Industry analysis
Transcript: Strengths Healthcare sector has a growth rate of 13% per year The number of patients visiting India for medical treatment have risen from 10,000 to 100,000 Hospitals in India conduct latest surgeries at a very low cost Healthcare industry alone employs over four million people availability of world class high-tech medical equipment and information technology Major surgeries like cardio-thoracic, neurological have a success rate at par with international standards Weakness Lack of medical facilities in less developed parts of India Less physician specialists in India High deposit fees and high costs of medical services in big hospitals limits itself to high income level people Lack of team or collaborative approach among governmental hospitals Opportunites Healthcare industry alone can rake in over $ 2 billion as additional revenue Medical tourism market in India is growing at a very fast pace and is worth $ 333 million. Joint ventures for offering medical insurance and other insurance services is one of the investment and business opportunities Telemedicine systems Healthcare Infrastructure Telemedicine Medical Equipment Health Insurance Clinical Trials Medical value travel Training and Education Threats The increasing Union power have led to the functional disruption of the healthcare units Competition from other international hospital chains which are more advanced and technology equipped Strength Cost efficiencies through sharing of managerial and clinical resources Economies of scale and competitive prices from our suppliers and service providers through centralized purchasing Access to qualified and trained medical resources through the educational initiatives Access to a larger patient base through our pan-India presence in primary clinics, telemedicine and other healthcare programs Weakness Apollo Hospital have added 165 stand-alone pharmacies during the year and added over 900 hospital beds during the last 18 months. The new bed additions and stand alone pharmacies will take some time to stabilize operations and attain maturity. This could impact the overall margins. As demand for these professionals exceed the supply, it may become difficult to negotiate favorable terms and arrangements with them. High attrition rate among the nursing workforce Opportunities In Infrastructure Booming medical tourism: Increasing number of medical tourist Telemedicine Health Insurance Threats There seems to be high competition prevailing amongst existing players in the industry. Cost of the medical equipment accounts for 40% to 45% of the total expenditure in the hospitals. Any change in technology will make the existing medical equipments obsolete As US is trying to provide quality healthcare services at low costs as per their new presidential plan, this may reduce the revenue. Pharma: R&D Patents-intens Insurance: Intense competition Hospitals: less intense Barriers to entry-high Pharma: initial investment, R & D Insurance: establishing physician network, State regulatory requirements Hospitals: Investment, Regulatory Complex Drugs Patients Pharma Hospital/ Insurance Pharmacies Medical equipment Insurance On the whole-no substitutes Pharma :After patent expires Hospitals & insurance: no substitutes Alternative medicine: Homeopathy ,Ayurvedic, yoga Unaffected by buyer power Centres of excellence Cutting edge medical care Request information Refer a patient Pay online Value Added Services Initiatives Apollo Hospitals’ hospital-based pharmacies account for above 80 percent of the turnover of this division They are more profitable than the stand-alone pharmacies because they not only have a captive consumer base The EBITDA margin from mature stores improved to 5.7% in FY 12 from 5.2% in FY11. Thus they have high growth opportunities and greater potential of high market share Apollo Hospital plans to commence specialty centers for Heart care, Orthopedic centers and Woman & Child care hospitals Apollo Reach Hospitals: This healthcare model takes advanced technology and experienced medical professionals to the people living in rural and semi-urban areas of the country Apollo Health Street Limited (AHSL) – An initiative which may require Apollo financial support The hospital business constitutes around 73% of the revenue and around 99% of the operating profit Six centers of Excellence ‘CONECT’ Cardiology Orthopedics Neurosciences Emergency Cancer Transplant Medicine Poor financial performance of non-core business such as insurance and BPO continues to drag Apollo’s consolidated performance. The management has indicated that going forward it will not increase investments in these businesses Super specialty hospitals Maximize on revenues from in-house pharmacy Health plan packages Stress management workshops Integrated healthcare systems Mergers for synergy of skills Diversification Healthcare Industry The health care industry is projected to grow at a healthy CAGR of 21 percent for the next five years Within this context,
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