Brazil's economy has grew at over 15% per year for a decade and is now waking up to a harsh reality. Social unrest, corruption scandals, political changes and rising inflation will shape growth moving forward. What does this mean for the Healthcare sector? How will the government react? What does this mean for the private sector and particularly for foreign investors? Fragmented private care Recent developments and outlook Foreign investments and Consolidations Private hospital income & expenditure Trends & Outlook

1. Guillaume
Corpart
+1
(305)
441-­‐9300
x302
gc@globalhealthintelligence.com
www.globalhealthintelligence.com
May
2015.
©
2015,
Global
Health
Intelligence.
All
rights
reserved.
Global
Health
Intelligence
on:
Healthcare in Brazil
Opportunities ahead

2. About the Presenter
Guillaume
Corpart
Managing
Director
Founder
of
Global
Health
Intelligence
Co-­‐Founder
of
Americas
Market
Intelligence
15+
years
in
consulOng
in
La:n
America
SERVICE
EXPERTISE
• Market
strategy
• Market
sizing
and
segmentaOon
• Monitoring
• CompeOOve
intelligence
• Customer
segmentaOon
• Market
research
PROJECT
EXPERIENCE
• 400+
consulOng
engagements
• 200+
CI
assignments
INDUSTRY
EXPERTISE
• Medical
devices
• Capital
equipment
• Consumables
• PharmaceuOcals
1

3. Global Health Intelligence
Hospital
demographics
The
world’s
largest
hospital
demographics
database
focused
on
emerging
markets
Medical
import
data
The
most
expansive
healthcare
equipment
import
staOsOcs
in
LatAm
Tailored
research
Refined
with
15+
years
Market
Intelligence
experience:
• Market
sizing
and
segmentaOon
• Partner
search
&
market
due
diligence
• CompeOOve
profiling
• Pricing
and
cost
analysis
• Best
pracOces
• PosiOoning
and
opportunity
idenOficaOon

‚
ƒ
2
Provides
advice
to
guide
investment
decisions
in
emerging
markets.

4. Table of contents
3
1. Brazil’s
economy
and
what
it
means
for
healthcare
1. Brazil’s
economy:
Boom,
Boom
…
2. …
Bust?
3. Healthcare
is
an
economic
priority
2. Overview
or
Brazil’s
healthcare
system
1. The
gap
between
aspiraOon
and
reality
2. A
perverse
and
interdependent
relaOonship
3. The
balance
between
SUS
and
Private
care
4. Fragmented
private
care
3. Recent
developments
and
outlook
1. Foreign
investments
and
ConsolidaOons
2. Private
hospital
income
&
expenditure
3. Trends
&
Outlook
4. Q&A
Session

5. • The
Brazilian
economy
grew
at
a
CAGR
of
15%
between
2003
and
2014.
• During
this
Ome,
the
middle
class
grew
from
44%
to
60%
of
the
populaOon.
• This
translates
to
42
mi
people
entering
the
consumer
class.
• There
are
140
mi
people
in
SES
A/B,
C.
• Sustained
by
the
high
price
of
commodiOes,
rising
wages,
strong
credit
growth,
lower
interest
rates.
• 2013-­‐2014:
nega:ve
growth
and
consistently
revised
downward
forecasts
for
2015.
Brazil’s economy: Boom, Boom …
4
0%
10%
20%
30%
40%
50%
60%
70%
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
2003
2005
2007
2009
2011
2013
GDP
(US$
bi)
Middle
class
(as
%
of
society)
Sources: The World Bank, IPEAD, IBGE, Ministerio de
Desenvolvimento Social, PwC, FGV.
Middle class: HH earning between R$ 1,395 and R$ 4,650 /m
GROWTH OF THE BRAZILIAN ECONOMY AND ITS IMPACT
ON THE MIDDLE CLASS

6. • The
slowdown
in
the
Chinese
economy
resulted
in
downward
pressures
on
the
price
of
commodiOes
and
thus
a
plumme:ng
of
the
Real.
• The
price
of
commodiOes
dropped
by
66%
from
July
2011
to
March
2015,
during
which
Ome
the
Real
dropped
by
a
corresponding
51%.
• Infla:on
is
at
8.2%
per
year,
the
highest
since
2005.
• Unemployment
is
at
6.2%,
rising
trend
since
2013.
• Civil
protests
of
2013/14/15
–
healthcare
is
a
cornerstone
of
the
manifested
anger,
along
with
corrupOon
scandals
(Petrobras).
• Is
Brazil’s
:me
over?
Unlikely.
But
it
is
a
rude
awakening
with
considerable
consequences.
… Bust?
5
Sources: www.xe.com, IndexMundi (Iron Ore)
51%
drop
in
value
The
fate
of
private
healthcare
is
intricately
Oed
to
that
of
the
middle
class.
F/X RATE: US$ 1 = R$ X

