infrastructure trend monitor india 2009

8/6/2019 Infrastructure Trend Monitor India 2009

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ADVISORY

GlobalInfrastructurTrendMonitorIndian Healthcare Edition:

Outlook 20092013

The Global Infrastructure:

Trend Monitoris a series

of publications allowing

infrastructure investments

to be compared across

geographies. In this thirdedition, we analyze the

medium term expenditure

on healthcare infrastructure

across India. Our aim is to

help improve the quality of

debate in identifying the

geographically attractive

markets in Indias healthcare

infrastructure.


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ii Global Infrastructure: Trend Monitor Indian Healthcare Edition

Foreword

2009 KPMG International. KPMG International provides no client services and is a Swiss cooperative with which the independent member firms of the KPMG network are affiliated. All rights reserved. 20866NSS

India saw rapid economic growth from 2003 to the start of the

global economic slowdown in 2008.

Among the largest economies in the world, its growth rate was second

only to that of China. However, few would disagree that Indias past

expenditure on infrastructure has fallen short of demand and, as a

result, it may be constraining current and future economic growth.

With a population of over a billion, the coordination and strategic

choices concerning expenditures on healthcare infrastructures are of

vital importance. These are especially challenging given the complex

migration patterns typically seen within emerging economies. It

remains to be seen how the policies currently in place will shape the

Indian healthcare infrastructure market in the future.

Private healthcare capacity in India is already significant. Given the

anticipated incentives to be offered by the government, including

the use of user fee financed provision and the opportunities for

Public Private Partnerships (PPP), we believe that the private sector

market will attract further foreign investment.

This third edition of the Global Infrastructure: Trend Monitor

presents forecasts for current and future healthcare infrastructure

expenditure across India. By this, we aim to help improve the quality

of the debate on the size and geographic location of opportunities in

India. We hope you enjoy this publication and find our commentary

on this exciting market informative.

Kai RintalaHead of Infrastructure Intelligence

KPMG in the UK

Pradip KanakiaHead of Markets

KPMG in India


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Global Infrastructure: Trend Monitor Indian Healthcare Edition iii

Contents1. Foreword

2. Key findings

3. Important notes

4. Model outputs

5. Insight

6. Method

7. Appendix



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1 Global Infrastructure: Trend Monitor Indian Healthcare Edition

Key Findings

Insights

The Indian healthcare industry is estimated to double in value by 2012 and morethan quadruple by 20171.The main factors propelling this growth are rising income

levels, changing demographics and illness profiles, with a shift from chronic to

lifestyle diseases. This is likely to result in considerable infrastructure challenges

and opportunities.

Webelievethereisgrowingappreciationfortheroleprivateinvolvementmayhave in meeting public demand, and government are looking into the use of PPP

models to help improve infrastructure and healthcare provision. The government

is also exploring setting up state funded healthcare insurance schemes to support

healthcare delivery for the poorer sections of the population. For investment to be

effective, the provision of healthcare infrastructure and insurance should be strategically coordinated.

Unlikeindevelopedmarkets,wherethereisafocusongeneratingspecializedhealthcare facilities and innovations to drive improvements in health services,

the Indian healthcare delivery model (including use of PPP) has to date only had

success in the provision of more healthcare services in relatively small segments.

One of the major challenges remains the need to develop scalable and sustainable

healthcare delivery models to deal with Indias diversity and changing socio

economic population profiles. The major innovation in Indian healthcare delivery

models should be focused on developing and delivering low cost, affordable, basic

healthcare services.

Model Outputs

Basedontheoutputsofoureconometricmodelexpenditureonhealthcareinfrastructure across the Indian states is projected to grow by an average of 5.8

percent per annum between 2009 and 2013, taking the total expenditure in 2013 to

US$14.2 billion.

Ofthe32statesconsidered,thesixstatesofMaharashtra,Rajasthan,WestBengal, Uttar Pradesh, Tamil Nadu and Andra Pradesh are forecast to represent

approximately 50 percent of the expenditures for the 2009-2013 period.

Ofthelargerstates,expenditureonhealthcareinfrastructureisexpectedtogrowthefastestinKerala,Rajasthan,andWestBengal.

1 KPMG/Confederation of Indian Industry (2008) Health Insurance Inc.: The Road Ahead



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Global Infrastructure: Trend Monitor Indian Healthcare Edition 2

Notes

1) This publication distinguishes between

model output oriented commentary, which

is based on the data collated from stated

sources, and insight-oriented commentary,

which is based on the views among KPMG

firms professionals. The limitation of the

former is that it does not attempt to capture

market developments, new initiatives or

shifts in policy.

