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HbA1c Testing Market India HbA1c Testing Market – July 2013

Executive Summary Market

 India is facing a persistent rise in its diabetic patient population and the number is estimated to grow from ‘u’ mn in 20‐‐ to ‘v’ mn in 20‐‐  HbA1c testing market in India is expected to reach INR ‘h1’ bn in 2017, growing at a CAGR of ‘ 1’ % f ‘x1’ % from INR ‘b1’ bn in 2012 INR ‘b1’ b i 2012

Drivers

Drivers & i & Challenges

Technology Trends

Competitive p Landscape

Challenges

 Increase in the number of diabetics  Growing need for diabetes diagnosis  Increasing ageing population  Comprehensive health insurance policies covering diabetics

 Test results can be influenced  High price of tests  Racial and ethnic variations in HbA1c results

 Latex Enhanced Immunoassay Method  Enzymatic HbA1c Assay Method  High‐Performance Liquid Chromatography Method Major Diagnostic Service Providers

Apollo Health and Life Styles Ltd.

Dr. Lal Path Labs Pvt. Ltd.

Metropolis Healthcare Ltd.

Major HbA1c Analyzer and Major HbA1c Analyzer and Reagent Manufacturers

Abbott India Ltd.

Bio‐Rad Laboratories Bio Rad Laboratories (India) Pvt. Ltd.

Trivitron Healthcare Trivitron Healthcare Pvt. Ltd.

HbA1c TESTING MARKET IN INDIA 2013.PPT

• Economic Indicators • Introduction • Market Overview Testing Testing HbA1c g • Drivers & Challenges • Diabetes Disease Trends • Technology Trends • Competitive Landscape • Strategic Recommendations • Appendix HbA1c TESTING MARKET IN INDIA 2013.PPT

Healthcare system in India requires a larger public outlay due to huge population base Healthcare Industry Overview

Healthcare Market Size & Growth

• According to “World Health Statistics 2011 Report, India”, healthcare comprised u% of India’s GDP in 2008  Public and private expenditure on health as percentage of GDP was v% and w% respectively

• Favorable demographics, increase in awareness levels and better medical care are some factors that are driving the healthcare sector in India • Segment 1 comprise the largest segment of overall healthcare market, followed by pharmacy, medical equipment, diagnostics and healthcare IT • Gradual penetration of health insurance is stepping up affordability of health services through increased demand for preventive and curative healthcare services • Superior quality healthcare, coupled with low treatment costs in comparison to other countries, is b benefitting Indian medical tourism, thereby driving the fitti I di di l t i th b d i i th Indian healthcare market  Treatment for major surgeries in India costs approximately 20% of that in developed countries

INR bn 8,000 ,

x% %

6,000

20‐‐

20‐‐e

4,000

2,000 0

20‐‐e

Healthcare Market‐ Segmentation

Segment 1 y% p% s%

Segment 3 Segment 4 Segment 5

HbA1c TESTING MARKET IN INDIA 2013.PPT

Segment 2

Segment 6

Diagnostics labs are witnessing healthy growth on the backdrop of huge expansion & improvement in technology Diagnostic Service – Market Overview • Enhanced physician knowledge, coupled with better technology in the field of diagnostics, is causing the I di Indian market to grow k • Rise in lifestyle diseases has caused medical diagnostics market to grow immensely in tier II and tier III cities • Diagnostic market is characterized by the presence of large number of labs in the unorganized sector that are large number of labs in the unorganized sector that are not accredited Diagnostic Service Market‐ Split

Diagnostic Service Market Size & Growth INR bn 150 100

x% a

20‐‐

20‐‐e

50 0

20‐‐e

Diagnostic Service Market‐ Segmentation

n% q% India has more than u ‘000 labs

m% Category 1

Segment 1

Category 2

HbA1c TESTING MARKET IN INDIA 2013.PPT

Segment 2

Rising diabetic population of India will ensure steady growth of HbA1c testing HbA1c – Market Overview • HbA1c market in India is expected to reach INR h1 bn in 20‐‐, growing at a CAGR of x1% from INR a1 bn in 20‐‐ • HbA1c tests can be offered exclusively or in packages with other tests by the diagnostic service providers • Technology ‘A’ is currently the most common method adopted for conducting HbA1c tests in India • PoCT for HbA1c testing at the household level is not available in the domestic market and hence, the laboratories and hospitals offering HbA1c tests hold 100% market share • There is a growing level of awareness among the diabetic patient population of India about HbA1c testing which is leading them to take the test independently which in turn will suitably drive the HbA1c testing market in India  Approximately u%‐v% of the HbA1c test takers come without the doctor’s recommendation

