Sri Lanka expansion plan Phillips Healthcare

1. CONFIDENTIAL 1
DRAFT
Business Case – Sri Lanka
Tapping an ocean of opportunities

2. Executive Summary
A Aspiration
 Grow aggressively from 16 Cr OIT in 2012 to 50 Cr OIT in 2015 with 50% CAGR
 To Establish Philips Health Care as market leader in IS , Ixr , USG , Ventilation & Respiratory Care
 To be preferred partner for Hospital groups for their upcoming new projects
B Where to play
 Govt. Tenders
 Govt. Soft Aid Projects ( JAICA , Austrian & ASHRA )
 Private Hospital Projects
 Tier I & Tier cities with Value Ultrasound and Monitoring devices
C How to win
 To gain customer trust and confidence by setting up direct Philips Healthcare legal entity
 By having complete Coverage of the island through direct and indirect sales team
 By Winning mind share of Radiologist and Cardiologist in SL by partnering with them in developing their skills &
knowledge
 By establishing the Clinical superiority of Philips Products through seminars & Roadshows
 By offering Complete solution to Hospital Promoters by way of Innovative Products , Structured Financing and
also offering technical & Soft skills training to their team

3. Key Demographics
Area : 65610 sq. kms
Languages :Sinhalese, English, Tamil
Population (2010 est.) :21,513,990
GDP (PPP) - 2010 : $106.5 billion
HDI - 2010 : 0.658 (91st )
Per capita Income : $5,220
Density/sq. km.: 308.4
Growth rate: 0.9%
Birth rate: 15.8/1000
Infant mortality rate: 18.1/1000;

4. Healthcare Market in Sri Lanka
Healthcare Spends
Govt
Non
Govt
Figs in Rs Crores/ 0000000’s
Government sponsored healthcare delivery models play a
significant role in current scenario but its far from
adequate
<1.5% of total GDP is spend on Healthcare however a
significant majority almost 80% of this is spend on
maintaining existing facilities & hence little focus on
capacity improvements which is the need of the hour.
Annual Healthcare Spending
Govt
Individual/out of
pocket
Pvt. Health
Insurance
Public Insurance
Healthcare currently is government driven & represents a huge opportunity from private players

5. Healthcare Professionals & Available Beds
Health Workforce Total Density (/10000)
Physicians 10,479 6
Nursing & Attendants 33,850 17
Cardiologists 42 .02
Radiologists 140 .07
Govt. Hospitals 1,042 .6
Govt. Hospital Beds 69,501 35
Pvt. Hospital Beds 3000 1.51
Radiographers 464 0.23
Cardiographer 269 0.14
Hospital Type Hospitals
Total No. of patient
beds
National Hospital 1 3291
Teaching Hospital 21 17736
Provincial General Hospital 3 3889
District General Hospital 18 9509
Base Hospital – Type A 21 6586
Base Hospital – Type B 45 7086
Divisional Hospital – Type A 39 4514
Divisional Hospital – Type B 143 9524
Divisional Hospital – Type C 277 6621
Primary Medical Care Unit 474 745
Total 1042 69501
Hospital Type
No. of
Hospitals
Total No. of
patient beds
Nawaloka Hospital 1 400
Asiri Hospital 4 600
Lanka Hospital 1 350
Durdans Hospital 1 300
Hemas Hospital 3 150
Oasis Hospital 1 143
Other small 10 300
Total 2243

6. Historical IB & Philips Presence
IS Modality Total Philips IB
MRI 15 5
CT 29 8
PET CT 1 0
CATHLAB 12 4
MRI
35%
CATHLAB
30%
Philips Market Share-Absolute Value-2012
MRI CT
MRI
35%
CATHLAB
30%
CT
35%
Philips Market Share-Absolute Number
Wise
MRI CATHLAB CT
The market is growing in rapid pace as seen in 2012 with 2 3 T ,1 Biplane & 2 Flat Panel RF
systems being finalized.

7. Flow Business
Philips
NK
Mindray
GE
47%
20%
PCCI-12
15 %
10%
Philips
GE
Toshiba
Others
51%24%
US-Cardiology
Toshiba
GE
Mindray
Philips
47%
20%
US-Radiology
15 %
10%
Philips is losing volumes to Chinese players & 2013 is projected to be tougher due to Chinese
government sponsored projects