2) The 2009 2013 data are modeled using the

latest figures available at the time of writing.

3) All figures in this publication are in 2006

U.S. dollars based on exchange rates as

of June 1 to facilitate direct comparisons

and they represent all investment, by both

public and private sector, in healthcare

infrastructure which may include activities

such as medical research, drug production or

primary care services.

4) Annual growth rates over the period2009-2013 are in real terms, i.e. they exclude

the impact of inflation.

Objective

The aim of the Trend Monitor is to help

stimulate informed debate of global

infrastructure opportunities by providing

Important Notes

observations and on the ground market insight

underpinned by econometric modeling.

Existing publications tend to focus on the

short-term, identifying opportunities that are about

to come to market, or the long term, estimating

the size of the required investment over decades

to come. The Trend Monitor is purposefully

positioned between the two in order to present

a medium term (2009 2013) view of market

potential.

Our analysis builds on what we believe to be

the most consistent data sources, and relies on

only a small number of explicit assumptions. The

publication also leverages the local specialization

of professionals in KPMG s Indian member firm

to seek to present a better informed view of the

future.

Definitions and classifications

Size and prospects of individual states:

Largeandgrowingfast

stateswhere2006

expenditure is above $500m and investment

is expected to expand relatively rapidly, with

average projected annual growth rates of over

6.5 percent in the period 2009-2013.

Largeandgrowingslowly stateswhere2006 expenditure is above $500m though

investment is expected to expand relatively

slowly, with average projected annual

growth rates below 6.5 percent in the period

2009-2013.

Smallandgrowingfast stateswhere2006 expenditure is below $500m while


rapidly, with average projected annual

growth rates of more than 6.5 percent in the

period 2009-2013.

Smallandgrowingslowly stateswhere2006 expenditure is below $500m and


slowly, with average projected annual

growth rates below 6.5 percent in the period

2009-2013.

The term state is used throughout this

publication as a reference to various areas of

the respective federal structures of India. The

Trend Monitor is analyzed with all 28 states

and four of the seven union territories of India

as data for the least populous union territoriesof Dadra and Nagar Haveli; Daman and Diu;

andLakshadweepwereunavailable. Method

A detailed overview of the research and

analysis method applied can be found in the

Method section of this report.



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1

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2223

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32

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2 3

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11

12

1314

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17

18

19

20

21

2223

24

25

26

27

28

29

30

31

32


India: expenditure on healthcare infrastructure in 2006 by state (percentage of total)

1.1. Maharashtra 12.0%2.2. Rajasthan 8.2%3.3. Uttar Pradesh 8.1%4.4. West Bengal 7.9%5.5. Tamil Nadu 7.5%6.6. Andhra Pradesh 7.0%7.7. Kerala 6.7%8.8. Gujarat 6.2%9.9. Karnataka 5.2%10.10. Haryana 4.8%11.11. Delhi 4.3%12.12. Madhya Pradesh 3.5%13.13. Punjab 2.7%14.14. Himachal Pradesh 2.2%15.15. Bihar 1.8%16.16. Orissa 1.6%17.17. Assam 1.6%18.18. Jharkhand 1.6%19.19. Jammu and Kashmir 1.6%20.20. Uttranchal 1.2%21.21. Chattisgarh 0.9%22.22. Manipur 0.8%23.23. Tripura 0.5%24.24. Nagaland 0.4%25.25. Chandigarh 0.3%26.26. Arunachal Pradesh 0.3%27.27. Meghalaya 0.3%28.28. Goa 0.2%29.29. Andaman and Nicobar 0.2%

Islands

30.30. Mizoram 0.2%31.31. Sikkim 0.1%32.32. Puducherry 0.1%

1

2 3

4

5

6

7

8

9

1011

12

1314

15

16

17

18

19

20

21

2223

24

25

26

27

2829

30

31

32

Key:Large and growing fastLarge and growing slowlySmall and growing fastSmall and growing slowly

Analysis: KPMG International, refer to Method section of this report



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India: expenditure on healthcare infrastructure in 2006 (US$ m illion)

India: expenditure on healthcare infrastructure in 2006 per person (US$ )

