2.

Competitive Analysis of the firm

2.1 Sources of Competitive Advantage
a. Pan India Presence Apollo is the largest private hospital
chain in the country. It presently boasts of over 10000 beds in more
than 64 hospitals, over 2000 pharmacies, more than 100 primary
care and diagnostic clinics. iGiven the enormous growth potential of
the Healthcare industry in India, the pan India presence of Apollo
helps in leveraging it to the maximum extent. The hub and spoke
model followed by Apollo with a super speciality hospital located in
a Tier-1 city as a hub, which is connected to several smaller
hospitals in Tier-2 and Tier 3 cities helps Apollo utilize the demand
effectively. Presently Apollo hospitals has been growing at a rate of
12% of which 9% is based on volumes.ii Existing presence in areas of
low healthcare penetration will help Apollo gain a first-mover
advantage when it comes to launching new divisions. For instance,
the recent foray of Apollo into the homecare segment with Apollo
Homecare will benefit from the same.
b. Brand image The focus of Apollo hospitals on clinical
excellence has led it to become the one of the most trusted
healthcare providers which is a source of competitive advantage for
it. It has been a pioneer in cutting edge surgeries and organ
transplants. This is backed by the fact that Apollo was the first
hospital to be awarded JCI (Joint Commission International)
certification in India, which is the international Gold standard for
hospitals.iii Apollo follows ACE (Apollo Clinical Excellence) score card
which includes major critical clinical parameters and international
best practices thereby delivering excellent service. Service
excellence is an extremely rare resource and cannot be easily
imitated. It is also the crux of intangible value addition such as
brand image, for the firm.
c. Operational Efficiency- The growth of Apollo hospitals is also
in synchronisation with its consistent improvement in its operational
efficiency. It has centralised its procurements to get economies of
scale for both own & managed hospitals. This can be analysed by
studying a few parameters crucial to the hospital industry. iv
Patients handled- Apollo hospitals have recorded steady
growth of both in & out patients over the last 5 years with
CAGR of 7%. Total admissions in FY-15 are +3.5 lakhs with
outpatients around +32 lakhs.

d.

Bed Utilization- registered occupancy rate of 68% despite

increase in 510 beds (from 5811 to 6321). Last 5 years
recorded an average occupancy rate of 72% with average
beds operational being 5000. Competition has recorded an
average occupancy rate of ~ 70%.
ARPOB (Avg. revenue per occupied bed) - ARPOB has grown
at a healthy CAGR of 8% over the last 5 years. ARPOB is
Rs.25,381 per day in FY-15.
ALOS(Avg. length of stay)- reduced ALOS from 4.79 days in
2011 to 4.43 in 2015 due to advancements in operating
procedures and technology.

Business units catering to the entire healthcare

spectrum- Apollo has been extremely active in all parts of the
healthcare value chain. It is a pioneer of integrated healthcare
delivery through its diversified business units. Some of the major
business units amongst the above are Pharmacy, Telemedicine and
Reach Hospitals. The pharmacy network of Apollo amounts to over
2000 branded pharmacies, the first of its kind in India. It accounts
for around 36% of Apollos gross revenues. Primary Healthcare
needs are presently met through the network of Apollo clinics.
Moreover, Apollo aims to provide healthcare services at the grass
root level by further developing the Reach Hospitals initiative and
utilizing its telemetry services. Apollo has also invested significantly
in training and development for its employees by setting up
research and educational institutes. This is in line with the
increasing demand for quality healthcare for its expansion plans as
well as initiatives such as Apollo Reach. Apart from these various
business units, Apollo also offers a unique variety of value added
services(Appendix 1) which are a valuable resource in terms of
revenue generation and expansion of its customer base.

8. Recommendations and Implications

i https://www.apollohospitals.com/locations/india
ii http://www.moneycontrol.com/news/results-boardroom/revenues19-healthcare-servicesgrowth-at-12-apollo_1304223.html

iii https://www.apollohospitals.com/corporate/joint-commission-international-accreditation
iv Annual Report- Year-2015/Financial and Operational Highlights