Apollo Hospitals

First World Health Care at

Emerging Market Prices

By Group AN2

CIRCA 1983

Computers
Telephones
Internet
1 TV Channel Doordarshan

Health insurance
Surgery
Tertiary care centre
Cardiac services

Our cities were called..

Bombay
Bangalore
Calcutta
Madras
Pondicherry

The defining Moment..

Apollo
Hospitals
Touch a Billion Lives

Mission
The mission is to bring healthcare of International
standards within the reach of every individual. We
are

committed

to

the

achievement

and

maintenance of excellence in education, research

 Founded by Dr.Prathap C. Reddyin 1983

The Apollo hospitals group is the pioneer of integrated
healthcare delivery in India
AnIndianhospital chain based inChennai, India

 Dr. Prathap C Reddy, was bestowed with the second

highest civilian award, the Padma Vibhushan, by the
Government of India.
Touched and enriched 39 million lives who came from
120 countries.
Over 10,000 beds across 56 hospitals
More than 1500 pharmacies,
Over 100 primary care & diagnostic clinics,
115 telemedicine units across 9 countries.
The cost of treatment in Apollo is a tenth of the price in
the western world

HealthCare Industry
Spends 5.2% of GDP
The private medical sector remains the primary source
of health care for 70% of households in urban areas
and 63% of households in rural areas
Industry is expected to grow at CAGR 17%
Per capita Healthcare Expenditure to grow at CAGR
15.4%

COMPETITORS
Manipal Group

Fortis Health
Care

11 Private
7 government
Affiliated
6000 beds

4 hospitals
10 over next 5
years
600 beds
4000 in next 5

Lanka Hospitals

A part of the chain of Apollo

Hospitals.

Commenced on 7th June, 2002.

Is a 350 bed multi speciality,

tertiary care hospital.

Latest diagnostic and high

endmedical equipment.

Apollos role was both primary

investor and 3rd party management
operator.

47% of investment by International

Finance Corporation and 35% by
Local Investors.

Apollo Pharmacy
Apollo Pharmacy is the medical
store chain of Apollo Hospitals
Enterprises Ltd

Revenue of 43% and profit of

40% at AHELs balance sheet

Transformed from a supporting

facility to the standalone facility

Targeting to add 250 outlets

every year.

Whats new?
Plans to launch a pharmacy format thats more than
double the size of the existing 350 sq. ft model.

Developed a new line of business in FMCG for related

items.

Planning for the turnover of Rs 1150 crores from 1380

outlets across India.

Apollo Global Project

Consultancy
The planning, implementation and
operations management arm of theApollo
Hospitals Group.

Provides end to end solutions across the

healthcare spectrum round the globe.

What they do?

Setting up a health care
facility
Hospital Operations
Management
Strategic Consultancy
Training
Hospital Quality
Consulting

SOME UNDERTAKEN PROJECTS

Apollo Lavasa Hospitals
Bramwell Hospitals, Mauritius
The Lanka Hospital Corporation
Ltd, Sri Lanka
Al Hokar, Saudi Arabia
Medicover International, Poland
Yemen International, Yemen
Tertiary Care Hospital, Nigeria

Apollo Health and Lifestyle Ltd.

Apollo Health and Lifestyle Limited operates as a subsidiary of
Apollo Hospitals Enterprise Limited.
The company was founded in 2002 and is based in
Hyderabad, India.
It provides primary healthcare facilities through a network of
franchised clinics in India
Offers specialist consultation, diagnostics, preventive health
checks, and 24-hour pharmacy.

Expansion and
competitions
Aim is to maximize
convenience and comfort
Is an integrated model and
offers facilities for
Specialist Consultation

Indian Competitors
Core Diagnostics
Private Limited
SRL Limited
DaVita Care
(India)
Indian
Competitors

Diagnostics

Pvt. Ltd.

Preventive Health Checks

Sarvodaya Global
Limited

24-hour Pharmacy, all

under one roof

Medica Synergie Pvt

Ltd.

SWOT
STRENGTHS
Cost Advantage
Provides primary,
secondary and tertiary
health care services
Quality health care
Brand Image
Talented professionals
Integrated health care
services
High Asset utilization
JCI Accreditations

WEAKNESS
Less

pay

compared

to

international competitors
High attrition rates among
nursing workforce
Lack of infrastructure for
medical tourism
Rising cost of health care
delivery
Perception
operations

as

high-end

OPPORTUNITIES
Growth

of

Health

care

industry in India
Two

third

of

healthcare
occurs

outside hospitals

of
to

skilled
other

countries
Competition from domestic
players

Booming medical tourism

international

market

Poor public infrastructure

China competent enough to
serve medical tourists

Health insurance

National

Entering in insurance and

other medical services
Emerging

Migration
technicians

expenditure

Unexplored

THREATS

as

health care provider

global

&

International

Government Regulations

HEALTH MAINTAINANCE
ORGANISATION
Anorganizationthat
Provides

or

arranges

managed

care

forhealthinsurance
Self-funded healthcare benefit plans
Acts as a liaison withhealthcare providers on a prepaid
New field to venture
basis.
Scope for development in Insurance sector

PORTER'S FIVE
FORCES
Threat Of New
Entrants

Govt. regulation of entry

Can bring in new technologies

High investment in infrastructure
Low

barriers

of

investment funding

entry,

easy

Threat Of Existing
Competition

Large number of players

Price competition
Easy investment available
Low pool of talented doctors,
so increase in rivalry will
increase charges of the
doctors
Scope of Public private
partnerships