HbA1c Market Size & Growth

HbA1c Tests Conducted Annually

INR bn

x1%

6 4

x2%

15 10

20‐‐

20‐‐e

2 0

20‐‐

20‐‐e

HbA1c TESTING MARKET IN INDIA 2013.PPT

Drivers & Challenges – Summary

Challenges Drivers

Test results can be influenced

Increase in the number of diabetics

High price of tests

Growing need for diabetes diagnosis

Racial and ethnic variations in HbA1c test results

Increasing ageing population Comprehensive health insurance policies covering diabetics

HbA1c TESTING MARKET IN INDIA 2013.PPT

Rapidly growing pool of diabetic patients in the country will result in a continuous increase in the number of HbA1c tests Increase in the number of diabetics

Impact

• India is the second largest diabetic pool in the world, after China • Rapid urbanization and industrialization have led to lifestyle related changes that has increased the risk factors associated with diabetes  High incidence of diabetes in India is mainly because of people’s sedentary lifestyles, lack of physical activity, obesity, stress and consumption of food rich in sugar, fat and calories  From one generation to the next, the prevalence of diabetes has increased six fold  Usually, u Usually, u‐v% v% of diabetes cases are of type II and w of diabetes cases are of type II and w‐z% z% are of type I are of type I

• Number of diabetic patients is expected to increase at an exponential rate through the years which will result in a steady increase in the demand for HbA1c tests Increase in Diabetes Patients – India mn

80 60

20‐‐

20‐‐e

40 20 0 Note: The estimation covers diabetes in adult population between 20 years to 79 years

HbA1c TESTING MARKET IN INDIA 2013.PPT

Diabetes Disease Trends– Summary Diabetic Retinopathy

Glaucoma

Cataract

Diabetes Disease ` Trends

Diabetic Neuropathy

Cardiovascular Disease

Chronic Kidney Diseases

Foot Ulcers 9

Diabetic retinopathy has been recently declared to be the 6th most prevalent cause of blindness Diabetic Retinopathy is a common diabetic eye disease that leads to blindness to both eyes caused by changes in the blood vessels of the retina • People with diabetes (both type I and type II) are at risk and hence it is recommended to get a comprehensive dilated eye exam at least once a year • During pregnancy, diabetic retinopathy may be a problem for women with diabetes Common Symptoms Common Symptoms Blood vessels may swell and leak fluid Abnormal new blood vessels grow on the surface of the retina

Diabetic Retinopathy – Prevalence among Diabetics by Age mn

p‐q years

30 20 10

t‐u years

r‐s years

c6 a6

c7 a7

20‐‐

20‐‐e

HbA1c TESTING MARKET IN INDIA 2013.PPT

20‐‐e

20‐‐e 10

Technology Trends (1/3) : Technology 1 Method

Latex Enhanced Immunoassay Method

• The technology is also known as ‘Technology X’ • This method for HbA1c testing is based on interactions between Particle 1 and Particle 2 • The cross‐link reaction results in changes in solution turbidity which is proportional to the amount of antigen present in samples

Method Analysis • The method has an advantage over ‘Technology A’ method in its application on general chemistry analyzer • However, the method lacks in precision standards and use of Particle Y often causes cuvette contamination that H h h dl k i ii d d d fP i l Y f i i h results in deterioration of assay precision

HbA1c TESTING MARKET IN INDIA 2013.PPT

Market Competition – Porter’s Five Forces Analysis Impact

Threat of New Entrants

Impact

Bargaining Power of Suppliers

Impact

Competitive Rivalry

Impact

Threat of Substitutes

HbA1c TESTING MARKET IN INDIA 2013.PPT

Bargaining Power of Buyers

Impact

Competitive Benchmarking (1/4) Key Ratios of Major Companies – Operational Basis (FY 2012) (1/3) Gross Margin

