Tejnaksh Healthcare Ltd Management Discussions.
Healthcare has become one of Indias largest sectors - both in terms of revenue and employment. Healthcare comprises hospitals, medical devices, clinical trials, outsourcing, telemedicine, medical tourism, health insurance and medical equipment. The Indian healthcare sector is growing at a brisk pace due to its strengthening coverage, services and increasing expenditure by public as well private players.
Indian healthcare delivery system is categorised into two major components - public and private. The Government, i.e. public healthcare system comprises limited secondary and tertiary care institutions in key cities and focuses on providing basic healthcare facilities in the form of primary healthcare centres (PHCs) in rural areas. The private sector provides majority of secondary, tertiary and quaternary care institutions with a major concentration in metros, tier I and tier II cities.
Indias competitive advantage lies in its large pool of well-trained medical professionals. India is also cost competitive compared to its peers in Asia and Western countries. The cost of surgery in India is about one-tenth of that in the US or Western Europe.
Healthcare industry in India comprises of hospitals, medical devices, clinical trials, outsourcing, telemedicine, medical tourism, health insurance and medical equipment. The industry is growing at a tremendous pace owing to its strengthening coverage, services and increasing expenditure by public as well private players.
The hospital industry in India, accounting for 80% of the total healthcare market, is witnessing a huge investor demand from both global as well as domestic investors. The hospital industry is expected to reach $ 132 bn by 2023 from $ 61.8 bn in 2017; growing at a CAGR of 16-17%.
The medical tourism industry in India is expected to double its value to become a $ 6 bn industry by 2018 from $ 3 bn in 2017. Medical tourist arrivals in India increased by over 50% to 200,000 in 2016 from 130,000 in 2015.
The diagnostics industry in India is currently valued at $ 4 bn. The share of organized sector is almost 25% in this segment (15% in labs and 10% in radiology).
The primary care industry is currently valued at $ 13 bn. The share of organized sector is practically negligible in this case.
India added 450 million people over the 25 years to 2016, a period during which the proportion of people living in poverty fell by half. This period of rising prosperity has been marked by a "dual disease burden", a continuing rise in communicable diseases and a spurt in non-communicable or "lifestyle" diseases, which accounted for half of all deaths in 2015, up from 42 percent in 2001-03.
The result of this disease burden on a growing and ageing population, economic development and increasing health awareness is a healthcare industry that has grown to $81.3 billion (Rs 54,086 lakh crore) in 2013 and is now projected to grow to 17 percent by 2020, up from 11 percent in 1990.
As that happens, in rural areas, mobile technology and improved data services are expected to play a critical role in improving healthcare delivery. Although limited, some companies are also investing in innovative services and creating lucrative yet low-cost digital and device solutions, an example of which would be GE Healthcares Lullaby Baby Warmer.
However, despite some advances, Indias healthcare sector must deal with a plethora of challenges.
With the lowest government spend and public spend, as a proportion of gross domestic product (GDP), and the lowest per capita health spend China spends 5.6 times more, the US 125 times more Indians met more than 62 percent of their health expenses from their personal savings, called "out-of-pocket expenses", compared with 13.4 percent in the US, 10 per cent in the UK and 54 per cent in China.
Indias existing infrastructure is just not enough to cater to the growing demand.
While the private sector dominates healthcare delivery across the country, a majority of the population living below the overty line (BPL) the ability to spend Rs 47 per day in urban areas, Rs 32 per day in rural areas continues to rely on the under-financed and short-staffed public sector for its healthcare needs, as a result of which these remain unmet.
Moreover, the majority of healthcare professionals happen to be concentrated in urban areas where consumers have higher paying power, leaving rural areas underserved.
India meets the global average in the number of physicians, but 74 percent of its doctors cater to a third of the urban population, or no more than 442 million people, according to a KPMG report.
India compares unfavourably with China and the US in the number of hospital beds and nurses. The country is 81 percent short of specialists at rural community health centres (CHCs), and the private sector accounts for 63 per cent of hospital beds, according to government health and family welfare statistics.
Some of the key roadblocks, then, for Indias healthcare industry:
Population: India has the worlds second-largest population, rising from 760 million in 1985 to an estimated 1.3 billion in 2015.
Infrastructure: The existing healthcare infrastructure is just not enough to meet the needs of the population. The central and state governments do offer universal healthcare services and free treatment and essential drugs at government hospitals. However, the hospitals are, as we said, understaffed and under-financed, forcing patients to visit private medical practitioners and hospitals.
Insurance: India has one of the lowest per capita healthcare expenditures in the world. Government contribution to insurance stands at roughly 32 percent, as opposed to 83.5 percent in the UK. The high out-of-pocket expenses in India stem from the fact that 76 percent of Indians do not have health insurance.
Rural-urban disparity: The rural healthcare infrastructure is three-tiered and includes a sub-center, primary health centre (PHC) and CHC. PHCs are short of more than 3,000 doctors, with the shortage up by 200 per cent over the last 10 years to 27,421.
Increase in number of private players in the market has led to increased competition
However number of hospitals is still low compared to the requirement so there is not much competition in the market.
