual doctors </li></ul><ul><li>Subsidized pricing offset by donations </li></ul><ul><li>Sub-optimal facilities </li></ul><ul><li>Government Hospitals </li></ul><ul><li>Ill equipped to provide efficient healthcare </li></ul><ul><li>Unavailability of appointed doctors and hospital staff </li></ul><ul><li>Not favoured by semi-urban populations </li></ul><ul><li>Standard of care is abysmal </li></ul><ul><li>Organised Sector </li></ul><ul><li>Very few players in this sector </li></ul><ul><li>Regional in focus, usually offshoots of tertiary players </li></ul><ul><li>Most current players are Urban Centric </li></ul>
  6. 6. Porter’s 5-Force Analysis for Health-care Sector (Contd.) <ul><li>Threat of Potential Entrants </li></ul><ul><li>Each of the industry player has to face competition from new entrants within their own operating environment. </li></ul><ul><li>In the organized sector, new ventures like Cochlear Ltd (Australia), Reliance Health(ADAG), the Hindujas, Sahara Group, Emami and the Panacea Group are joining existing players like Apollo, Fortis, Columbia-Asia, Piramal Healthcare . Funding is not a problem for these groups , neither the economies of scale, as there is huge untapped market. </li></ul><ul><li>In urban area, unorganized pharma retail is facing competition from chains like Frank-Ross. Same factor is applicable for pathology centers also. </li></ul><ul><li>Multinational equipment manufacturer like EES (J&J), Philips, GE are more intensively looking for new markets like India as growth potential is low in already saturated developed nations </li></ul>
  7. 7. Porter’s 5-Force Analysis for Health-care Sector (Contd.) <ul><li>Bargaining power of suppliers </li></ul><ul><li>Facilitator of health care services are people (doctor, nurses, management stuffs), pharmaceutical companies, equipment manufacturer, insurance provider, government. </li></ul><ul><li>Bargaining power of these facilitator does not affect every player in same manner. Government regulations are applicable for all, but “cash-less treatment” with collaboration among corporate, insurance firm and hospitals is a competitive advantage for organized player </li></ul><ul><li>Possibility of supplier’s integrating forward is less compared to other industry because most of organization in this sector focuses on their core competency. </li></ul><ul><li>Threat of Substitutes </li></ul><ul><li>There no potential threat of substitute product/services for this sector </li></ul>
  8. 8. Porter’s 5-Force Analysis for Health-care Sector (Contd.) <ul><li>Bargaining power of buyers </li></ul><ul><li>Apart from extreme cases, switching cost for buyer is high in terms of convenience, money comes second. </li></ul><ul><li>Power of buyers diminishes when he moves from primary care to tertiary care . </li></ul><ul><li>High quality treatment at a fraction of the cost, in comparison to western countries, makes India an ideal healthcare destination for highly specialized medical care (tertiary care ) </li></ul>
  9. 9. Thank You