Apollo Hospitals Enterprise Limited will open new hospitals in smaller towns like Lucknow and Kanpur, which don’t have many super specialty hospitals, rather than open another hospital in big cities like Delhi, as India’s largest hospital chain operator looks to strengthen its presence in newer markets, top company officials said on Wednesday.
“In Delhi, there is overcapacity of beds. The success of hospitals in Delhi is because of the feeder markets. So, for instance, Lucknow in UP was hugely under served. Our strategy is Lucknow. We are looking at maybe Nagpur, Kanpur, which are feeders into Delhi. The cost per bed is much lower and clinical talent is available. So, our strategy is to actually look at feeder markets and place hospitals there,” said Suneeta Reddy, managing director of Apollo Hospitals.
In February this year, the company opened its 330-bedded super specialty hospital in Lucknow. Over the last 30 months, Apollo Hospitals has invested Rs 3,000 crore in 13 hospitals.
The Apollo Hospitals now has 72 hospitals. While the company will continue to invest into new and existing hospitals, it will also explore asset light models, whereby it will only operate and manage few properties, just like many hotel chains as it will help it reduce the need to get new investments as well as reduce debt.
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“Most of the hotels are not owned by the companies. So, instead of owning property, if we can transition into that it will help us,” said Prathap Reddy, chairman of Apollo Hospitals.
For instance, its upcoming hospital in Kochi is being set up through an operations and management contract with the Adlux Group as infrastructure partner.
The company had a debt of more than Rs 3,000 crore as of March 31, 2019. The promoter family sold a 3.6 per cent stake earlier this month in a bid to reduce debt.
In June this year, it sold its near 51 per cent stake in Apollo Munich Health Insurance to HDFC.
Earlier in November last year, it announced plans to transfer its front-end pharmacy business to a wholly owned subsidiary, post which it will hold 25.5 per cent in the pharmacy business, while the rest will be held by investors, including Jhelum Investment Fund, Enam Securities and Hemendra Kothari.
“We are not desperate to get more investment,” Prathap Reddy told reporters.
The company will continue to scale up its pharmacy business, which grew 19 per cent last quarter. It currently has 3,500 pharmacy stores and the aim is to expand it to 5,000 outlets, with around 250-300 pharmacies being opened every year, Suneeta Reddy said.
