The Report is a brief overview of Healthcare Insurance Market in India. It covers Market Size and Forecasts, Competitive Structure, Growth Analysis, Impact Analysis and Recommendations.

1. Healthcare Insurance Sector in India Santhosh - Analyst

2. Contents Introduction Market Size & Forecasts Market Drivers Market Restraints Competitive Structure Value Chain Strategic Recommendations Impact Analysis

4. Market Size & Forecasts India Health Insurance Market (2002-2008) Source:IRDA The Indian healthcare insurance industry was worth INR 5,125crores with a compounded annual growth rate of approximately 37 percent between 2002 and 2008. The market penetration is only around 2 percent of the total population in India. The Health Insurance Industry is one of the fastest growing segments among other non-life insurance segments.

5. Market Size & Forecasts Total Revenue Forecast for Indian Healthcare Insurance Market - 2008-2015 The Indian healthcare insurance industry is worth INR 60,497 crores with a compounded annual growth rate of approximately 42.3 percent between 2008 and 2015. The market penetration is will be 3 folds higher in 2015. The main factors of growth are increased awareness. According to World Bank Report, 99% of Indians will face financial crunch in case of any critical illness. Hence the need for Health Insurance.

6. Market Drivers Current Impact (2008-2011) Future Impact (2011-2014) 0 5 10 0 5 10 Increasing awareness of Health Insurance Rising healthcare costs have increased need for health insurance Supporting Demographic Profiles (Prospering Middle Class, increasing disease state, population) Detariffing of the general insurance industry (which has increased emphasis and efforts by insurance companies towards health insurance and other personal lines of business) Rationalization of premium rates (e.g. trend of upward revision in respect of Group Health policies) In order to encourage foreign health insurers to enter the Indian market the government has recently proposed to raise the foreign direct investment (FDI) limit in insurance from 26% to 49% , Government initiatives are always supportive to Healthcare Insurance Environment.

7. Market Drivers (Cont…) The spending on Healthcare is increasing YOY from 2005 to 2025. The prospering middle class in India supports this spending environment. The average annual household consumption in healthcare (discretionary spending ) is expected to double between 2005 and 2025. There is a clear indication that seekers ( annual income between INR 2,00,000 and 04,99,999) and strivers ( annual income between INR 5,00,000 and 10,00,000) population is significantly increasing in the next future. There will be a direct proportionality of this increase to healthcare spending parity. Source:Mckinsey Source:Mckinsey

9. Market Restraints Current Impact (2008-2011) Future Impact (2011-2014) 0 5 10 0 5 10 Inadequate healthcare infrastructure Insufficient data on Indian consumers & disease patterns resulting in difficulty in product development and pricing Limited reach Significant underwriting losses for Health Insurance business in India Lack of standardization and Accreditation norms in healthcare industry in India

11. Competitive Structure (Cont…) Market Share of Key Players in Health Insurance Companies (2008) Source:IRDA Health insurance forms a low proportion of the total business for life insurance companies in India (0.2 percent of the individual regular premium for FY2008), it forms a significant proportion of the business for non-life Insurance companies (approx.18 percent of the total Gross Written Premium for FY2008) Market Leader : New India Insurance Market Structure : Oligopolistic Competition Top players : New India ICIC Lombard United India National Oriental Market Size : Increasing

13. Competitive Structure (Cont…) Market Share of Key Players in Private Health Insurance Sector (2008) Market Leader : ICICI Lombard Market Structure : Oligopolistic Competition Top players : ICIC Lombard Reliance Bajaj Alliance Market Size : Increasing By Analysis Present Scenario Market Leaders ICICI Lombard Reliance Bajaj Allianz Niche Star Health Apollo DKV Market Boomers Market Followers Royal Sundaram IFFCO Tokio Futuristic Scenario : Perfect Competition Market Leaders ICICI Lombard Reliance Bajaj Allianz Niche Star Health Apollo DKV Market Boomers Market Followers New Players Others TATA AIG Royal Sundaram IFFCO Tokio TATA AIG The market in the current scenario is oligopolisitc in nature and there is a fair possibility in future that the market will have large number of firms with homogenous product offering ending with Perfect Competition. By Analysis

14. Value Chain Payers IRDA - regulator Customers (Individuals, Patients) Employers Government Mediclaim Policy Holders NGO/SHG/MFI Intermediaries TPAs Distribution Channel Partners HMO PPO Insurers Private Companies Public Companies Providers Hospitals Diagnostic Centers Doctors Nursing Homes Private: Private Companies, TPAs, Distribution Channel, TPA’s, PPO, HMO, Healthcare Providers, Private Employers Public : Public Companies, Healthcare Providers, Government Employers

17. Impact Analysis – Pharmaceutical Industry Healthcare Insurance Growth’s Impact on Pharmaceutical Industry Reimbursement Reimbursement is the sales price that a payer for a drug ultimately pays, net of any rebates or discounts it receives. Reimbursement is important to pharmaceutical companies because any rebates or discounts that impact the price of a drug to a payer also impact pharmaceutical company revenue and profits (along with quantity). Generally speaking, as a payer’s negotiating power increases, either through government legislation or concentration of buyers, reimbursement levels go down. Payer mix represents the percentage of prescriptions that are reimbursed by a private health insurance plan, government funded health plan or paid for in cash by an individual. Payer mix is relevant because on average pharmaceutical companies receive very different revenues for the same drug depending on whether it is ultimately reimbursed by a private health plan, government funded plan or paid for in cash. Payer Mix Utilization Utilization is defined as the quantity of pharmaceuticals consumed. It is necessary to evaluate potential impact on overall utilization of pharmaceuticals (both brand and generic drugs) as well as any potential bias towards utilization of generics over branded pharmaceuticals.

18. Impact Analysis- Pharmaceutical Industry (Cont…) Reimbursement Payer Mix Utilization Factors Net Effect on Pharmaceutical Companies Branded Generic With the growing Health Insurance market in India, the overall utilization of drugs would subsequently increase. However, generic drug utilization would be higher than that of the branded drugs due to the factor that India is still in nascent stages health insurance penetration. Assuming that the penetration is more in middle class, the premium they opt will be lesser and hence generic drugs would have an definite advantage. The growth of healthcare insurance market in India will have a positive impact on Pharmaceutical Industry. India’s Pharmaceutical market is a pharma emerging market with growth potential more than 10%. Alongside with the growth of insurance market, the pharmaceutical market may grow at a faster phase more than 15% within the next few years. As the health insurance penetration increases, reimbursement will also increase. As the volume of drug sale or utilization of drugs grows, reimbursement increase with a positive impact. A partnership environment strategically would be in advantage for pharmaceutical companies to offer discounts and increase their volume sales. By Analysis