APOLLO HOSPITALS

FIRST-WORLD HEALTH CARE

at EMERGING-MARKET PRICES

I N T E R N AT I O N A L
C O N S U LT I N G
 Issue Definition
EnvironmentAnalysis
Strategy Options
Strategy Choice
Action Plan

CONTENTS
CONTENTS
ISSUE DEFINITION
ISSUE DEFINITION
 Integrated Health Care International Hospital
Delivery Networks Management

Medical
Tourism

Apollo Hospitals Group faced ample opportunities.

But which strategies were most promising?

ISSUE DEFINITION
ISSUE DEFINITION
1
ENVIRONMENT ANALYSIS
ENVIRONMENTANALYSIS
1. Internal Environment -Apollo Group

Treating patients from more than 50 countries

Share in the tertiary care market stood at 14% in India

35% share in the market for private tertiary care

ENVIRONMENTANALYSIS
ENVIRONMENTANALYSIS
2
1. Internal Environment - Local Competitors

Fortis
Apollo Manipal
Healthcare
Hospitals Group
Ltd.

4 hospitals
33 hospitals 11+7 hospitals
(10 hospitals)

600 beds
6400 beds 6000 beds
(4000 beds)

ENVIRONMENTANALYSIS
ENVIRONMENTANALYSIS
3
2. Local Environment

Indians spent 5.2% of GDP on health care

(less than South Koreans 6.7% and Brazilians 6.5% but more than China 2.7%)

ENVIRONMENTANALYSIS
ENVIRONMENTANALYSIS
4
 Total Expenditure on Health, %GDP
16%

13%

10%

7%

4%
2000 2001 2002 2003 2004

US France Canada UK Korea

ENVIRONMENTANALYSIS
ENVIRONMENTANALYSIS
5
2. Local Environment

Only 15% of the Indian population was covered by insurance

ENVIRONMENTANALYSIS
ENVIRONMENTANALYSIS
6
 Public expenditure on health, % total expenditure on health in 2004
100%

75%

50%

25%

US Canada France UK Korea

ENVIRONMENTANALYSIS
ENVIRONMENTANALYSIS
7
3. Global Environment

Total expenditure on health has increased constantly

ENVIRONMENTANALYSIS
ENVIRONMENTANALYSIS
8
 Total expenditure on health, Per capita US$ PPP
$6,500

$4,925

$3,350

$1,775

2000 2001 2002 2003 2004

UK Canada France US Korea

ENVIRONMENTANALYSIS
ENVIRONMENTANALYSIS
9
3. Global Environment

India has a competitive advantage in the Health Care Cost

ENVIRONMENTANALYSIS
ENVIRONMENTANALYSIS
10
 Global Cost Differences for Cardiac Surgery(US$)
$30,000

$27,000
$26,000
$24,000

$18,000

$12,000

$9,000
$8,000 $7,500
$6,000
$6,000

US UK Malaysia Singapore Thailand India

ENVIRONMENTANALYSIS
ENVIRONMENTANALYSIS
11
 Health Care Cost Differences between US and India(US$)
$160,000
$159,326

$128,000
$122,424

$96,000

$64,000
$57,262
$47,988
$43,780 $40,640
$32,000

US
India $9,500 $10,000 $11,000 $11,000 $9,000 $8,500
H/V Replacement Heart Bypass Angioplasty Gastric Bypass Hip Replacement Knee Replacement

ENVIRONMENTANALYSIS
ENVIRONMENTANALYSIS
12
ENVIRONMENTANALYSIS
ENVIRONMENTANALYSIS
13
 Apollo Hospitals Group is dominant company in the India tertiary care market.
But there are number of competitors in the market for privately-provided tertiary care.
And Indians spend most of health care expenditure(64%) in their pocket directly without public support.

ENVIRONMENTANALYSIS
ENVIRONMENTANALYSIS
13
 Apollo Hospitals Group is dominant company in the India tertiary care market.
But there are number of competitors in the market for privately-provided tertiary care.
And Indians spend most of health care expenditure(64%) in their pocket directly without public support.

Growth Limits of Domestic Health Care Market in short-term view

ENVIRONMENTANALYSIS
ENVIRONMENTANALYSIS
13
 Apollo Hospitals Group is dominant company in the India tertiary care market.
But there are number of competitors in the market for privately-provided tertiary care.
And Indians spend most of health care expenditure(64%) in their pocket directly without public support.

Growth Limits of Domestic Health Care Market in short-term view

Global Total expenditure on health %GDP has increased constantly.
Also, Global Total expenditure on health per Capita has increased.
And, India has a competitive advantage in the Health Care Cost.

ENVIRONMENTANALYSIS
ENVIRONMENTANALYSIS
13
 Apollo Hospitals Group is dominant company in the India tertiary care market.
But there are number of competitors in the market for privately-provided tertiary care.
And Indians spend most of health care expenditure(64%) in their pocket directly without public support.