Operating Margin

Net Margin

500

a1 0

d2 c2

f2 f3

‐500

‐1,000

Company 1

Company 2

Company 3

Company 4

Company 5

Company 6

• Company 1 recorded the highest gross margin, followed by Company 3 and Company 5 • Company 1 and Company 5 recorded similar operating margins with the former being slightly better than the latter • Company 6 and Company 3 recorded negative operating margin and net margin

Note: Cost of Goods Sold for Dr Lal Pathlabs, S Serum and Thyrocare is N.A. HbA1c TESTING MARKET IN INDIA 2013.PPT

Private: Domestic Company – Company 1 (1/5) Company Information

Offices and Centres – India

Corporate Address

Tel No. Fax No. Website Year of Incorporation Hyderabad

Products and Services Category

Head Office

Products/Services

Consultations

Key People Diagnostics

N Name

D i ti Designation

Heath Check

Person 1

CEO

Others

Person 2

Senior VP – Marketing

Person 3

Head ‐ Operations and retails sales

HbA1c TESTING MARKET IN INDIA 2013.PPT

Private: Domestic Company – Company 1 (2/5) Shareholders of the Company as on 20/06/2012 Name

No. of Shares held

Ownership Structure Bodies Corporate

100%

Total Note: Ownership structure corresponds to Date of AGM:20/06/2012

HbA1c TESTING MARKET IN INDIA 2013.PPT

Private: Domestic Company – Company 1 (3/5) Financial Snapshot i i lS h Total Income

K Key Ratios i Net Profit/Loss

INR mn 400

INR mn c2

300

0 b2

200 100 0

Particulars

d1 c1

2009

2010

‐5 ‐10 ‐15

2011

2012

Financial Summary

2010

2009

Operating Margin Net Margin Profit Before Tax Margin Return on Equity Return on Capital Employed Return on Working Capital Return on Assets Return on Fixed Assets

Cost Ratios Operating costs (% of Sales) Administration costs (% of Sales) ( ) Interest costs (% of Sales)

Liquidity Ratios

• The company reported total Income of INR XX mn in FY 20XX, registering an increase of X per cent over FY 20YY

Leverage Ratios

• The company reported debt to equity ratio of X.XX in FY 20XX, a decrease of X.X per cent over FY 20YY

2011

Profitability Ratios

• The company incurred a net profit of INR X mn in FY 20XX, as compared to net profit of INR Y mn in FY 20YY

• The company earned an operating margin of X.X per cent in FY 20XX, an increase of X.X percentage points over FY 20YY

y‐o‐y change 2012 (2012‐11)

Current Ratio Cash Ratio Debt to Equity Ratio D bt t C it l R ti Debt to Capital Ratio Interest Coverage Ratio

Efficiency Ratios Fixed Asset Turnover Asset Turnover Current Asset Turnover Working Capital Turnover Capital Employed Turnover Improved

HbA1c TESTING MARKET IN INDIA 2013.PPT

Decline

Private: Domestic Company – Company 1 (4/5) Business Highlights Description

News

Overview

• Company 1 operates as a wholly owned subsidiary of the Company A Company 1 operates as a wholly owned subsidiary of the Company A • It has established a large network of ‘Brand A’ across India • ‘Brand A’ functions as an integrated model providing facilities for Specialist Consultation, Diagnostics, Preventive Health Checks and 24‐hour Pharmacy

Diagnostics

k f h ‘ ’ li i i l ll di i l di dh d h • Has a network of more than ‘u’ clinics operational all over India, including Andhra Pradesh, Assam, Bihar, Delhi, Gujarat, Haryana, Karnataka, Kerala, Madhya Pradesh, Orissa, Srinagar, Tamil Nadu, Uttar Pradesh and West Bengal • It has established state‐of‐the‐art Labs, which are equipped to handle diagnostics and imaging services

HbA1c

• The HbA1c test is included in Product 1, which also includes Blood Sugar fasting & Post Prandial, Lipid Profile, Urine Routine, S Creatinine, BP –Ht‐Wt‐ BMI, Diet Counselling and Consultation with Diabetologist

Future Plans

• Company 1 has plans of setting up similar clinics overseas in the near future

HbA1c TESTING MARKET IN INDIA 2013.PPT

Private: Domestic Company – Company 1 – SWOT Analysis (5/5)

HbA1c TESTING MARKET IN INDIA 2013.PPT

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