Dr. Prathap C Reddy, Chairman
Apollo Hospitals Group
“Apollo Hospitals
First –World Heath Care at Emerging-Market
Prices”
April 15, 2010
“Perspectives on Management”
Peter Bell
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Statistics-India
• Total population: 1,151,751,000
• Gross national income per capita (PPP international $): 2,460
• Life expectancy at birth m/f (years): 62/64
• Healthy life expectancy at birth m/f (years, 2003): 53/54
• Probability of dying under five (per 1 000 live births): 76
• Probability of dying between 15 and 60 years m/f (per 1 000
population): 276/203
• Total expenditure on health per capita (Intl $, 2006): 109
• Total expenditure on health as % of GDP (2006): 4.9
• Figures are for 2006 unless indicated. Source: World Health Statistics
2008
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•
Statistics-U.S.
Total population: 302,841,000
• Gross national income per capita (PPP international $):
44,070
• Life expectancy at birth m/f (years): 75/80
• Healthy life expectancy at birth m/f (years, 2003): 67/71
• Probability of dying under five (per 1 000 live births): 8
• Probability of dying between 15 and 60 years m/f (per 1
000 population): 137/80
• Total expenditure on health per capita (Intl $, 2006): 6,714
• Total expenditure on health as % of GDP (2006): 15.3
• Figures are for 2006 unless indicated. Source: : World Health Statistics 2008
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Success Story
• Dr. Reddy
• Opportunity
• The Business
• Growth
• Legacy/Leadership Transition
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Apollo Hospitals, New Delhi
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Dr. Prathap Reddy
“Good fortune is what happens when
opportunity meets with planning.”
Thomas Edison
– Market Need
– Access to Talent
– His expertise and passion
– Cost Advantage
– Culture
– Regulatory Environment
– Globalization
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Dr. Prathap C. Reddy
• Background
– Cardiologist
– Trained and Practices in the US for 15 years
– Moved home to India-but had to refer complex
cases outside of India
– Opens first “for profit” hospital in India-1983
• Experience
• Passion
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“This goes back to how and why Apollo began in Madras.
(People don’t know… that I am not a rich man nor am I
an entrepreneur.) I did this because… in 1979 I spent ten
years in US and came back. When I was practicing, I lost
a patient, a man who was only 38 years old, he died
because he couldn’t afford to pay $30,000 and go to
Houston for his surgery. And when I saw his wife who
was 31-years old with a 7 year old son and a two year old
daughter, I said to myself, “This tragedy shouldn’t befall
another person because if Indians are par-excellence
overseas… why shouldn’t we do that for our own
people?” That was the birth of Apollo. And it was not
easy.”
Source:http://www.priu.gov.lk/news_update/Current_Affairs/ca200206/20020605exclusive
_interview.htm
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The Opportunity
• Large Population-1.1 Billion
• High infant mortality and morbidity
• 64% of health care spending direct from the consumer
• Only 15% of the population has health insurance-
• Infrastructure is behind (0.7 beds/1000 India vs 2.6 world
average)
• Quality of government care is sub-par
• No HMO’s (eg. Blue Cross, Tufts, Aetna, etc)
• Tertiary care market growth rate of 15%
• Growth in middle class
• Medical Tourism
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The Business
• Metrics/Results: 1983-2003
– Quality
• Cardiac (beating heart technique)-99.5%
– Only surpassed by Mayo Clinic
• Bone Marrow-87%
• Kidney-95%
– Size
• Largest private health care group in Asia
• 33 hospitals with 6,400 beds
• Treat patients from 50 countries
• 14% market share (Tertiary market)
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The Business (cont.)
• People:
– 10,000 employees (1,000 doctors)
– Access to talent: India doctors in the US who want to move
back home
– Global Nursing Program (GNP)
• Pharmacy Network:
– 43% or revenue and 40% of profits
– 189 outlets
– Consistent Quality
• Financials:
– Sound financial controls
– $115 MM in revenue
– Oper Margin:-22.30% vs 20%
– Net Margin (M)-7.92 % vs 4%
– Valuation: $311 MM (Reddy family owns 32%)
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Cost Advantage
• Cardiac: $25,000 vs $6,000
• Orthopedic: $20,000 vs $4,500
• Bone Marrow: $250,000 vs $30,000
– Personnel costs
– Equipment utilization rates
– Economic life of the equipment
– Margins
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Apollo-Integrated healthcare delivery company
• Apollo Hospitals Enterprise Limited
• » AHEL Pharmacies Business
• » Keimed.com Limited
• » Online Hospital Equipment Services Private Limited
(Equipment World)
• » Apollo Health & Lifestyle Limited
• » Apollo Health Street Limited
• » Med Varsity Online Limited
• » Apollo Telemedicine Enterprises Limited
• » Apollo Hospitals Education and Research Foundation
• » Family Health Plan Limited
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Growth Opportunities
• Integrated Health Care Delivery Networks (IDN)
– Pharmacies
– Primary care clinics
– Other services (eg. Insurance)
• International Hospital Management
– Colombo Hospital (Sri Lanka)
– Romania
• Medical Tourism
– Indians living overseas
– UK and Canadian residents-long waiting times
– US-43 MM uninsured Americans
– Patients from countries without quality health care
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Challenges
• Quality
• Access to Capital
• Profits
• Local or Global?
• Who has access to care?
– Private Hospitals vs. Public health care in India
• Substitute?
• Increasing Competition
– How does Apollo compete?
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Summary: Takeaways and
Questions
Profits vs Quality of Care (is there a trade-off?)
Would you go or send a family member?
What role should the US Government play?
What role should large pharma and medical
technology companies play?
Private or Public?
Who Pays?
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