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Private healthcare opportunities in pakistan

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Investment Opportunities in Pakistan's Healthcare Sector

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Private healthcare opportunities in pakistan

  1. 1. Pakistan’s Health Sector Prospectus
  2. 2. Pakistan the Land of endless opportunities  Land of 210 million People growing with 2.1% annual rate.  Geo- Strategic Location (Economic Super power China, land locked Afghanistan, Energy rich Central Asian states, financially liquid Gulf state and economical advanced far east countries)  Growing Democracy (Democratic Governments since last 15 years)  Rule of Law (Independent Judiciary and Media)  Controlling Terrorism  Business Friendly Policies  Economic indicators on growth trajectory.  Attracting Foreign Direct Investment by permitting 100% foreign equity  Part of One belt one Road (OBOR) initiative, Chinese investment of US$ 60 Billion in China Pakistan Economic Corridor (CPEC) Projects.  Pakistan has 18th largest middles class in the world.  Growing Middle Class 40% (84 million people), young, educated population base. Tele density of 150 million people shows the economic condition of large population base.  The annual new registration of motorcycles is 1.2 million and motor cars 150,000 compared to 200,000 motorcycles and 50,000 cars 10 years ago in the biggest province of Punjab.
  3. 3. Pakistan Healthcare Sector  Pakistan’s rapidly expanding population means there are exciting opportunities in the consumer healthcare segment, the generic and patent medicines market.  Healthcare spending in Pakistan stands at US$ 9.2 billion.  Mixture of Public Sector Hospitals, Private Commercial Hospitals, Private Not for Profit Hospitals, Foundation and Trust Hospitals for poor patients.  Public Sector Hospitals varies from 200 bedded Tehsil Headquarter Hospitals to 2000 bedded Teaching Hospitals in cosmopolitan Cities.  Public and Private Hospitals are part of Integrated Healthcare Facilities including Medical college, Nursing School and Teaching Hospital.  World Bank gave US$ 100 million loan to Punjab Province to introduce healthcare reforms aimed at enhancing the number of people who have access to high quality health services.  Government is struggling Hard to cope with increasing population and their medical needs by increasing five time Healthcare budget in last 5 years.  The condition of Public sector hospital is just miserable because of heavy inflow of patients, mismanagement, lack of facilities, lack of resources.  Every year 5,000 new Doctors are graduated from Medical Colleges.  US$ 3 billion pharmaceutical market, creating some 70,000 direct and 150,000 indirect employment opportunities in more than 400 pharmaceutical manufacturing units and increasing at CAGR of 12% in last three years.
  4. 4. Public Sector Healthcare  Pakistan spend less than 1 % of GDP on health.  There are only 7,000 midwives serving 210 million people instead of the required 70,000.  Of the USD 44 spent per person annually on health, USD 28 is out of pocket expense and only USD 16 are contributed by the Government.  There are just 12 healthcare attendants (physicians and nursing staff) for every 10,000 people.  Burden of Disease; 40% infectious/communicable diseases, 12 % reproductive health problems, 6% Nutritional deficiencies, 10% Non-communicable diseases (NCD)  The current ratio of one doctor per 1,073 persons.  There are long waiting time due to shortage of beds, OT and specialists.
  5. 5. Role of Private Sector  Private Sector is Quickly filling the vacuum created due to non availability of Quality Public Sector Hospitals.  There is large increase in affluent population who can afford good quality medical treatment at Private Clinics.  With increase in trend of Medical insurance, many organizations are providing private medical insurance to their employees thus large number of middle class segment of society are enjoying private medical facilities.  About ¼ of the patients treated in Private Hospitals are covered under insurance/institutional coverage.  There was great number of affluent people, who used to go to Fareast, Middle east and Europe for their medical treatment. With quality Private Medical Treatment available in the country, now they are enjoying the same facilities here in Pakistan.
  6. 6. Opportunities of Private Investment in Pakistan’s Healthcare Sector  Development of Greenfield Hospitals  Opening of Specialized Clinics  Mergers & Acquisitions M&A Opportunities  Public Private Partnerships  Professional Hospital Operators.  Funding of Healthcare startups in m health, Telemedicine and biotech domain.
  7. 7. Market Landscape for Private Hospital  Although there are number of private hospitals available in major cities of Pakistan but still due to enormous demand and large affluent class there is still demand of more private Hospitals.  Due to loose grip of regulators, the private hospitals are charging at their will and there is large price gap of same treatment at different private hospitals.  Most of the private hospitals are working as tertiary hospital and serving the needs of specific area and location and offering services for all the general diseases.  There are some private hospitals offering specialized services e.g. cancer, ophthalmology, urology, cardiology, Obstetrics etc.
  8. 8. Private Hospitals Private Hospitals can be categorized in to following:  Commercial Hospitals  Private Non for profit Hospitals  Trust/Foundation Hospitals
  9. 9. Specialties Dealt at Private Hospitals  Orthopedics  Internal Medicine  Pediatrics  Cardiology  Cardiac Surgery  Vascular Surgery  Ophthalmology  Infectious Diseases  Pulmonology  General Surgery  Urology  Nephrology with Dialysis  Dentistry  Dermatology  Endocrinology  Obstetrics / Gynecology  ENT  Plastic Surgery  Neurosurgery  Neurology  Psychology  Psychiatry
  10. 10. Typical Financials, Area and Employees of 300-400 bedded Private Hospitals  Revenue US$ 75-85 Million  Profit US$ 6-7.5 Million  Employees 2500-3000  Consultants Doctors 100-150  Area 10-20 Acres
  11. 11. Leading Commercial Hospitals Hospital Name City Capacity Year of Establishment Doctors Hospital Lahore 250 2000 National Hospital Lahore 250 1999 Hameed Latif Hospital Lahore 250 1994 Farooq Hospital Lahore 220 2012 Shifa International (JCI) Islamabad 400 1987 Quaid-e-Azam Hospital Islamabad 400 2012
  12. 12. Private Not for Profit Hospitals Hospital Name City Capacity Year of Establishment Agha Khan University Hospital (JCI) Karachi 540 1987 Shaukat Khanum Memorial Hospital Lahore 200 1994 Fatima Memorial Hospital Lahore 510 1977 Indus Hospital Karachi 150 2007 Liaqat National Hospital Karachi 700 1958
  13. 13. Feasibility for 300 Bedded Private Hospital Capex  Land & Land Development US$ 5 Million  Hospital Building & Construction US$ 10 Million  Equipment & Furnishing US$ 15 Million  Professional fee US$ 2 Million  Allied Facilities US$ 1 Million  Contingency US$ 2 Million  Total Capex US$ 35 Million Opex  Salaries & Benefits of employees US$ 6 Million  Marketing & Advertising Expenses US$ 500,000  Utilities Expenses US$ 400,000  Travel & Transportation Expenses US$ 100,000  Other Expenses US$ 200,000  Total Opex US$ 7.2 Million
  14. 14. Projected Revenue & ROI of Private Hospital  Revenue from Beds Occupancy US$ 5.6 Million  Revenue from Consultancy US$ 3.4 Million  Revenue from Medicine US$ 1 Million  Revenue from Diagnostic US$ 1.2 Million  Revenue from Allied Facilities US$ 1 Million  Total Annual Turnover US$ 12.2 Million  Total Annual Opex US$ 7.2 Million  Operating Profit US$ 5 Million per annum.  Return on Investment 14.28%  Pay Back Period 7 Years  IRR 2.99%