US$

US$m

AndamanandNicobarIslands

AndhraPradesh

Arunac

halPradesh


AndhraPradesh

Assam

ArunachalPradesh

Bihar

Assam

Chandigarh

Bihar

Chattisgarh

Chandigarh

Delhi

Chattisgarh

Goa

Delhi

Gujarat

Goa

Haryana

Gujarat

Himac

halPradesh

Haryana

Jammua

ndKashmir

HimachalPradesh

Jharkhand

JammuandKashmir

Karnataka

Jharkhand

Karnataka

Kerala

Kerala

Madh

yaPradesh

MadhyaPradesh

M

aharashtra

Maharashtra

Manipur

Manipur

Meghalaya

Meghalaya

Mizoram

Mizoram

Nagaland

Nagaland

Orissa

Orissa

Puducherry

Puducherry

Punjab

Punjab

Rajasthan

Rajasthan

Sikkim

Sikkim

TamilNadu

TamilNadu

Tripura

Tripura

UttarPradesh

UttarPradesh

Uttranchal

Uttranchal


India: expenditure on healthcare infrastructure in 2006 (US$ million)

1,400

1,200

1,000

800

600

400

200

0


India: annual expenditure on healthcare infrastructure in 2006 per person (US$)

40

35

30

25

20

15

10

5

0



W

estBengal

WestBengal


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India: forecast average annual growth rate in healthcare infrastructure expenditure 2009-2013 (perce

India: forecast cumulative expenditure on healthcare infrastructure in 20092013 (US$ billion)

US$bn


India: forecast average annual growth rate in healthcare infrastructureexpenditure 2009- 2013 (percent)

9%

8%

7%

6%

5%

4%

3%

2%

1%

0%



8

7

6

5

4

3

2

1

0


India: forecast cumulative expenditure on healthcare infrastructurein 20092013 (US$ billion)

Andaman

andNicobarIslands

AndhraPradesh

ArunachalPradesh

Assam

Bihar

Chandigarh

Chattisgarh

Delhi

Goa

Gujarat

Haryana

HimachalPradesh

J

ammuandKashmir

Jharkhand

Karnataka

Kerala

MadhyaPradesh

Maharashtra

Manipur

Meghalaya

Mizoram

Nagaland

Orissa

Puducherry

Punjab

Rajasthan

Sikkim

TamilNadu

Tripura

UttarPradesh


AndhraPradesh

ArunachalPradesh

Assam

Bihar

Chandigarh

Chattisgarh

Delhi

Goa

Gujarat

Haryana

H

imachalPradesh

Jam

muandKashmir

Jharkhand

Karnataka

Kerala

MadhyaPradesh

Maharashtra

Manipur

Meghalaya

Mizoram

Nagaland

Orissa

Puducherry

Punjab

Rajasthan

Sikkim

TamilNadu

Tripura

UttarPradesh

Uttranchal

Uttranchal

WestBengal

WestBengal


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India: forecast cumulative expenditure on healthcare infrastructure in 20092013 per person (US$)

India: ratio of forecast cum ulative expenditure on he althcare 2009 2 013 to the forecast averag e fo

Ratio


India: forecast cumulative expenditure on healthcare infrastructure in20092013 per person (US$)

300

250

200

150

100

50

0

India: ratio of forecast cumulative expenditure on healthcare2009 2013 to the forecast average for all states



US$

4.0

3.5

3.0

2.5

2.0

1.5

1.0

0.5

0.0

3

.66

Maharashtra

Rajasthan

2.6

6


2.6

2

WestBengal

AndhraPra

desh

UttarPradesh

2.3

9

ArunachalPra

desh

TamilNadu

2.3

2

Assam

AndhraPradesh

2.3

1

Bihar

Kerala

2.2

0

Chand

igarh

Gujarat

1.9

1

Chattis

garh

Karnataka

1.6

9

Delhi

1.5

9

Haryana

Goa

Delhi

1.3

3

Gu

jarat

1.1

0

MadhyaPradesh

Haryana

Punjab

0.8

5

HimachalPra

desh

HimachalPradesh

0.7

8

JammuandKas

hmir

Bihar

0.5

7

Jhark

hand

JammuandKashmir

0.5

4

Karnataka

0.4

8

Orissa

K

erala

Assam

0.4

8

MadhyaPra

desh

0.4

8

Jharkhand

Mahara

shtra

Uttranchal

0.4

1

Manipur

Chattisgarh

0.3

5

Meghalaya

Manipur

0.3

3

Mizoram

Tripura

0.2

0

Nagaland

Nagaland

0.1

4

O

rissa

Chandigarh

0.1

3

Puducherry

0.1

0

ArunachalPradesh

Punjab

Meghalaya

0.0

8

Rajas

than

0.0

7

Goa


0.0

6

Mizoram

0.0

5

Sikkim

0.0

5

Puducherry

0.0

3

Sikkim

TamilNadu

Tr

ipura

UttarPra

desh

Uttranchal

WestBengal


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Model Output

Total healthcare infrastructure

expenditure for 2013 is predicted to

reach $14.2 billion, a near 50 percent

increase on the 2006 total.

