Hospital chains eye robust growth

Slowing demand may be forcing India Inc to curtail investment plans, but corporate healthcare chains seem to suffer no such problems. The sector, led by Apollo Hospitals, Fortis Healthcare and Wockhardt Hospitals, has expansion plans worth more than Rs 2,000 crore (Rs 20 billion) to increase their bed strength in response to robust demand.

Fortis, which now manages 3,000 beds with a network of 26 hospitals, is planning to double its capacity by 2012 with 40 hospitals.

Fortis Healthcare Managing Director and CEO Shivinder Singh said about 1,200 beds will be added soon at Vashi in Navi Mumbai, Shalimar Bagh in Delhi and Gurgaon and the chain would be eyeing 'opportunistic acquisitions' in the near future.

"The slowdown has not affected us because we are not dependent on selective procedures and traffic from abroad to boost business," said Singh, a former promoter of domestic pharma giant Ranbaxy.  

Apollo Hospitals, which has 7,500 beds in 43 hospitals in India and overseas, plans to add 2,000 beds in two years at an investment of over Rs 800 crore (Rs 8 billion). New hospitals will soon come up at Vizag, Bhubaneswar, Erode, Trichy and Karaikudi. Over 550 beds are also being added at Apollo's main centres at Hyderabad and Chennai.

"Patients are keen to avail of quality healthcare and opt for the best available choices, especially in the case of chronic diseases," said Suneeta Reddy, executive director, Apollo Hospitals.

Fortis will file for a Rs1,000 crore (Rs 10 billion) rights issue with the Securities and Exchange Board of India within a month to fund its expansion plans, Singh said. Reddy said Apollo Hospitals has already raised Rs 800 crore (Rs 8 billion) for the purpose.

Meanwhile, the 17-hospital Wockhardt chain, which had to shelve its initial public offer last year to fund for its expansions, is will soon add hospitals at Kolkata, Mumbai and at Nasik in Maharashtra, which will start functioning within a month.

Vishal Bali, chief executive of Wockhardt Hospitals said the company would continue to add capacity and maintain the double-digit growth of the past few years. Bali, however, declined to reveal details about the investments plans.

Driving this growth is steadily rising incomes and, therefore, demand for quality healthcare services in the absence of an efficient government-run delivery systems. Various estimates put the annual growth of the sector at between 10.8 per cent and 15 per cent.

"Demand has outstripped supply in India's healthcare sector, which is growing at a fast pace year after year," said Apollo's Reddy. Fortis Healthcare, which added about 750 beds alone over the past one year through expansions and acquisitions, posted a net profit of Rs 16 crore (Rs 160 million) in the nine months ended 31 December, 2008, against a loss of Rs 45.6 crore (Rs 456 million) in the corresponding period last year.

Wockhardt's Bali noted that apart from demand, healthcare providers are moving to medium and smaller towns, which has given the hospital chains better reach and business.