FUNDING OPPORTUNITIES IN HEALTHCARE CII Conference on PE

FUNDING OPPORTUNITIES IN HEALTHCARE CII Conference on PE, VC, Debt and Angel fund in Healthcare Kolkata June 2016

Indian Healthcare Sector – Brief Overview & Fund Raising Trend – Key Emerging Themes – Means of Funding – Tata Capital’s Approach

Indian Healthcare Sector – Brief Overview & Fund Raising Trend I |3 I

PE Investments have far exceeded monies raised through IPOs since 2005 18 Equity raised by Indian companies 16 Amount in US$ Bn 14 12 10 8 6 4 2 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 IPO 0. 7 0. 1 0. 2 0. 4 2. 9 1. 9 5. 6 7. 9 4. 6 4. 2 8. 4 1. 3 0. 3 2. 1 PE 0. 6 0. 7 0. 3 0. 6 1. 1 2. 1 6. 8 16. 2 16. 5 6. 9 8. 1 12. 7 11. 8 10. 0 9. 3 14. 8 PEs have invested US$11 Bn, ~75% of the capital raised (2005 onwards) I Source: VC Circle Edge, Tata Capital Research *Figures for 2015 are as of Sep 2015 |4

PE / VC Investments by Region • Western India - $ 6. 2 bn ; 207 deals • 40% in value terms ; 31% by volume • Mumbai - $6 bn; 157 deals • South India - $5 bn; 229 deals • 32% in value terms; 35% by volume • Bengaluru - $ 3. 3 bn; 155 deals • North India - $3. 5 billion; 179 deals • 22% by value; 27% by volume • NCR - $ 2. 8 bn; 161 deals • Kolkata - $ 274 mn. Source: Venture Intelligence |5

Indian Healthcare - A Favored Destination for PE Investing Sector-Wise Private Equity Deals during 2012 -2015 YTD Sector-wise Deal Value (US$ Mn) Financials 587 10784 Consumer Discretionary 8179 Information Technology 7055 Health Care 4404 Industrials Utilities Sector-wise Deal Volume 5287 4119 F. . . 934 C. . . 1512 I. . . 303 H. . . 399 I. . . U. . . 84 Consumer Staples 1778 Telecom Services 2624 T. . . 10 Materials 1059 65. . . Energy 61 146 C. . . E. . . 8 Moved up from 10 th rank in 2011 to 4 th position during 2012 -2015 Source: VC Circle Edge, Tata Capital Research |6

Early Stage companies attracting Investors PE/VC Investments in Healthcare Sector - Stage in Lifecycle 30 16 8 8 5 5 Early Stage 2 Q 3 FY 15 4 Q 4 FY 14 0 4 7 0 Growth Stage 4 6 4 4 4 5 5 6 Q 3 FY 16 6 8 5 Q 2 FY 16 9 Q 4 FY 15 10 5 8 5 Q 1 FY 16 6 Q 2 FY 15 15 3 14 Q 4 FY 16 20 Q 1 FY 15 Deal Volume 25 Mature Stage I Source: VC Circle Edge, Tata Capital Research |7

Indian Healthcare - US$ 99 Bn Market Opportunity growing at 12% AGR C 12% Medical Services US$55. 5 Bnv Pharma US$19 Bn Diagnostics US$5 Bn US$174 Bn US$99 Bn Laboratory US$3. 1 Bn Radiology US$1. 9 Bn 2015 2020 Rising disposable income Increased accessibility Delivery US$50. 5 Bn Increase in disease burden Population growth Insurance coverage Source: Pw. C, Tata Capital Analysis 2025 Growth Drivers Indian Healthcare US$99 Bn Medical Equipment/Supplies US$6. 9 Bn US$305 Bn Industry Growth Government spend US$17. 8 Bn

Indian Healthcare continues to attract over US$ 1 Bn Investment Annually PE in the Healthcare sector over the years 1600 90 1400 Deal value in US$ Mn 100 90 76 1200 80 67 1000 51 800 59 54 45 34 600 40 25 30 400 20 200 10 276 385 667 637 142 554 349 1030 1036 1040 1459 2005 0 60 50 43 41 70 Deal volume 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Total Deal Value ($ mn) 0 No of Deals Amount invested since 2012 is US$4. 5+ Bn vs. US$ 3 Bn between 2005 -11 I Source: VC Circle Edge, Tata Capital Research |9

