Sunday, January 06, 2008
2008-Time to Consolidate
2007. What a year it was. India rocked. Across the board. The stock market, real estate, T20, bollywood, and of course healthcare.
New hospital projects being launched are no longer as exciting as they used to be, there are so many of them. Pharma retail seems to have taken off well, the buzz around medical tourism is a little muted, and everyone seems to be talking accreditation and quality standards.
One development that caught my attention is the entry of private equity, big time into the healthcare delivery space. Some of the large hospital projects have always had Private Equity participation, but for the first time, mid size hospitals seem to have caught the fancy of the PE players. And many of them are launching dedicated funds that will invest in mid size hospitals. ICICI Venture has already announced a bunch of such investments, and by the end of the year, it seems likely that the fund would have assembled 15-20 investments aggregating 1000 beds or more. On the one hand we have the large hospital chains acquiring hospitals across the country (practically every chain has added to its network in 2007), and now we have a PE driven consolidation.
Who will benefit from this. The patient, the physician, the owner of the hospital, or the investor. Considering that the fund will get involved in activities like hiring and procurement, as well as quality standards, one would expect patients to benefit immensely. Many of these mid size hospitals are underutilized and the presence of seasoned managers brought into the act by the fund will surely boost the financial performance of these hospitals. So physicians, owners, and investors will benefit as well.
As of now, seems like win-win all around. We'll have to wait and see. One challenge will be the availability of top talent, both medical as well as non-medical. But maybe there is an opportunity to set up executive training programs targeted towards healthcare professionals. As well as promote the concept of membership organizations.
New hospital projects being launched are no longer as exciting as they used to be, there are so many of them. Pharma retail seems to have taken off well, the buzz around medical tourism is a little muted, and everyone seems to be talking accreditation and quality standards.
One development that caught my attention is the entry of private equity, big time into the healthcare delivery space. Some of the large hospital projects have always had Private Equity participation, but for the first time, mid size hospitals seem to have caught the fancy of the PE players. And many of them are launching dedicated funds that will invest in mid size hospitals. ICICI Venture has already announced a bunch of such investments, and by the end of the year, it seems likely that the fund would have assembled 15-20 investments aggregating 1000 beds or more. On the one hand we have the large hospital chains acquiring hospitals across the country (practically every chain has added to its network in 2007), and now we have a PE driven consolidation.
Who will benefit from this. The patient, the physician, the owner of the hospital, or the investor. Considering that the fund will get involved in activities like hiring and procurement, as well as quality standards, one would expect patients to benefit immensely. Many of these mid size hospitals are underutilized and the presence of seasoned managers brought into the act by the fund will surely boost the financial performance of these hospitals. So physicians, owners, and investors will benefit as well.
As of now, seems like win-win all around. We'll have to wait and see. One challenge will be the availability of top talent, both medical as well as non-medical. But maybe there is an opportunity to set up executive training programs targeted towards healthcare professionals. As well as promote the concept of membership organizations.
Saturday, April 21, 2007
Healthcare Goes Retail
Chemists Check Competition
By now everyone acknowledges that retail is the flavor of the month, and if any business can go retail, one can be sure it will. I have written about the levels of activity in the healthcare space, with many players setting up retail pharmacy chains, integrated health centers and so on.
But this has to be the most interesting move of them all. The All-India Chemists and Druggists Association (AIOCD) has appointed Ernst and Young, and Accenture to help chemist stores "migrate" from traditional shops to professional stores. Plans are afoot to provide AC storage facilities for drugs, Blood Pressure and routine check up facilities like blood sugar levels, consultation, home delivery etc. The AIOCD is also in talks with leading pathology labs to offer these diagnostic facilities at the chemist stores.