Of the 32 states, the six states of

Maharashtra,Rajasthan,WestBengal, Uttar Pradesh,Tamil Nadu and Andra

Pradesh represent just over 50 percent

of the total expenditure in 2006.

Maharashtra alone spent around 12

percent of the total expenditure at

approximately US$1.1 billion, yet the

state accommodates fewer than 10

percent of the overall population.

Twelve states spent less than

US$100million each in 2006, together

representing less than 4.5 percent

of total national expenditure and 3.6

percent of the population. Among

these the smallest expenditure

states were Goa, Andaman and

Nicobar Islands, Mizoram, Sikkim, and

Puducherry.

The state of Uttar Pradesh was only

the third largest in terms of absolute

expenditure in 2006 but hosts over 16

percent of the population.

The states of Himachal Pradesh,

Manipur and Andaman and Nicobar

Islands were the only states to spend

over US$30 per capita on healthcare

infrastructure in 2006, with about

two thirds of the remaining states

spending less than US$15, including

the 6 largest absolute expenditure

states.

The state with the highest per capita

healthcare expenditure for 2006 is the

Andaman and Nicobar Islands at $36,

while the state with lowest is Bihar at

just $1.90, revealing uneven spending

on healthcare infrastructure.

The states of Manipur and Nagaland

are expected to grow the fastest

through the medium term, each

projected to have average annual

growth rates over 8 percent against

an overall national rate of 5.8 percent.

Of the larger states, expenditure on

healthcare infrastructure is expected

togrowthefastestinRajasthanand West Bengal.

Maharashtra maintains its dominance

as the state with the highest

cumulative healthcare infrastructure

expenditure over the forecast period,

with a projected spend at over US$7.3

billion. Only the two other states

ofRajasthanandWestBengalare projected to witness cumulativehealthcare expenditures of over US$5

billion from 2009 to 2013.



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Insight

Against a world average of around fourhospital beds per 1000 population,

India lags behind at just over 0.72. This

is a clear indication of the insufficiency

of healthcare infrastructure in India.

The Indian healthcare industry isestimated to double in value by 2012

and more than quadruple by 2017. The

main factors propelling this growth

are rising income levels, changing

demographics and illness profiles

with a shift from chronic to lifestyle

diseases. This is likely to result in

considerable infrastructure challenges

and opportunities.

Indian healthcare infrastructure overthe last decade has not kept pace with

growth in population3. The available

capacity has increased but not in linewith rising demand. This is likely to be

in part due to lack of capacity building

in semi urban and rural areas.

The Indian healthcare system iscontrolled by respective state

authorities, presenting an opportunity

to improve responsiveness to

healthcare needs at a more local

level. Our analysis suggests that

there is uneven focus on healthcare

infrastructure in India. The variety

of organizational structures and

processes in healthcare delivery may

result in greater inequalities between

geographical areas.

Government has a growing agendato deal with the issues of urban

healthcare infrastructure as rural to

urban migration has significantly

increased demand for these services.

The healthcare sector in India isundergoing considerable reform

prompted by the continuing phase

of rapid economic growth. Emerging

markets, such as diagnostic chains

and medical device manufacturers,

are attracting increasing amounts ofinvestment.

We believe there is a growingappreciation for the role private

involvement may have in meeting

public demand and government is

piloting the use of PPP models to help

improve infrastructure and healthcare

provision.

2 KPMG/Confederation of Indian Industry (2008) Health Insurance Inc.: The Road Ahead

3 ibid



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Method

This publication draws on data from

sources named below and insights from

professionals in KPMGs Indian member

firm, in order to present both model

outputs and commentary on the Indian

healthcare infrastructure market.

Information on market size has not

been readily available and as such it is

produced using an econometric model,

utilizing data sourced externally and a

limited number of explicit assumptions.

The dataset4 of our econometric model

is presented in the Appendix.

Our forecasts of the future size of

the healthcare infrastructure markets

across India encompass expenditure at

different levels of government as well

as the private sector on building and

maintaining healthcare infrastructure

for uses such as medical research, drug

production or primary care services.

Our modeling relies on past trends to

project the future and does not attempt to

capture the undercurrents of political risk,

financial and other market fluctuations,

population growth, or sudden spikes in

infrastructure activity.

The process of data gathering and

presentation was as follows:

Constructionoutputdata(2000-2006)for 32 Indian states was obtained fromIndian National Income Accounts at

factor cost and converted to market

prices.