Increasing Yo. Y Trend In Pharma Deal Activity Healthcare PE deal split – Segment wise Pharma & Delivery segments account for ~90% of the deal activity I Source: VC Circle Edge, Tata Capital Research | 10

Illustrative Top Transactions – 2015 -16 Investor Target Amount Temasek Sun Pharma $ 294 mn. Capital International Mankind $ 203 mn. Temasek Glenmark $ 151 mn. TPG Capital Manipal Health $ 150 mn. Temasek Medanta Medicity $ 113 mn. Carlyle Metropolis $ 128 mn. Illustrative Top Transactions in Eastern India – 2014 Investor Banyan. Tree Target ILS Hospitals Amount (Rs. Mn. ) 400 Matrix Partners Bengal Speech and Hearing 247 Brand Capital Dr. Paul’s Multi-Speciality Clinic 100 asasasssd I | 11

Indian Healthcare Sector - Key Emerging Themes I | 12 I

Summary Opportunities | 13

Emergent Themes in Indian Healthcare Industry Diagnostics & Data Analytics leading to Personalised Medications Diagnostics going Genomics; Digital Healthcare democratizing Healthcare Delivery Increase in focus on tier II & III cities Indian Healthcare Pharma Indigenization on the back of Make in India Prevention & Wellness | 14

Indian diagnostics market moving up market – Onwards Genetic Testing CA 28 GR % Global Genetic Testing Market (2014 -2020) $ Mn l Globally, this market was valued at $886 Mn in 2014 and is expected to grow to $3. 9 Bn by 2020 at a CAGR of 28%. l This momentum is increasingly seen picking up in India as well though India still scratching the surface l Price erosion is a major driver to popularize genetic testing for the Indian population. Currently, DNA sequencing in India costs ~INR 10, 000. l The Indian population is traditionally prone to certain genetic predispositions like Thalassemia and Retina pigmentosa. High throughput sequencing techniques can assist early diagnosis. l Hyderabad-based Mapmy. Genome is an example of a recently started genomics company, backed by investments worth $1. 1 Bn. l Traditional Diagnostics – Ripe for Disruption consolidation and break in doctor partnerships l Imaging Business Model – Challenged by Cost of Capital & Utilization factors | 15

Shortage of service delivery in Tier II & III towns Access to Public Healthcare % of Total Population in a class l Access to public healthcare in India is lower than the OECD average. Only 22% of the high income group and 17% of the low income group have access to public healthcare in India l This is evident from the fact that in India, 15% of the population is covered under health insurance and out -of-pocket expenditure has reached ~70% of total health expenditure l Currently, only 3% of trained medical staff are working in Tier II & III towns, which is not enough to meet the growing rural healthcare demands Distribution of Hospital Beds l Moreover, there is a divide in distribution of hospital beds, with ~70% concentrated in the top 20 cities Total Hospital Beds (~1. 56 Mn) Private Beds (61%) 0. 95 Mn Top 20 Cities (~70%) Other Cities (~30%) Government Beds (39%) 0. 61 Mn Top 20 Cities (60%) Other Cities (30%) l To be able to fulfil the healthcare demand, the country requires an addition of 6 -7 lac beds by 2025 (estimated investment required is $25 – 30 Bn) l This presents a huge opportunity for private investors in bridging this gap by investing in the private hospital segment | 16

Medtech & Devices - “Make in India” initiative Local Manufacturing v/s Imports in India 2015 l In the current state, indigenous manufacturing is limited to products in the lower end of technology value chain (E. g. gowns, masks, gloves, syringes, needles etc. ) l Local manufacturers primarily focus their efforts on affordable medical devices for the lower and middle income segments of the Indian market and therefore operate predominantly in the low priced, high volume market segments (Trivitron Healthcare, Sutures India, Narang Medical) l Complex medical devices (Imaging, Monitoring devices, Critical Life Support Systems etc. ) are mostly imported by international companies with negligible manufacturing in the country due to favorable tax structures l Push for domestic manufacturing through the “Make in India’ initiative from the government is expected to boost local players’ presence further in the sector | 17