Clearly, this move is prompted by the coming of the big boys into pharma retail. The numbers are mind-boggling. The next few years could see more than 5000 outlets being set up by the new entrants alone (Reliance Retail-4000, Fortis Health World-1000, Dabur-400). Am sure existing players like Apollo, Medicine Shoppe, LifeKen etc will have their own ramp-up plans. Most of these retail chains intend to provide a host of value added medical services such as BP check, blood testing, health related consultancy, home delivery, prescription reminders, membership facilities, NRI schemes and telemedicine.
To counter these, the association has pooled in resources through its members, and one can already see multiple initiatives at the state level (Maharashtra and Kerala). It is estimated that there are around 5.5 lac traditional chemist shops across the country. However, such value added services are likely to be offered only by the larger outlets, typically based in the metros with space of around 200 s.ft.
According to Mr.A.N.Mohan, President of the AIOCD, these steps are being taken to safeguard the interest of the members and shift the conventional age-old pharmacy to a modern, and professional format.
By now everyone acknowledges that retail is the flavor of the month, and if any business can go retail, one can be sure it will. I have written about the levels of activity in the healthcare space, with many players setting up retail pharmacy chains, integrated health centers and so on.
But this has to be the most interesting move of them all. The All-India Chemists and Druggists Association (AIOCD) has appointed Ernst and Young, and Accenture to help chemist stores "migrate" from traditional shops to professional stores. Plans are afoot to provide AC storage facilities for drugs, Blood Pressure and routine check up facilities like blood sugar levels, consultation, home delivery etc. The AIOCD is also in talks with leading pathology labs to offer these diagnostic facilities at the chemist stores.
Clearly, this move is prompted by the coming of the big boys into pharma retail. The numbers are mind-boggling. The next few years could see more than 5000 outlets being set up by the new entrants alone (Reliance Retail-4000, Fortis Health World-1000, Dabur-400). Am sure existing players like Apollo, Medicine Shoppe, LifeKen etc will have their own ramp-up plans. Most of these retail chains intend to provide a host of value added medical services such as BP check, blood testing, health related consultancy, home delivery, prescription reminders, membership facilities, NRI schemes and telemedicine.
To counter these, the association has pooled in resources through its members, and one can already see multiple initiatives at the state level (Maharashtra and Kerala). It is estimated that there are around 5.5 lac traditional chemist shops across the country. However, such value added services are likely to be offered only by the larger outlets, typically based in the metros with space of around 200 s.ft.
According to Mr.A.N.Mohan, President of the AIOCD, these steps are being taken to safeguard the interest of the members and shift the conventional age-old pharmacy to a modern, and professional format.
Friday, April 20, 2007
Healthcare Goes Retail
Fast Growth
In my second posting sometime in August last year, I wrote about Optival Health Solutions, a company which was setting up retail pharmacies under the brand name of Aushadhi. At that time they had 53 outlets across Andhra and Karnataka. Sometime back I read that the company had received an investment from iLabs and had changed its name to Medplus Health Services.
Yesterday, Dr.Madhukar Gangadi, the founder of the Company was featured in the Economic Times. Medplus is already at 120 stores and expects to get to 250-300 by June. Now, that is some ramp-up. Of course, this area is hot, what with a host of big names already having jumped into the fray (most prominent among these of course being Fortis World). But going from scratch to 250 stores in slightly over 15 months (Medplus opened its first store in Feb 06) is great going. And now Dr.Gangadi is talking about launching the concept of Integrated Health Centers, which will also include diagnostic labs and clinics. A concept that is becoming popular, and in my opinion, will become a significant part of the healthcare delivery process in India.
In my second posting sometime in August last year, I wrote about Optival Health Solutions, a company which was setting up retail pharmacies under the brand name of Aushadhi. At that time they had 53 outlets across Andhra and Karnataka. Sometime back I read that the company had received an investment from iLabs and had changed its name to Medplus Health Services.