7. Healthcare is an economic priority
6
Sources: World Bank, World Economic Forum, IPEAD, IBGE, Ministerio
de Desenvolvimento Social, PwC, FGV, Datafolha.
• While
the
Brazilian
economy
is
expected
to
slow,
Healthcare
will
remain
strong
(and
possibly
even
grow).
• Other
key
sectors
include
Natural
Resources,
Agriculture,
Manufacturing
(dropping)
• Health
is
the
#1
priority
in
public
opinion,
ahead
of
issues
such
as
violence/security,
corrupOon,
educaOon,
unemployment
or
poverty.
• 80%
of
new
healthcare
users
come
from
the
new
middle-­‐class.
• Insurers
have
low-­‐cost
plans
for
the
new
middle-­‐class.
• The
“demographic
dividend”
will
play
in
the
country’s
favor
through
2029.
• Government
policy
will
anract
investments,
focused
on
increasing
the
availability
and
quality
of
care
to
the
populaOon.
POPULATION
PopulaOon:
200
mi
Upper
+
Middle
class:
140
mi
(70%)
UrbanizaOon:
89%
ECONOMY
GDP:
US$
2,245
bi
Healthcare
expenditure:
9%
of
GDP
(Priv.:
4.9%,
Pub.:
4.1%)
Medical
device
market:
US$
5
bi
Clinical
trials:
2,000+
HOSPITAL
STRUCTURE
Number
of
hospitals:
6,950
Number
of
hospital
beds:
452,000
Hospital
admissions
(SUS):
11.5
mi
INSURANCE
Private
health
insurance:
54
mi
(27%)
Geographies:
65%
of
contracts
in
South-­‐East
RANKINGS
Ease
of
doing
business:
120
(out
of
189)
Global
compeOOve
index:
57
(out
of
144)

8. The gap between aspiration and reality
7
• It
is
a
cons:tu:onal
right
for
all
ciOzens
to
have
healthcare
coverage
through
the
Unified
Healthcare
System
(SUS
–
Sistema
Unico
de
Saude).
• Inequali:es
are
high
in
a
system
meant
to
provide
care
for
all.
• The
SUS
has
been
underfunded
since
its
concepOon
–
lack
of
equipment
and
doctors,
lack
of
geographical
coverage.
• Private
plans
(originally
conceived
as
supplemental
to
public
insurance
-­‐
PPP)
have
become
a
parallel
system
for
those
who
can
afford
it.
• Private
plans
offer
a
higher
quality
of
care,
but
revert
back
to
SUS
for
not-­‐covered
(expensive)
procedures.
• 63%
of
private
plans
are
hired
through
businesses.
• Consumers
are
willing
to
pay
for
bener
healthcare.
• The
government
accounts
for
46%
of
HC
spending,
down
from
75%
in
2000
and
compared
to
70%
in
OECD
countries.
Sources: The Economist, The Lancet.

9. A perverse and interdependent relationship
8
Sources: The Lancet, PwC.
INFECTIOUS
DISEASES
Dengue
fever
Visceral
leishmaniasis
Repeated
epidemics,
out
of
control
Increasing
NON
COMMUNICABLE
DISEASES
Overweight/obesity
Diabetes
Hypertension
Psychiatric
diseases
Asthma
Cancers
of
the
breast,
lung,
prostate,
colon
Rapid
increase
Increasing
High
prevalence,
sOll
increasing
High
prevalence
High
prevalence
Increasing
EXTERNAL
CAUSES
Homicides
Traffic-­‐relates
injuries
and
deaths
DomesOc
violence
Decline
but
sOll
at
epidemic
levels
Decline
but
sOll
at
epidemic
levels
High
prevalence
• There
is
a
perverse
and
interdependent
rela:onship
between
the
SUS
and
Private
insOtuOons.
• The
private
does
not
make
money
from
the
SUS
yet
~2/3
of
procedures
conducted
are
hired
by
SUS.
• Without
the
SUS,
many
private
hospitals
would
go
out
of
business.
Without
private
insOtuOons
the
SUS
could
not
deliver
care.
• Despite
its
limitaOons,
the
SUS
can
be
credited
for
its
achievements.
• Increased
access
to
primary
and
emergency
care,
reach
universal
coverage
of
vaccinaOon
and
prenatal
care,
and
invest
in
the
expansion
of
human
resources
and
technology.
“The continuous expansion of the private subsector is subsidized
by the state, while the public sector is often underfunded, thus
compromising its ability to guarantee quality of access to care.”

10. The balance between SUS and Private care
9
• Public
insOtuOons:
Primary
care
clinics,
Emergency
units.
• The
SUS
depends
on
contracts
with
the
private
sector,
especially
for
diagnosOc
and
therapeuOc
support
services.
• Private
insOtuOons:
Hospitals,
OutpaOent
clinics,
DiagnosOc
and
therapeuOc
services.
• Provision
of
secondary
care
by
the
SUS
is
problemaOc,
because
service
supply
is
restricted
and
oten
given
preferenOally
to
individuals
with
private
health
plans.
Public
Sector
(SUS)
47%
Private
HC
insurance
23%
Out-­‐of-­‐
pocket
30%
Public
(SUS)
36%
Private
for
profit
33%
Private
non
profit
31%
COVERING HC EXPENSES HOSPITAL BEDS: 452,000
“Brazil is not for beginners”
- Tom Jobim
Sources: The Economist, The Lancet, PwC.