Wellness industry to take centre stage thanks to spurt in lifestyle diseases Wellness Market in India (2015) $ 10. 7 Bn l Wellness products and services comprise of 3 major segments – Fitness, Nutrition and Alternate therapy l By 2020, over 65% of all mortality will be linked to lifestyle diseases viz. diabetes, coronary heart diseases among others. l Realizing the potential benefits of holistic preventive care over remedial care, Insurance companies, Employers and Schools are expected to be the key facilitators to develop pro-wellness ecosystem. l Lot of Indian companies are capitalising on the business potential of traditional Indian practices eg Himalaya, Herbalife, Charak, Baidyanath l The industry is garnering increasing levels of interest from the investor community as evident from the PE transactions in the past and encouraging capital market response to IPOs of Kaya, Talwalkars etc. l Disbursement of government grants and schemes for the Ayurveda, Unani, Siddha and Homeopathy (AYUSH) sector has increased at a CAGR of 31% between 2008 - 2011 Source: PWC, Tata Capital | 18

Indian Pharma Market – Headlines | 19

Pharma Industry – Key Challenges wherein lie the Opportunities § Market Opportunity plagued by disruptive trends owing to: • Regulatory Changes o USFDA Audit Patterns undergoing a change – USFDA wants Indian companies to not only be compliant on the date of the audit but also demanding a cultural shift in the manner in which the companies are conducting their businesses. o NPPA / NLEM Pricing Constraints - pressure from governments trying to curb costs • Impact of MCI Professional Conduct, Etiquette and Ethics Regulations – A positive for the patients but definitely will demand redefinition of how pharma marketing is conducted • Investing in digital technologies - Mobile technologies for engaging with customers, cybersecurity systems and data analytics offer the greatest potential for exploiting global opportunities. | 20

Disruptive Changes in Healthcare Delivery through Tech E-pharmacy to disrupt pharma distribution l Retail pharmacy industry’s entire supply chain uses minimal technology to get their work done which induces various inefficiencies in the supply chain l E-pharmacies are able to connect the supply chain and generate efficiency while ensuring availability of medicines Telemedicine to bridge urban Rural divide l The telemedicine market in India was valued at $7. 5 Mn, and is expected to rise at a CAGR of 20%, to $18. 7 Mn by 2017. With increasing emergence of telemedicine, rural parts of the country will be able to get affordable access to healthcare. l Cisco for instance offers technology that costs rural patients $1 fee for the virtual consultation, far cheaper than travelling to the nearest doctor. This balances out the doctor-citizen imbalance. Healthcare Analytics; Wearables l With the healthcare sector growing rapidly, data is also being generated at the same pace. This is expected to be $20 Bn industry globally by 2020 l Healthcare analytics add value from simple efficiency gains to preventing outbreaks, make better diagnosis and predict onset before they become apparent | 21

‘Beyond the pill’, outcomes, and real-world data are providing health data and transforming what is possible – New Business Models | 22

What does a VC / PE Investor typically seek? • What is the business all about? • What is the size of opportunity? • Are you a early stage business in an early stage sector or are you a early stage business in a mature sector? Investing in the business is a fnx of the maturity of the business juxtaposed with the maturity of the industry in which your business is operating in • Are you Specialized or Generalized multipurpose business model? • What is the Growth potential? Don’t get misled by the Macro / Big Numbers • Investors will dive deeper and look at regional factors, local factors etc. • Is this business model a market creation opportunity play or • Whether it is taking a small sliver out of existing market opportunity? • What is the differentiator? • What is the problem you are solving? Is it a solution searching for a problem? • Are you merely building a better mouse trap? • Why should you be funded vis-à-vis some other entrepreneur? • Is it a regional play or a potentially national play? • Is the business delivery a localized opportunity or is it a distributed opportunity | 23