Yesterday, Dr.Madhukar Gangadi, the founder of the Company was featured in the Economic Times. Medplus is already at 120 stores and expects to get to 250-300 by June. Now, that is some ramp-up. Of course, this area is hot, what with a host of big names already having jumped into the fray (most prominent among these of course being Fortis World). But going from scratch to 250 stores in slightly over 15 months (Medplus opened its first store in Feb 06) is great going. And now Dr.Gangadi is talking about launching the concept of Integrated Health Centers, which will also include diagnostic labs and clinics. A concept that is becoming popular, and in my opinion, will become a significant part of the healthcare delivery process in India.
Tuesday, April 17, 2007
$ 50 B
What the numbers tell us
Experts often talk about there being two Indias. One that is made up of the 300 Million, urban and/or middle income people who make the consuming class that is largely responsible for the growth of the economy. The other that consists of the 700 Million, rural and/or poor who in many instances lack even basic amenities like drinking water or access to primary health care.
Was wondering if healthcare statistics would look different if we adjusted for the above..
Lets look at the total number of hospital beds. Approximately 9,00,000 we are told, with maybe 40,000-80,000 being added every year (it is time state governments implemented a licensing/registration policy for new healthcare facilities, so that we know atleast how many beds are being added every year). Using the 1 Billion number, it looks like the availability of Hospital Beds per 1000 Population (an average used by the World Bank and WHO for comparing countries, and used by everyone else to demonstrate their understanding of ground level realities) is around 0.9. Which makes us look bad when compared against developed countries like the US.
Given that a large number of the hospital beds are in urban/semi-urban areas, and that the most acknowledged challenge for the rural and/or poor population is access to healthcare, it is reasonable to assume that a big chunk of these beds cater to the 300 Million urban and/or middle income groups. When looked at this way, the availability of beds now jumps up to 3 per 1000 population. A figure that compares extremely favorably with the developed countries.
So what is the ground reality? Are we uniformly lacking in healthcare infrastructure, or is it just a classic case of skewed allocations, with the middle income groups being well provided for, and the poor having to make do with the occasional philanthropic initiative. Since this blog is not about policy making, I make no attempt to offer solutions to fix this problem. But one thing is certain. That, there is a huge, yet untapped opportunity in rural India for healthcare infrastructure. Not flashy hospitals, but well designed facilities that provide high standards of medical treatment that will obviate the need for a patient to travel to an urban center almost all the time.
Experts often talk about there being two Indias. One that is made up of the 300 Million, urban and/or middle income people who make the consuming class that is largely responsible for the growth of the economy. The other that consists of the 700 Million, rural and/or poor who in many instances lack even basic amenities like drinking water or access to primary health care.
Was wondering if healthcare statistics would look different if we adjusted for the above..
Lets look at the total number of hospital beds. Approximately 9,00,000 we are told, with maybe 40,000-80,000 being added every year (it is time state governments implemented a licensing/registration policy for new healthcare facilities, so that we know atleast how many beds are being added every year). Using the 1 Billion number, it looks like the availability of Hospital Beds per 1000 Population (an average used by the World Bank and WHO for comparing countries, and used by everyone else to demonstrate their understanding of ground level realities) is around 0.9. Which makes us look bad when compared against developed countries like the US.
Given that a large number of the hospital beds are in urban/semi-urban areas, and that the most acknowledged challenge for the rural and/or poor population is access to healthcare, it is reasonable to assume that a big chunk of these beds cater to the 300 Million urban and/or middle income groups. When looked at this way, the availability of beds now jumps up to 3 per 1000 population. A figure that compares extremely favorably with the developed countries.
So what is the ground reality? Are we uniformly lacking in healthcare infrastructure, or is it just a classic case of skewed allocations, with the middle income groups being well provided for, and the poor having to make do with the occasional philanthropic initiative. Since this blog is not about policy making, I make no attempt to offer solutions to fix this problem. But one thing is certain. That, there is a huge, yet untapped opportunity in rural India for healthcare infrastructure. Not flashy hospitals, but well designed facilities that provide high standards of medical treatment that will obviate the need for a patient to travel to an urban center almost all the time.