Govt. Hospitals-A strong

competition

Threat of
Substitutes
A basic requirement
Facilities in other countries

There is some threat for

substitution in the form
Ayurvedic
Homeopathic treatments

Threat of Suppliers

Less Medical equipment

suppliers

Human resource talented

pool of Indian doctors and
surgeons
Attrition of nurses to western
countries
High costs of advance
technologies

Threat Of
Buyers

Low competition in the tertiary

care services as of 2004
cost advantage over other
countries
China, Malaysia locations for
cheaper medical services

Few Medicine costs are high in

Apollo pharmacy

Q1. Which expansion option is best suited for Apollos

needs and capabilities
Building a Health
Maintenance
Organization

Huge initial
investment
High returns
Huge untapped
market
Brand Name to
facilitate the sales
Customers easily
available
Every customer
stepping in can be
a prospective
insurance taker
As a
complementary it
will help the

Building and
running whollyowned hospitals

Huge
investment
Slow process
Huge untapped
market
Facilitates entry
of new
competition
Resources
availability near
the center
Full fledged
facility to be
developed from
scratch

Licensing its name

to facilities it
manages under
contract

Less investment
involved
A Faster process
Resources already
at place, mere
improvements
required
Facilities to be
streamlined in the
right direction as
they already do in
their consulting
wing though deign
and workforce
facilities
Additional

EMPLOYEES
EMPLOYEES

CUSTOMERS
CUSTOMERS
Superior
Superior results,
results, quick
quick
treatment
treatment &
& low
low cost.
cost.
Foreign
Foreign trained
trained
doctors
doctors
High
High Success
Success rate
rate of
of
surgeries
surgeries
State
State of
of Art
Art
Innovative
Innovative techniques
techniques

Training
Training facilities
facilities
Computer
Computer &Grooming
&Grooming
Skills
Skills
Decentralised
Decentralised
Management
Management
Good
Good rapport
rapport with
with Top
Top
management
management

Apollo
Hospit
al
(Madra
s)

SHAREHOLDERS
SHAREHOLDERS
CAGR
CAGR of
of 16%
16% from
from
2000-04
2000-04
Value
Value was
was Rs
Rs 13.6
13.6 bn.
bn.
in
in 2004
2004
Focus
Focus for
for D/E
D/E Ratio
Ratio of
of
1
1
Share
Share of
of 14%
14% in
in
tertiary
tertiary and
and 35%
35% in
in
Private
Private care
care
Above
Above average
average
operating
operating profit
profit

What are the key elements of Apollo

Hospitals Madras strategic Service vision?

Market segmentation

Cost/Product Differentiation

Operations

Service Sectors

Market Segmentation
Increase penetration in
insurance(%)
Middle to upper income
patients
Ageing Population
Working Population

Cost/Product Differentiation

Operations
Stringent quality
norms and protocols
Strong Execution
Strategy
Acumen to match
care demand and
market gaps with

creation of assets
Long term relationships with medical professionals
Service Sectors
To enhance patient experience and value
End to end offerings

Primary

Standardization of clinical protocols

Secondary

Low cost treatment (Economies of scale)

Tertiary

What account for Hyderabad Apollo

Hospitals disappointing performance, and
what are its future prospects?
Competition from private hospitals
Poor operations strategy
Customers are price sensitive
Location far from city
Large number of private doctors and clinics
No clear medical and business Goals
High attrition rate
Medical tourism is less
The main problem for expansion is lack of
trained doctors and trained manpower

FUTURE PROSPECTS
More Globalization
Infrastructure Improvement
Transportation Facilities
Advertise as centre for International
Tourism
Acquire international projects
Train doctors and manpower

STRENGTHS
Integrated

International

Health Care

Hospital

Delivery

Management

Medical Tourism

Network
Already Ventured

Experience in

Cost Advantage

managing
hospitals
Consumer Trust

Cost leadership

Service at par with

global standards

Expertise in this

High profit margin

business

High success rate

of operations at
low cost

Some of the

Integrated service

Superior Skills

primary care

is provided

compared to

WEAKNESS
Integrated

International

Health Care

Hospital

Delivery Network

Management

Some of the

Contributes only

Weak competitive

franchises are not

2.4% of revenues

position in India vs

doing good

Medical Tourism

countries like
Thailand

Profitability issues

May have cultural

Most of the

differences

patients are
domestic

OPPORTUNITIES
Integrated Health

International

Medical tourism

care delivery

hospital

network

management

Two thirds of Health

Opens up to

Revenue is

care expenditure

European Markets

expected to be at

happens outside

1.1 to 2.2 Billion

Hospitals

dollars

Compliments

International

Huge cost

pharmacy vice

Presence

advantage & skill

versa
Helps in up selling

availability
Can grow as a

Effective utilization

Global Brand

of existing
infrastructure

Referral networks

First Mover

THREATS
Integrated

International

Health Care

Hospital

Delivery

Management

Medical Tourism

Network
Franchise model

Requires to hire

International

may not be

staff with local

competition

successful

language

Tough competition

local culture and

Local

from Local clinics

practices

Infrastructure

Millions of

Threat of loosing

After Care services

physicians

coat advantage

operating