India is facing a huge cancer burden. The prevalence of cancer is estimated at 3.9 million people in 2015 with reported incidence of 1.1 million (or 94 people per 1 lac population). However, the real incidence is expected to be much higher (1.5-2.0x) than reported incidence affecting 1.6 – 2.2 million people.
The difference between reported and actual incidence can be primarily attributed to under-diagnosis and delayed diagnosis of cancer in India. Lack of awareness and inadequate infrastructure are key barriers to timely and accurate diagnosis in India. To put this in perspective, India has a mere 0.1 PET CTs per million population compared with 0.3 in China and 6.2 in the U.S. Adverse cancer mortality rates observed in India can be attributed to poor diagnosis and inadequate treatment landscape. 1
The profile of cancer in India is changing and is mirroring trends seen in more urbanized nations. In 2000, the most prevalent cancers in India were head and neck cancers in men (associated with all forms of tobacco use) and cervical cancer in women. Breast cancer has now surpassed cervical cancer as the most prevalent female cancer, and incidence rates of gastrointestinal cancers which have traditionally been low in India have been showing an increasing trend. Breast and cervical cancers among women, and head and neck, lung, and GI cancers among men, represent more than 60% of the incidence burden of solid tumors.
What are the key barriers limiting diagnosis and treatment in India?
• Affordability: Cancer treatments on an average cost INR 3 lacs – INR 4 lacs (can go upto INR 14-15 lacs with innovator targeted therapy drugs and advanced radiation treatments). India has low average household income levels with ~20% of households having an annual income >INR 200,000. Insurance coverage is low with only ~30% of the population covered by state and private insurance schemes
• Access: Low density of diagnostic and treatment facilities and significant geographical skew with 40-60% of the facilities and oncologists in the top metro cities
• Awareness: Low awareness about cancer, its symptoms and self-examination
Cancer incidences to rise going forward
Cancer incidence is expected to increase going forward due to three key main factors – demographic changes (ageing population), higher exposure to risk factors (sedentary lifestyles, increasing pollution) and gradual improvements in awareness and access.
Reported cancer incidence in India is estimated to increase from ~90 per 1 lac population to ~150 by 2020. This will result in cancer incidence increasing from 1.1 million in 2015 to 2.1 million in 2020, a CAGR of 14% . The prevalence is expected to increase from 3.9 million in 2015 to 7.1 mn in 2020E.
Significant demand supply gap in the Industry both in Diagnosis and Treatment
While on the one hand, there is increasing incidence, on the other, there is a huge demand-supply mismatch across diagnosis and treatment landscape in India. As of 2015, there are only 121 PET-CT scanners installed in India with ~50% installed in metropolitan cities. Only 10-12% of new patients in India can potentially get PET CT scans done based on current installed capacity.
Radiation therapy still at a nascent stage:
A key requirement for successfully providing radiation therapy is the availability of Linear Accelerator (LINAC). Yet again, India faces the issue of under-penetration and geographical skew (One-third installed in top 7 metros). Due to poor access to cancer care and low affordability, only 15-20% of cancer patients in India receive/opt for radiation treatment, versus 50-60% globally.
Limited penetration of Comprehensive cancer care centers (CCC):
As of 2014, only 200-250 CCCs offered diagnosis, treatment and post-treatment care at a single location. This results in ~180 CCCs per million incidence compare with 875 in the U.S. Around 40% of these centres are located in top eight metropolitan cities and ~85% are owned by private players/trusts. Government hospitals currently do not have adequate infrastructure to meet the growing burden of cancer care in the country – signaling significant opportunity for private/for-profit players.
Limited Oncologists:
Additionally, significant gap exists in terms of availability of oncologists in India compared with other developed countries. There is just one oncologist per 1,600 people in India, as against one per 100 people in the U.S.