Global Aspirations
Indian Hospital Companies Go Global
Today's Economic Times carries reports about two of India's largest healthcare companies, Apollo and Manipal. Both reports talk about the expansion plans of these groups, but the interesting thing is that these plans include hospital projects outside India. Of course, the Apollo Hospitals Group ventured outside India long back, and already has hospitals in Dubai, Bangladesh and Oman. Now it is eyeing acquistions in the UK, and says it has received proposals from the Caribbean and Latin America. On the other hand, Manipal Health Systems is just venturing out with its first overseas project in Malaysia.
This is interesting stuff, and reminds me of something I wrote sometime back. Riding on an increasing demand for world class services from a domestic consumer base that has the willingness and ability to pay for world class services, these is an explosive growth in the number of high end specialty hospitals. But these hospitals are not content to just treat the well heeled Indian Patient, and are increasingly reaching out to a global audience. And many are doing this by going closer to these patient populations.
Historically, India has always played a significant role in the global healthcare industry, though its contributions were mostly by way of providing a large number of physicians and nurses to hospitals, both in the developed and developing countries. Strangely, that opportunity looms even larger today as the population in the developed countries grows older, and needs not only physicians and nurses, but a large number of other trained care givers as well.
In the last decade, India has built up quite a reputation for itself as the preferred outsourcing destination for the world. Whether it is Disease Management or Tele Radiology, Clinical Data Management or Claims Processing, India does it all. It is a happy coincidence that Information Technology is such an essential ingredient in delivering cost effective healthcare services to a global population. If combined well with its ability to produce top Medical talent, India has a chance to become a preferred provider of healthcare services to the World. An opportunity it must grab with both hands.
Today's Economic Times carries reports about two of India's largest healthcare companies, Apollo and Manipal. Both reports talk about the expansion plans of these groups, but the interesting thing is that these plans include hospital projects outside India. Of course, the Apollo Hospitals Group ventured outside India long back, and already has hospitals in Dubai, Bangladesh and Oman. Now it is eyeing acquistions in the UK, and says it has received proposals from the Caribbean and Latin America. On the other hand, Manipal Health Systems is just venturing out with its first overseas project in Malaysia.
This is interesting stuff, and reminds me of something I wrote sometime back. Riding on an increasing demand for world class services from a domestic consumer base that has the willingness and ability to pay for world class services, these is an explosive growth in the number of high end specialty hospitals. But these hospitals are not content to just treat the well heeled Indian Patient, and are increasingly reaching out to a global audience. And many are doing this by going closer to these patient populations.
Historically, India has always played a significant role in the global healthcare industry, though its contributions were mostly by way of providing a large number of physicians and nurses to hospitals, both in the developed and developing countries. Strangely, that opportunity looms even larger today as the population in the developed countries grows older, and needs not only physicians and nurses, but a large number of other trained care givers as well.
In the last decade, India has built up quite a reputation for itself as the preferred outsourcing destination for the world. Whether it is Disease Management or Tele Radiology, Clinical Data Management or Claims Processing, India does it all. It is a happy coincidence that Information Technology is such an essential ingredient in delivering cost effective healthcare services to a global population. If combined well with its ability to produce top Medical talent, India has a chance to become a preferred provider of healthcare services to the World. An opportunity it must grab with both hands.
Friday, April 13, 2007
$ 50 B
Exciting Business Models Power Growth
When I wrote on the 1st of Jan, I made a resolution that there would be regular posts from my side. But obviously, I have not been able to stick to that. Surely not for want of action in the healthcare space. If anything, this space is getting hotter by the day. Not a day goes past without the media reporting about some new activity, some days there are more than a couple of stories. New businesses, new models for existing businesses, we are seeing it all. Just the other day, I was driving on Bannerghatta Road in Bangalore. I crossed the new Apollo Hospital, which has a partnership with Johns Hopkins Hospital. Next door is the new Wockhardt Hospital that sports a tie-up with Harvard Medical. Just a few kilometers from these, Dr.Devi Shetty is building the Narayana Health City for which his list of colloborators includes global healthcare leaders like Kiran Mazumdar Shaw.