What does a VC / PE Investor typically seek? FOUNDERS & TEAM • Experience and Background • Why are you in this business? What are your motivations? How did the team come together? • Why are you Capable of executing this business plan? • What is the monetary / service delivery advantage your product / services is able to offer? • Cost effective and practical acquisition of customers • Is this an exit able opportunity? Is this a lifestyle Business? • Are you landlord or an Capital Grower? • Don’t confuse your surgical / medical skills with business skill? | 24

Indian Healthcare Sector – Means of Funding I | 25 I

Various Sources for funding growth Source of Finance Government grants Angel investors/Accelera tors Venture Capital Investor’s Level of engagement Typical Quantum of funding Valuation

Indian Healthcare Sector - Tata Capital’s Approach I | 27 I

Tata Capital – Corporate Overview Tata Capital Ltd. Private Equity Opportunities Fund Growth Fund Financial Services Corporate Finance Other Services Broking, Advisory & Hosuing, Consumer and Rural Financing Commercial Finance Healthcare Fund Innovation Fund Special Assets Management Special Situations Fund Leasing With a Loan Book size of US$ 6+ Bn and US$ 1 Mn AUM across five PE funds, Tata Capital caters to the diverse needs of corporate and institutional customers. | 28

Tata Capital Healthcare Fund is a ~US$70 mn healthcare focused private equity fund Fund Vehicles § Tata Capital Healthcare Fund I, a SEBI registered VC Fund § Tata Capital HBM Healthcare Fund I, a Singapore limited partnership Investment Advisors § Tata Capital Limited & HBM Partners Limited Fund Size § ~US$ 55 mn Domestic Fund (Final Close in April 2012, 92% Drawn down) § US$ 15 mn Offshore Fund (Final Close in Nov. 2015, ~28% committed) Sponsor § Tata Capital Limited with commitment of US$ 16 mn into the Domestic fund – 24% of the Fund Size Fund Focus § Deal Criteria: High growth companies in expansion phase § Deal Size & Shareholding: US$ 5 -10 mn and significant minority holding § Average Holding Period: Upto 5 years § Key Rights: Board & Audit committee seat, Exit, Minority protection rights Target Return § 3 x over 5 years Fund Term § Seven years from final closing date, option to extend by two years Commitment Period § Four years from final closing date Exit Strategy § Strategic sale, Trade sale, Buyback, IPO | 29

Investment Strategy Predicated across Two Themes Consumption Themes Focused on the Indian consumption story Healthcare delivery Specialty hospitals, dental, dialysis, eye clinics, fertility clinics, path labs etc Healthcare devices and diagnostics Diagnostic services, orthopaedic & ophthalmic devices, cardiovascular products, imaging etc Domestic pharma Companies with strong marketin & distribution networks Competency Themes Domestic competency leveraged to pursue international markets Niche generics & contract manufacturing Cost / manufacturing arbitrage, technical, regulatory and chemistry capabilities Product innovation Drug-repurposing and development companies Technology innovation Patented devices, Healthcare IT

US$ 50 Mn deployed across six deals; Balance investible corpus of US$ 7 Mn Aug-10 2012 Sep-14 Jul-15 Dec-12 Jun-13 Nov-15 2014 Mar-14 Drug Repurposing & Technology co. Investment: INR 234 Mn – Early stage Stake: ~20% Pharmaceutical Infusions/Sterile dosage player Investment: INR 680 Mn - Growth Stake: ~24% Second largest chain of dialysis centres in India Investment: INR 200 Mn – Early stage Stake: ~37% Full spectrum orthopaedic focused hospital chain in Maharashtra Investment: INR 250 Mn - Growth Stake: ~35% Oct-15 India’s largest pharma packaging company Investment: INR 500 Mn - Growth Stake: ~11% 2015 Nov-15 Pharmaceutical Custom Research & Manufacturing service provider Investment: INR 692 Mn - Growth Stake: ~17%

THANK YOU TATA Capital Healthcare Fund I Tower A | 1101 | Peninsula Business Park | Ganpatrao Kadam Marg | Lower Parel | Mumbai 400 013 | India Web- http: //online. tatacapital. com/Private_Equity/HF_Overview. htm Emai-l enq_tc@camsonline. com Board- line +91 22 6606 9000