Threat of New Entrants:
Big threat of new entrants in the industry
Number of players has increased considerably in recent times
Customers may go for public hospitals which are inexpensive
Customers might go for EHealth
Bargaining Power of Suppliers:
Bargaining power of suppliers in this industry is high because quality of products and timely delivery matter and there are less number of quality suppliers
Bargaining Power of Customers:
Bargaining power of customers is low because of trust and loyalty however increase in number of options has given customers some bargaining power
During the financial year 2018-19, your Company has achieved total turnover of Rs. 1538.24 Lakh and has incurred net profit of Rs. 269.20 Lakh. The Company has net worth of about Rs. 1308.80 Lakh as on March 31, 2019.
OUTLOOK FOR THE COMPANY:
With financial sustainability, care delivery, patient centricity, digital transformation, and regulatory compliance at the top of the agenda, health care sector leaders need to collaborate with all stakeholdersboth within the health care ecosystem and those in converging industriesas they look to shape the future of health care and establish a sustainable smart health community.
There is an exponential increase in the pace and scale with which digital health care innovations are emerging. Digital technologies are supporting health systems efforts to transition to new models of patient-centered care and helping them develop "smart health" approaches to increase access and affordability, improve quality, and lower costs. From lockchain, RPA, cloud, artificial intelligence (AI), and robotics, to internet of medical things (IoMT), digital and virtual reality are just some of the ways technology is disrupting health care. These technologies are helping with diagnosis and treatment, helping with speed, quality and accuracy, and improving the patient experience.
India is a land full of opportunities for players in the medical devices industry. Indias healthcare industry is one of the fastest growing sectors and it is expected to reach $280 billion by 2020. The country has also become one of the leading destinations for high-end diagnostic services with tremendous capital investment for advanced diagnostic facilities, thus catering to a greater proportion of population. Besides, Indian medical service consumers have become more conscious towards their healthcare upkeep.
Indian healthcare sector is much diversified and is full of opportunities in every segment which includes providers, payers and medical technology. With the increase in the competition, businesses are looking to explore for the latest dynamics and trends which will have positive impact on their business. The hospital industry in India is forecasted to increase to Rs 8.6 trillion (US$ 132.84 billion) by FY22 from Rs 4 trillion (US$ 61.79 billion) in FY17 at a CAGR of 16-17 per cent.
Indias competitive advantage also lies in the increased success rate of Indian companies in getting Abbreviated New Drug Application (ANDA) approvals. India also offers vast opportunities in R&D as well as medical tourism. To sum up, there are vast opportunities for investment in healthcare infrastructure in both urban and rural India.
Exchange Rate Used: INR 1 = US$ 0.0159 as on March 31, 2019
The healthcare market can increase three fold to Rs 8.6 trillion (US$ 133.44 billion) by 2022.
India is experiencing 22-25 per cent growth in medical tourism and the industry is expected to reach US$ 9 billion by 2020.
There is a significant scope for enhancing healthcare services considering that healthcare spending as a percentage of Gross Domestic Product (GDP) is rising. The governments expenditure on the health sector has grown to 1.4 per cent in FY18E from 1.2 per cent in FY14. The Government of India is planning to increase public health spending to 2.5 per cent of the countrys GDP by 2025.
Some of the major initiatives taken by the Government of India to promote Indian healthcare industry are as follows:
On September 23, 2018, Government of India launched Pradhan Mantri Jan Arogya Yojana (PMJAY), to provide health insurance worth Rs 500,000 (US$ 7,124.54) to over 100 million families every year.
In August 2018, the Government of India has approved Ayushman Bharat-National Health Protection Mission as a centrally Sponsored Scheme contributed by both center and state government at a ratio of 60:40 for all States, 90:10 for hilly North Eastern States and 60:40 for Union Territories with legislature. The center will contribute 100 per cent for Union Territories without legislature.
The Government of India has launched Mission Indradhanush with the aim of improving coverage of immunisation in the country. It aims to achieve atleast 90 per cent immunisation coverage by December 2018 which will cover unvaccinated and partially vaccinated children in rural and urban areas of India.
HUMAN RESOURCES AND INDUSTRIAL RELATION:
The company has maintained very harmonious & cordial Industrial relations. There is continuous emphasis on development of human resources through training. The issues pertaining to workers are resolved in harmonious and in cordial manner through regular interactions. We believe whatever we achieved from where we started our journey long back is the result of efforts of our team. So, we consistently aim to provide a sustainable environment for learning right from the stage of recruitment to retention.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
The Internal audit was carried out by firm of Chartered Accountants, who conduct the audit on the basis of Annual Audit Plan. The processes include review and evaluation of effectiveness of the existing processes, controls and compliances. It also ensures adherence to policies and systems, and mitigation of the operational risks perceived for each areas under audit. Significant observations including recommendations for improvement of the business processes were reviewed by the management before reporting to the Audit Committee. The committee has reviewed the Internal Audit procedures, findings and status of implementation of the agreed action plan.
Statements in the Management Discussion and Analysis Report, describing the Companys objectives, projections and estimates, are forward-looking statements and progressive within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the companys operations include global and domestic demand and supply conditions affecting selling prices, input availability and prices, changes in government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations.
On behalf of the Board of Directors,
For Tejnaksh Healthcare Limited
Dr. Ashish Rawandale