Couple of weeks ago, I was at a Healthcare Tourism Conference in Cochin, and there must have been more than 200 delegates, many from outside India, and the energy levels were so high. Every one seemed confident that the growth rate of this business segment would exceed the projections made in that bible for the Indian Healthcare sector-The CII-Mckinsey Report 2002.
Another aspect is the pace at which healthcare businesses are growing. In today's Economic Times there is a story about how Dr.A.Velumani of Thyrocare (I have written about him earlier) has grown his company to revenues of Rs.65 Crores in a matter of just 12 years. An interesting business model within the diagnostics business has helped him post 100 % year on year growth several years running.
Looking around, I get the feeling that India Healthcare may get to the $ 50 B mark ahead of 2012.
When I wrote on the 1st of Jan, I made a resolution that there would be regular posts from my side. But obviously, I have not been able to stick to that. Surely not for want of action in the healthcare space. If anything, this space is getting hotter by the day. Not a day goes past without the media reporting about some new activity, some days there are more than a couple of stories. New businesses, new models for existing businesses, we are seeing it all. Just the other day, I was driving on Bannerghatta Road in Bangalore. I crossed the new Apollo Hospital, which has a partnership with Johns Hopkins Hospital. Next door is the new Wockhardt Hospital that sports a tie-up with Harvard Medical. Just a few kilometers from these, Dr.Devi Shetty is building the Narayana Health City for which his list of colloborators includes global healthcare leaders like Kiran Mazumdar Shaw.
Couple of weeks ago, I was at a Healthcare Tourism Conference in Cochin, and there must have been more than 200 delegates, many from outside India, and the energy levels were so high. Every one seemed confident that the growth rate of this business segment would exceed the projections made in that bible for the Indian Healthcare sector-The CII-Mckinsey Report 2002.
Another aspect is the pace at which healthcare businesses are growing. In today's Economic Times there is a story about how Dr.A.Velumani of Thyrocare (I have written about him earlier) has grown his company to revenues of Rs.65 Crores in a matter of just 12 years. An interesting business model within the diagnostics business has helped him post 100 % year on year growth several years running.
Looking around, I get the feeling that India Healthcare may get to the $ 50 B mark ahead of 2012.
Monday, January 01, 2007
Looking Forward
When I started this blog, the intent very clearly was to celebrate entrepreneurial successes in India's fast growth healthcare industry. And since many of these could impact the US Healthcare system, it seemed like a good idea to connect these two whenever opportunities to do so arose.
2006 has been a good year for India, and for its healthcare industry as well. Pharma companies successfully bid for and acquired larger companies operating in the developed economies. Corporate enterprises with solid track records announced their plans to set up healthcare businesses. And we saw the emergence of a different kind of entrepreneur who believed that by cutting across borders that traditionally separated industries, one could build larger businesses, faster.
I wrote about some of these, and am sure there are many more out these who will break out into the open very soon. In the process creating wealth, or just a disruptive influence that could change the dynamics of the industry. Am looking forward to seeing this happen in 2007.
2006 has been a good year for India, and for its healthcare industry as well. Pharma companies successfully bid for and acquired larger companies operating in the developed economies. Corporate enterprises with solid track records announced their plans to set up healthcare businesses. And we saw the emergence of a different kind of entrepreneur who believed that by cutting across borders that traditionally separated industries, one could build larger businesses, faster.
I wrote about some of these, and am sure there are many more out these who will break out into the open very soon. In the process creating wealth, or just a disruptive influence that could change the dynamics of the industry. Am looking forward to seeing this happen in 2007.