11. Fragmented private care
10
• The
private
hospital
market
is
regional
and
fragmented
• The
largest
private
hospitals
in
the
country
are
philanthropic
and/or
nonprofit.
• No
private
hospital
group
owns
more
than
1%
of
the
market
based
on
number
of
beds.
• No
private
hospital
group
has
naOonal
coverage.
• The
7
largest
private
health
insurance
companies
(all
with
more
than
1
mi
lives
insured),
hold
less
than
30%
of
all
beneficiaries.
• There
are
over
1,000
private
insurance
plans
covering
~46
mi
people.
• Private
hospitals
oten
leverage
their
experience
to
manage
marginalized
insOtuOons
–
due
to
economic,
insOtuOonal,
or
geographic
reasons.
• Demand
for
new
investment
in
hospitals
–
to
increase
access
and
coverage.
• 13,000
hospital
beds
are
needed
by
2017.
• Avg.
occupancy
rate
of
private
hospitals
(2012):
77%.
LARGEST
HOSPITAL
GROUPS
&
INVESTMENTS
EXPANSION,
RENOVATIONS,
ACQUISITION
OF
MED.
EQUIPMENT
–
2012
• Rede
d’Or:
US$
143
mi
• Sirio-­‐Libanes:
US$
116
mi
• Albert
Einstein:
US$
112
mi
• Beneficiencia
Portuguesa:
US$
82
mi
• Amil:
US$
128
mi
Sources: The Economist, The Lancet, PwC.

12. • Three
months
ater
President
Dilma
Roussef
announces
that
foreign
players
can
now
have
ownership
in
Brazilian
hospitals,
Carlyle
invests
US$
600
mi
to
hold
an
8%
stake
in
Rede
d’Or.
• Rede
d’Or
is
the
largest
independent
hospital
operator
in
Brazil,
with
4,500
beds
and
29
hospitals.
• The
money
will
be
used
for
new
construcOons,
expansion
of
current
faciliOes
and
the
financing
of
new
acquisiOons.
• Further
M&A
ac:vity
is
imminent
increasing
industry
consolidaOon
and
standardizaOon.
• GIC
holding
of
Singapore
is
looking
to
buy
14%
of
Rede
d’Or.
Recent developments: Foreign investments and
Consolidations
11
April 28, 2015
January 26, 2015
Sources: The Wall Street Journal, Latin Lawyer.

13. Private hospital income & expenditure
12
• The
ANAHP
(NaOonal
AssociaOon
of
Private
Hospitals)
seeks
to
encourage
and
empower
hospital
members
to
use
standardized
indicators
(management
tool
and
as
sector
benchmarking).
• Metrics
include
Financial,
OperaOonal,
Human
Resources,
Healthcare
Services
Management,
Clinical
Care
Quality
and
Safety,
Clinical
Care
Protocols,
Sustainability
Personnel
costs
42%
Hospital
supplies
25%
Other
supplies
3%
Tech.
and
Op.
contracts
8%
Support
&
LogisOcs
contracts
5%
UOliOes
3%
Maint.
and
Tech.
support
3%
DepreciaOon
4%
Other
expenses
7%
Daily
rates
&
fees
25%
Hospital
supplies
48%
DiagnosOcs
and
Therapy
unit
16%
Other
Services
/
OperaOonal
5%
Other
/
OperaOonal
6%
Sources: ANAHP, 2012 data.
PRIVATE HOSPITAL EXPENDITURE PRIVATE HOSPITAL INCOME

14. Trends & Outlook
13
MARKET
DYNAMICS
HOSPITALS
HOSPITAL
SYSTEMS
DAY-­‐TO-­‐DAY
• Government
regulaOon
to
anract
investment
• PE
money
to
flow
into
Brazil
–
Strong
M&A
acOvity
• Expansion
/
ConsolidaOon
of
private
groups
• ModernizaOon
of
public
infrastructure
• Growth
of
home
care
• Growing
elderly
populaOon
• Cost
reducOon
• Regulatory
compliance
• Technology
• InnovaOon
• InternaOonal
accreditaOons
• Increased
accountability
and
transparency
• Management
informaOon
systems
• InternaOonal
benchmark
• Engagement
to
improve
data
collecOon
and
sharing
• Standardized
metrics
on
cost
/
quality
/
outcome
• Increasing
informaOon
exchange
between
stakeholders
• Cost
of
procedures
• Healthcare
IT
• Medical
imaging
• InterconnecOvity
/
Smartphone
boom
• Medical
records
• Equipment
updates
• Training
• Healthcare
needs
to
be
more
effecOve
and
innovaOve.
“Brazil is the country of the future;
and always will be.”

15. www.globalhealthintelligence.com
To
learn
more
about
Global
Health
Intelligence,
our
services,
consulOng
engagements
and
speaking
opportuniOes,
please
contact:
Guillaume
Corpart,
Managing
Director
+1
(305)
441-­‐9300
x302
gc@globalhealthintelligence
Q&A session