Growth Limits of Domestic Health Care Market in short-term view

Global Total expenditure on health %GDP has increased constantly.
Also, Global Total expenditure on health per Capita has increased.
And, India has a competitive advantage in the Health Care Cost.

Opportunity of Global Health Care Market for Apollo Hospitals

ENVIRONMENTANALYSIS
ENVIRONMENTANALYSIS
13
STRATEGY OPTIONS
STRATEGY OPTIONS
 Integrated Health Care Delivery Networks

International Hospital Management

MedicalTourism

STRATEGY OPTIONS
STRATEGY OPTIONS
14
 Advanced Health Care technology and a huge cost advantage

Intellectual Property
(Human resources and Managing Know-how)

Apollo intended to pursue an asset-light strategy

STRATEGY OPTIONS
STRATEGY OPTIONS
15
STRATEGY CHOICE
STRATEGY CHOICE
 Integrated Health International
Medical
Care Delivery Hospitals
Tourism
Network Management
Colombo Hospital
Pharmacy Network Dominant Position in Sri Lanka
SITACARE
The group operated the largest
International www.SITACARE.com One-Stop Shop
pharmacy network
(200 offices in India, 7 offices in EU)
(40% of profits) Consulting & Project
(33% of consulting revenue)

Cost Advantage in Global

Domestic Market Strategy
Integrated
Health Care Service
Financial Risks
Cost Advantage in Global
Using Intellectual Property
Using Human Resource and
Intellectual Property
Lack of Infrastructure
Asset-Heavy Strategy
Less Market Dominance

STRATEGY CHOICE
STRATEGY CHOICE
16
 Domestic Health Care Market faced Growth limitation
but Global Health Care Market is growing up

STRATEGY CHOICE
STRATEGY CHOICE
17
 Domestic Health Care Market faced Growth limitation
but Global Health Care Market is growing up

If Apollo concentrate on the IDN or the property of the abroad hospitals,

they have to invest more and it would be against group which pursuit asset-light strategy.

STRATEGY CHOICE
STRATEGY CHOICE
17
 Domestic Health Care Market faced Growth limitation
but Global Health Care Market is growing up

If Apollo concentrate on the IDN or the property of the abroad hospitals,

they have to invest more and it would be against group which pursuit asset-light strategy.

Therefore, Apollo need to concentrate on the medical tourism

using advantages of health care technology and cost,
and abroad hospital operation management using their human resources and intellectual property.

STRATEGY CHOICE
STRATEGY CHOICE
17
 Global Medical Tourism

After-Care Infrastructure

Medical Tourism in India

International Operation
Cooperation U-Health
Clinic Management

Time
STRATEGY CHOICE
STRATEGY CHOICE
18
ACTION PLAN
ACTION PLAN
1. Strategy Goal

Short-Term Medical
How can we make foreign patients?
Strategy Tourism

Mid-Term After-care How can we structure After-care Infra

Strategy Infrastructure most efficiently?

Global
Long-Term How can we make dominance in the
Medical
Strategy Global Medical Tourism Market?
Tourism

ACTION PLAN
ACTION PLAN
19
2. MedicalTourism - Segments Choice

Members of 20 million Countries with rationed

Indian diaspora (EU Nations including UK,Canada)

Patients from regional

The Legions of uninsured
markets in which top-
in the United States
quality were hard to find

ACTION PLAN
ACTION PLAN
20
ACTION PLAN
ACTION PLAN
21
ACTION PLAN
ACTION PLAN
21
2. MedicalTourism - Segments Choice

Members of 20 million Countries with rationed

Indian diaspora (EU Nations including UK,Canada)

Patients from regional

The Legions of uninsured
markets in which top-
in the United States
quality were hard to find

ACTION PLAN
ACTION PLAN
22
2. MedicalTourism - Segments Choice

The Legions of uninsured Countries with rationed

in the United States (EU Nations including UK,Canada)

ACTION PLAN
ACTION PLAN
22
2. MedicalTourism - US

Population in the US without Health Insurance(millions)

45

40

35

30
2000 2001 2002 2003 2004

ACTION PLAN
ACTION PLAN
23
2. MedicalTourism - US

The Legions of uninsured in the United States

43 million Americans under the age 65 had no health Insurance

Everyday about 8 million of American

search the internet for the medical informations .

About 53% of them find it useful for their life.

About 22% of users find it hard to search web effectively.

Source : www.dt.co.kr

ACTION PLAN
ACTION PLAN
24
2. MedicalTourism - US

The Legions of uninsured in the United States

43 million Americans under the age 65 had no health Insurance

Everyday about 8 million of American

search the internet for the medical informations .

About 53% of them find it useful for their life.

About 22% of users find it hard to search web effectively.