Theconstructionoutputdatawasconverted to US$ as at June 1, 2000

exchanged rate and rebased in 2006

prices using a price index from U.S.

Bureau of Economic Analysis.

Constructionoutputforeachstate was multiplied by 0.66 to arrive

at healthcare construction output(including new build as well as repair

and maintenance). This ratio is based

on the average long-run ratio in UK

Construction Statistics Annual (UK

Department of Business Enterprise

andRegulatoryReform). Healthcareconstructionoutput

was multiplied by 3.6 to include the

expenditure on design and professional

services, land, plant and materials.

This ratio was derived from the UK

Construction Statistics Annual and UK

Quarterly Capital Expenditure Inquiry

(UK Office of National Statistics).

Theforward-lookingexpendituresup to 2013 were estimated by linear

extension of the line of best fit for the

historical data.

Thepercapitaexpenditureswherecreated using 2006 population sizes

(www.india.gov.in) except for Jammu

and Kashmir (2005), Nagaland (1997),

West Bengal (2004), and Puducherry

(undated) due to availability of data.

The population sizes were considered

to remain unchanged in the forecast.

It should be noted that the numbers

for India are not directly comparable

with those presented in other editions

of Global Infrastructure: Trend Monitor

as different sources and methods have

been used in producing them.

4 The datasets have been produced in collaboration with Dr Stephen Gruneberg.



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Appendix



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Appendix Historical and forecast future healthcare infrastructure expenditure in India (in US$ millions at 2006 prices)

State 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Andaman and Nicobar

Islands

Andhra Pradesh

Arunachal Pradesh

Assam

Bihar

Chandigarh

Chattisgarh

Delhi

Goa

Gujarat

Haryana

Himachal Pradesh

Jammu and Kashmir

Jharkhand

Karnataka

Kerala

Madhya Pradesh

Maharashtra

Manipur

MeghalayaMizoram

Nagaland

Orissa

Puducherry

Punjab

RajasthanSikkim

Tamil Nadu

Tripura

Uttar Pradesh

Uttranchal

West Bengal

7 7 9 10 13 13 15 17 18 20 21 23 24 26

402 408 447 493 547 603 672 759 774 825 877 928 980 1,031

17 19 25 22 24 29 30 33 35 37 39 41 44 46

109 114 132 119 146 148 154 160 169 176 183 191 198 206

143 144 140 160 145 173 171 217 201 210 218 227 236 245

11 12 23 18 22 31 33 40 42 46 50 54 58 62

37 32 43 46 54 76 90 108 109 120 130 141 152 162

248 287 280 314 334 365 408 443 455 482 509 535 562 589

10 10 11 12 15 16 19 21 22 23 25 27 28 30

386 380 383 432 474 532 588 633 651 689 728 767 806 844

222 273 279 320 342 392 455 505 523 562 600 639 678 716

130 131 142 161 161 184 210 278 258 277 295 314 332 351

69 76 90 102 105 131 150 169 176 190 204 218 233 247

105 100 114 112 127 141 152 161 167 176 185 194 203 212

297 307 350 380 405 443 499 550 567 603 640 676 712 748

370 339 324 397 483 558 637 695 720 774 828 882 936 991

207 230 239 248 268 307 336 365 375 397 419 441 464 486

771 631 678 748 815 1,018 1,149 1,195 1,232 1,311 1,390 1,469 1,548 1,627

24 32 39 44 56 71 79 100 103 113 123 134 144 155

20 21 22 22 24 25 26 27 28 29 30 31 32 33

7 7 9 11 12 13 14 16 17 19 20 21 23 24

10 13 17 19 24 30 36 42 44 48 53 57 62 66

113 125 125 133 139 156 154 165 171 178 185 192 199 207

11 11 11 12 12 12 12 12 13 13 13 13 13 14

164 175 188 196 205 230 260 288 289 306 323 340 357 374

416 386 434 470 590 569 781 866 867 934 1,001 1,068 1,135 1,203

5 6 8 9 11 12 14 16 17 19 20 22 23 25

481 506 529 572 611 666 714 783 801 844 887 929 972 1,015

20 27 33 37 43 45 51 62 64 70 75 80 86 91

503 530 554 558 613 672 771 805 825 869 914 958 1,002 1,047

58 61 82 88 93 99 114 131 136 146 156 166 176 186

370 389 424 455 554 608 760 819 850 917 985 1,052 1,119 1,187



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Designed and produced by KPMG LLP (U.S.)s National Design Proposal & Production Services

Publication name: Infrastructure Trend MonitorPublication number: 20866NSSPublication date: July 2009

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