Lotus Eye Hospital & Institute Ltd Management Discussions.
Industry Structure and Development:
The Eye Care Health Industryis subject to witness a substantial growth in the upcoming years due to the rising occurrence of eye disorders such as myopia, hyperopia, astigmatism and presbyopia. The recent technological advancement in the healthcare sector is considered as a key factor for the development of the innovative products, thus influencing market growth. Other factors responsible for the growth of eye care product market are rise in disposable income and rise in health consciousness among general population, and increase in adoption of vision care products. In addition, current lifestyle changes such as increasing use of computers, television are leading to increasing number of patient pool that are suffering from various eye diseases. Increasing adoption of promotional campaign and implementation of aggressive market strategies by the major industry players in order to generate additional revenue are expected to fuel market growth in the upcoming years. however, growing competition among market players is leading to the presence of counterfeit products in the market, thus hampering market growth to certain extend.
The global vision care market is expected to reach around $74 billion, growing at a CAGR of more than 3% during the forecast. The global vision care market is driven by the increasing number of vendors collaborating with healthcare providers to promote and encourage customers to use the latest eye care products. The exponential growth in North America and the APAC region is likely to drive the demand for eye care products in the market. New generation eyecare products feature innovative material. Nowadays, instead of using conventional plastic material, the new-age contact lenses are made up of high-quality material such as silicone hydrogel, which offers better oxygen breathability. These types of advancements are leading toward increased demand for eyeglasses and contact lenses globally.
having said that, there was a high consolidation of the healthcare industry in 2018, due to stringent regulatory environment, making it difficult for the small players to stay afloat in a highly competitive market. The Kerala floods of August, 2018 tragedy cut off our major earning revenues in that area bringing down the overall performance , as reflected in the financial results.
To improve and cope with the same we are increasingly focusing on pursuing inorganic growth strategies to expand their presence, enhance product portfolios, and improve expertise in the global vision care market. We are also looking forward to developing new subsidiaries, signing new distribution/sales partnerships with regional vendors, and increasing merger and acquisition activities to enhance geographical footprint and customer base worldwide.
Opportunities and Threats
The Indian healthcare sector is growing at a brisk pace due to its strengthening coverage, services and increasing expenditure by public as well as private players.
There is a significant scope for enhancing healthcare services considering that healthcare spending as a percentage of Gross Domestic Product (GDP) is rising, currently the GDP contribution stands at 5.25%, which is the highest amongst developing nations. Rural India, which accounts for over 70 per cent of the population, is set to emerge as a potential demand source.
The innovative trends that have insinuated their way into the Healthcare sector are:
Artificial Intelligence and Cloud, innovation in the healthcare is nothing new, but what have revolutionized is the intrusion of Artificial Intelligence into the healthcare sector, which has turned heads all over and has become the new route to success for the healthcare industry.
Need for Transparency, there has been an urgent need felt to include and interpolate more transparency in the working, adoption and disposal of the healthcare companies, the awareness and the need of knowledge amongst the consumers have enforced the law makers to develop and instigate laws that proclaim and bring forward more transparent way of working amongst the industry.
Increase in Competitive intensity due to new entrants, Increased cost of resources, discontinuation of leases, lower contribution by the Government etc. are some major threats associated to the healthcare industries.
Segment-wise or product-wise performance
Your Company operates in only one segment i.e. Eye Care and Related Activities.
The Indian healthcare industry is predicted at US$ 372 Billion by 2022. Economic development and increasing health awareness has grown to $ 81.3 billion and is projected to grow 17% by 2020. Indias Ophthalmic Market is expected to total $US 1.9 Billion by 2021. Cataract products are the largest ophthalmic surgical submarket in India. Revenues from cataract surgery in India are expected to generate nearly one-fourth of the total ophthalmic market revenues in the country. Market Scope estimates that Indias cataract market will total US$533.7 million by 2021, growing at a CAGR of 9.3 percent.
Retinal disease is the second-leading cause of blindness in India, fueled in part by a high incidence of myopia. Retinal products are the second-largest ophthalmic revenue market in India due to the importance of anti-VEGFs in treatment. Market Scope expects Indias retinal disease market to fluctuate over the next five years as new biosimilar anti-VEGFs enter the market, but we look for revenues to remain relatively flat, totaling US$232 million in 2021.
Glaucoma, the third-largest ophthalmic submarket in India, is mainly a pharmaceutical market, and the main driver of revenue growth will be better access to glaucoma medicines. Market Scope forecasts that Indias glaucoma market will increase to uS$296.5 million by 2021 at a CAGR of 10.8 percent.
Risk and Concerns
The competition from the un-organized sector would be met by delivering quality eye care services at par with international standards which the un-organized sector lacks in view of constraints in investment to create a quality eye hospital.
Because of increased opportunities, many private players are entering into this sector. Your Company can counter this challenge by providing focused eye care delivery and by deploying the state of the art equipments backed by panel of expert Doctors.
i. Shortage of skilled manpower:
increasing demand for health care services combined with the aggressive expansion by the indian private health care players is expected to significantly increase the demand for medical professionals. Similarly there is a shortage of medical and para-medical staff. We have a talented and skilled manpower in terms of Doctors, Nurses and paramedical staff. We continue to attract talented and skilled medical professionals.
The health care sector is a capital intensive sector and need significant funding to grow.
i. Regulatory Risk
The evolution of the global regulatory environment has resulted in increased regulatory scrutiny that has raised the minimum standards to be maintained. This signifies the alignment of corporate performance objectives, while ensuring compliance with regulatory requirements.
ii. Increased cost of resources
Failure to acquire resources at fair and reasonable rates and increase in operating expenses may impact the Companys growth and financials.
Internal control systems and their adequacy
Your company has established internal control systems to ensure optimum use in protecting its resources and ensuring adherence to its policies, procedures and statutes. There is proper and adequate system of internal control for the company and its branches. The company has appointed Internal Auditor to review the adequacy of the internal control system, procedures and policies. The internal auditor evaluates the adequacy of the internal control systems by testing the control mechanism and gives their recommendations to the management.
Discussion on financial performance with respect to operational performance
Financial performance with respect to operational performance has been dealt with in the Directors Report which should be treated as forming part of this Management Discussion and Analysis Report.
Material developments in Human Resources / Industrial Relations front, including number of people employed.
There were 360 number of permanent employees on the rolls of the Company as on 31.03.2018. During the year under review, your company enjoyed cordial relationship with the employees at all levels.
The Management Discussion and Analysis Report contains forward looking statements based upon the data available with the Company, assumptions with regard to global economic conditions, the government policies etc. Actual results might differ materially from those either expressed or implied.
1. IBEF, Healthcare Update
2. Market Research, reports, web articles, press & media reports and others
|For and on behalf of the Board|
|Place : Coimbatore||(Sd.) S.K. Sundaramoorthy|
|Date : 28th May, 2019||Chairman cum Managing Director|