Thursday, November 02, 2006
Chronic Diseases
Diabetes
ICICI Prudential Insurance has launched a product called Diabetes Care to provide cover to persons with Diabetes. To promote healthy habits the company has tied up with pharmaceutical companies to make insulin easily available to diabetics at discounted prices. And they say they will also charge discounted premiums to persons who take proper care of their health.
Interesting concept to target specific diseases, especially the chronic kinds, and this approach can be used across the board, by providers of various products and services. Let us take a look at some numbers.
For instance, the number of diabetics in India is estimated to be between 35-40 million, and growing at a rapid pace. Pharmaceutical companies that manufacture and sell insulin have already acknowledged the attractiveness of this market. Hospitals are also beginning to realize this (currently there are very few centers that focus on Diabetes Care, but more and more specialized centers are coming up) Home Monitoring equipment manufacturers have also gotten into the game early. And now we have an insurance company that is targeting the same group.
It would be reasonable to assume a large number of affluent diabetics who would be willing to spend money on products and services that help them manage the condition. Gyms and foot care centers readily come to mind. And I think that we will see a lot of action in this segment over the next couple of years.
And if Diabetics are targted thus, how long before persons with hypertension and dyslipidemia become the targets of interesting offerings. Watch this space
ICICI Prudential Insurance has launched a product called Diabetes Care to provide cover to persons with Diabetes. To promote healthy habits the company has tied up with pharmaceutical companies to make insulin easily available to diabetics at discounted prices. And they say they will also charge discounted premiums to persons who take proper care of their health.
Interesting concept to target specific diseases, especially the chronic kinds, and this approach can be used across the board, by providers of various products and services. Let us take a look at some numbers.
For instance, the number of diabetics in India is estimated to be between 35-40 million, and growing at a rapid pace. Pharmaceutical companies that manufacture and sell insulin have already acknowledged the attractiveness of this market. Hospitals are also beginning to realize this (currently there are very few centers that focus on Diabetes Care, but more and more specialized centers are coming up) Home Monitoring equipment manufacturers have also gotten into the game early. And now we have an insurance company that is targeting the same group.
It would be reasonable to assume a large number of affluent diabetics who would be willing to spend money on products and services that help them manage the condition. Gyms and foot care centers readily come to mind. And I think that we will see a lot of action in this segment over the next couple of years.
And if Diabetics are targted thus, how long before persons with hypertension and dyslipidemia become the targets of interesting offerings. Watch this space
Marketing Hospitals
Branding
A couple of years ago, the word Marketing when used in a conversation inside a hospital either evoked strong opposition (how can you talk about marketing in such a service oriented business like hospitals) or complete disregard (what is there in marketing-you send one guy who goes and meets all the referring doctors and offers them incentives to refer their patients to us).
Therefore news like the one in the Economic Times of the 30th of October comes as a breath of fresh air. Seems like the Sitaram Bhartia Institute of Science and Research wants to position itself as a boutique healthcare player and has roped in an agency to help with a brand makeover. Terms like Brand Profiles, Positioning and New Revenue Streams were used in the press release which makes me happy that even hospitals like the Sitaram Bhartia Institute have realized the importance of connecting with their customers. May their tribe grow.
A couple of years ago, the word Marketing when used in a conversation inside a hospital either evoked strong opposition (how can you talk about marketing in such a service oriented business like hospitals) or complete disregard (what is there in marketing-you send one guy who goes and meets all the referring doctors and offers them incentives to refer their patients to us).
Therefore news like the one in the Economic Times of the 30th of October comes as a breath of fresh air. Seems like the Sitaram Bhartia Institute of Science and Research wants to position itself as a boutique healthcare player and has roped in an agency to help with a brand makeover. Terms like Brand Profiles, Positioning and New Revenue Streams were used in the press release which makes me happy that even hospitals like the Sitaram Bhartia Institute have realized the importance of connecting with their customers. May their tribe grow.