Market Opportunity: High growth expected in treatment landscape as barriers are addressed
The already existing demand-supply gap in the system and improving demand factors fuelling growth of treatments will further increase the need to augment cancer treatment infrastructure in India. Rising income levels, increasing insurance, evolving technological landscape (PET CT, Molecular diagnostics, targeted therapies) and government focus are expected to drive huge growth in treatments. (Radiotherapy, Chemotherapy, Surgery).
Radiotherapy is expected to be the highest growth category as shown below:
The overall cancer treatment market in India is estimated at USD 1.7-2 billion in 2015, including all modalities of treatment and is poised for strong growth. In line with the growth projected, it is estimated that an additional 800-1,300 day care beds and 200-350 comprehensive cancer care centers will be needed by 2020. The geographic skew in the distribution of facilities and infrastructure will necessitate that a large proportion of the new centers are set up in non-metro cities to fill in the current gap. 1
The huge growth potential and under-penetration highlights a significant opportunity for private players. With government hospitals inadequate to provide the quality of treatments needed, private players have played a key role in shaping the treatment landscape in India. Historically, private multi-specialty hospitals have focused on Cancer as a Center of Excellence – major corporate hospitals that have focused cancer treatment centers include Apollo Hospitals, Manipal, Fortis, Max etc.
In addition, there have been specialized hospital chains focusing on cancer that have been gaining ground. Healthcare Global Enterprises (HCG), set up in 2006, operates the largest network of Comprehensive Cancer Centers in India with 17 centers Pan-India and 1 Center of Excellence in Bangalore. HCG has adopted a differentiated model designed to provide quality/comprehensive cancer care at competitive prices on a pan-India basis, with focus on non-metro locations (e.g. Cuttack, Nasik, Baroda, Hubli, Ranchi, Vijaywada, Trichy). 2
HCG attracted huge private equity interest owing to attractive market opportunity and differentiated business model. The company raised ~USD 30 mn from Temasek in 2013 in addition to an earlier round raised by Premji Invest and India Build Out Fund3. In recent times, the healthcare sector has seen some high profiles IPOs that have received strong investor interest (e.g. Narayana Hrudayalaya, Dr. Lal Path Labs, Alkem Labs). HCG also had a successful IPO in March 2016 giving part exit to the existing investors.
Some other notable specialized cancer chains that have caught investos’ fancy include:
Key PE Deals
Conclusion
Cancer poses a huge economic and human cost and thus it is imperative to expand diagnosis and treatment for this disease which is assuming alarming proportions. The Government has taken initiatives to reduce prices of essential cancer drugs to make them more affordable. Oncology drugs have emerged as the fastest growing therapy area reporting a 26% CAGR (June 13-June 16) as per MAT data. Given the huge prevalence, Oncology is also a key area for R&D with companies targeting innovative cost-effective drugs. Within diagnostics, companies are focusing on advanced diagnosis such as molecular diagnostics and Indian players are all upping the ante when it comes to affordable and innovative devices for cancer treatments (e.g. Perfint Healthcare, Panacea Medical).
Given the huge prevalence and growth anticipated, oncology represents a compelling opportunity for private players across the healthcare realm. There is still a long way to go to bridge the demand supply dynamics (~200-350 CCCs needed by 2020). With the gradual build out of the ecosystem supporting cancer diagnosis and treatments coupled with the huge cancer burden, the segment is expected to witness significant private equity interest in the near future.
References:
1. Call for Action: Expanding Cancer Care in India, EY July 2015
2. https://www.hcgel.com/wp-content/uploads/2016/06/Investor-Presentation.pdf
3. http://www.vccircle.com/news/healthcare-services/2013/03/11/temasek-bets-257m-healthcare-global-eilsf-exits-22x-returns
4. http://economictimes.indiatimes.com/industry/banking/finance/tpg-buys-65-in-ctsi-for-33-million/articleshow/52001667.cms
5. http://www.vccircle.com/news/healthcare-services/2013/04/12/amrish-oncology-raises-6m-singapore-based-investor
6. http://in.reuters.com/article/international-oncology-raises-37-mln-fro-idINDEE8640BY20120705
This article was first published in the December issue of Medgate magazine
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