8. Philips Healthcare Performance
6
31
7
10
0
5
10
15
20
25
30
35
16
20132012201120102009
INR Crores
INR Crores

9. Major Business Opportunities – Next 18 months
Approx. IS business value 23M USD
Customer Equipments
Approx.
value (USD)
Chinese Project 16 slice CT – 4, 1.5 T MRI – 2, Cathlab -1 3.5M USD
Israel Project Brilliance Big Bore - 8 5.2M USD
BES 3T MRI - 1 No. 1.5M USD
Navaloka Bi Plane Cathlab – 1 1 M USD
Epilepsy Project
PET CT – 1, SPECT – 1, 3T MRI – 1, Angio
System - 1
3.2M USD
Browns Multi Modality 1M USD
Durdans Cathlab - 1 600K USD
Lanka 64 slice CT - 1 800K USD
Hemas 16 slice CT – 2, 1.5 T MRI - 1 1.3M USD
Navy 128 slice CT – 1, 3T MRI – 1, DR - 1 2.1M USD
National Cathlab - 1 600K USD

10. Business Opportunities – Flow Business
Total Market (Flow business) : USD 8.5 M
 PMCC : USD 4 Million
 US : USD 2 Million
 Ventillator : USD 1 Million
 Anesthesia : USD 1.5 Million
Govt purchase, Tied Aid projects constitute major portion ( App 70% ) of the above
Market for PCCI items is growing at ~25% per anum

11. Why choose Sri Lanka?
• Post Civil War , Peaceful for more than two years. Development work including
hospital projects planned in earlier war affected region is starting ( Northern Srilanka )
• Pvt. Health Insurance is growing at more than 30% PA which will drive the need for
Pvt. Health Facility
• Soft loans and Aid projects from developed countries to setup healthcare facilities
• Corporate groups like Browns & Hema’s started seeing healthcare as potential
business opportunity . Major Pvt. Hospital groups are in expansion mode and will add
more than 2000 beds in next three years
• Govt. is promoting health tourism

12. SWOT and Top Must Do’s for flow business
Strengths
• Dedicated dealer sales-
persons
• Philips brand in monitoring
business
• Support from Philips sales
team in last 3-4 years
• Demand pull from cardio-
logists for high end US
Opportunities
• Ventilator and Anesthesia
business
• US – Radiology and
value segment
• Business outside
Colombo
Weakness
• Lack of entrepreneurial
skill in dealer
• Not in good books of
govt. decision makers
• Lack of strategy to drive
growth
• Inadequate coverage
outside Colombo
Threats
• Strong presence of
Toshiba, GE in US
radiology market
• Aggressive Minday :
specially in Govt.
• GE and Siemens has
direct local presence
• Delay in service response
Top must do actions
• Channel needs to have more
resource, already appointed
few
• Channel owner/top
management need to focus
on healthcare business
• Need to organize Radiology
events/workshops. In short
term, Clearvue launch should
be planned
• Coverage outside Colombo
should be expanded for value
segment business
• Channel needs to stock
machines
• Philips sales team needs to
help dealer in forming
strategy and identifying gaps
Key challenges
• Inadequate coverage
• US business
• Strategy for growth

13. SWOT and Top Must Do’s for IS business
Strengths
• Philips Brand
• Technomedics has big
sales team
• Reference IB due to
Austrian project
• Demand pull from
cardiologists for cathlab
Opportunities
• Big project execution
expected in next 2 years
• Build brand in radiology
segment
• Improve relationship with
govt. decision makers
Weakness
• Channel representing
many companies, lack of
focus in Philips business
• Coordination of channels
difficult as Technomedics
handles rival companies
for flow business
• No lead generation
activities
Threats
• GE and Siemens has
direct local presence
• No concrete market
information
• Delay in service response
Top must do actions
• Need to change channel
strategy
• Need to have local sales and
service
representation, having one
local country manager and
one person under him
employed with PTS for IS
business seem to be good
option
• Training of channel sales
persons
• Need to organize/participate
in radiology events
• Need to interact directly with
decision makers in both
private and govt. sector
• We should start with giving
Sri Lanka service also as
additional role at FSE level
• Should have our Service
engineer in Sri Lanka
Key challenges
• Lack of focus from channel
• Brand building
• Delay in service response

14. • To Setup Philips Legal Entity
• To have Philips Area Manager based at Colombo who will directly handle IS business and to
manage US & PCCI business through dealer network
• To setup dedicated dealer training program for channels in Q2 to improve domain expertise
• To setup trained service network with spare parts depot
• To launch business financing in SL
• To work with College of Radiology , Cardiology and Anesthesiology to create brand Awareness for
Philips Products
• To set up Intellivue hospital show in Q2
• To launch Philips Imaging 2.0 in upcoming SAARC Radiology conference in August
• To setup Philips Training Academy to support upcoming radiologist to improve his/her skills and
knowledge
Moving Forward in 2013…

15. Expected Business Growth
50
7
10
6
0
5
10
15
20
25
30
35
40
45
50
2009 2010 2011 2012 2013 2014 2015
31
16
INR Crores
year
Philips Business is expected to grow to INR 50 Crores by 2015 with CAGR of
93% for next two years
INR Crores