Source : www.dt.co.kr

Web-based One-Stop Shop

ACTION PLAN
ACTION PLAN
24
2. MedicalTourism - US

Cooperate with MSN

Web-based One-Stop Shop MSN Health Care Service

Use MSN Messenger for U-Health

Provide Informations by MSN Searching Engine

ACTION PLAN
ACTION PLAN
25
2. MedicalTourism - EU Nations and Canada

British National Health Service Waiting Lists

Waiting 0 to 5 6 to 8 9 to 11 More than

Time months months months 1 year

October
793,200 124,300 38,800 109
2003

October
774,400 69,600 33 24
2004

ACTION PLAN
ACTION PLAN
26
2. MedicalTourism - EU Nations and Canada

They want the Health Care Service that has cost advantages and Conveniences.
It appeared to get easier toTravelAbroad forTreatment in the EU Nations.
Some private insurers had started steering clients to countries with cheaper care.

ACTION PLAN
ACTION PLAN
27
2. MedicalTourism - EU Nations and Canada

They want the Health Care Service that has cost advantages and Conveniences.
It appeared to get easier toTravelAbroad forTreatment in the EU Nations.
Some private insurers had started steering clients to countries with cheaper care.

Expansion of Brokers to Provide Informations and Services

ACTION PLAN
ACTION PLAN
27
2. MedicalTourism - EU Nations and Canada

Cooperate with Private Insurance Company

Win-win Strategy for Insurance Companies and Customers

Developing Potential Customer

Private Insurance Company can perform the roll of brokers

ACTION PLAN
ACTION PLAN
28
2. MedicalTourism - EU Nations and Canada

Expansion of Brokers

Expansion of Existing Brokers in Europe Market.

(SITACARE has 7 offices in the EU)

Developing New Brokers

by Cooperating with “Tour Guide” Company

Enhancing function of One-Stop Shopping

Potential Customers can find reasonable health care more easily

ACTION PLAN
ACTION PLAN
29
3.After-Care Infrastructure

International
Clinic

U-Health

ACTION PLAN
ACTION PLAN
30
3.After-Care Infrastructure - U-Health

Medical Service atAnytime,Anywhere

ACTION PLAN
ACTION PLAN
31
3.After-Care Infrastructure - U-Health

Process of the U-Health

ACTION PLAN
ACTION PLAN
32
3.After-Care Infrastructure - U-Health

U-health can be After-care tool

(Cover the weakness of MedicalTourism)

Customer Relationship ManagementTool

Save expenditure of health care to Customer

ACTION PLAN
ACTION PLAN
33
3.After-Care Infrastructure - International Clinic

Franchising International Clinic

Use to After-care tools in International Market

Cover the limitations of U-Health

Have an Investment efficiency

Use own Human Resources

ACTION PLAN
ACTION PLAN
34
4. Global Medical Tourism

ACTION PLAN
ACTION PLAN
35
4. Global Medical Tourism

Opportunities in China

Increasing Demands of Premier Health Care.

China opened Health Care Market to Foreign Companies.

(Limited Partnership or Joint-Venture)

More than 90 million tourist visited China each year.

(India attracted less than 3 million foreign visitors a year)

China is Potential Market of MedicalTourism.

ACTION PLAN
ACTION PLAN
35
4.Global MedicalTourism

If China Health Care Market grows up,

is it Just Crisis toApollo?

ACTION PLAN
ACTION PLAN
36
4. Global Medical Tourism

It is a huge Opportunity forApollo!

We have to use this Opportunity

ACTION PLAN
ACTION PLAN
37
4. Global Medical Tourism

International Consulting & Projects

33% of consulting revenues, a figure that expected to rise to 50%

Consulting Division contributed only 2.4% to AHEL’s revenue,

but 10% for Profits

It is a Market for our Intellectual Property

“We should manage hospitals, we should NOT own them.”

ACTION PLAN
ACTION PLAN
38
4. Global Medical Tourism

Managing Hospitals in China

Contributing China Market Growth

using their Human Resource and Intellectual Property
Dominant Position in the China Health Care Market

Doing Medical Tourism Strategy in China

(Including Potential Market - Japan,Australia)

ACTION PLAN
ACTION PLAN
39
4.Global MedicalTourism

India

ACTION PLAN
ACTION PLAN
40
4.Global MedicalTourism

India

ACTION PLAN
ACTION PLAN
40
4.Global MedicalTourism

India + China

ACTION PLAN
ACTION PLAN
40
4. Global MedicalTourism

Ultimately, Apollo Hospitals will be

the Leader of Global Tourism Market

India + China

ACTION PLAN
ACTION PLAN
40
THE FIRST PART OF
THE GAME IS OVER
THE FIRST PART OF
THE GAME IS OVER

I N T E R N AT I O N A L
C O N S U LT I N G