Top Indian Hospital Chains Eye Sri Lanka

15th August 2010, www.thebottomline.lk, By Indika Sakalasooriya

With two of the top hospital chains in India eying overseas expansion, local analysts are excited about the possibility of either one or both of them investing in the healthcare business in Sri Lanka.

According to Indian media, Apollo Hospitals, India’s industry leader is looking for contracts to manage hospitals abroad, while Fortis Healthcare is aggressively looking for acquisitions as an expansion strategy. Further, Fortis is evidently preparing for other opportunities beyond India to become Asia’s healthcare leader after their battle to acquire Singapore-based hospital chain Parkway Holdings.

Fortis Chairman, Malvinder Singh was recently quoted in the Indian media reports as saying “there are a heap of opportunities we have already identified which we will evaluate and engage with”.

He added that the company has $800-900 million in cash and an established line of credit, which would be used for the acquisition of one or more assets outside India.
Apollo, India’s largest hospital operator which exited Sri Lanka following a hostile takeover of its hospital by a local business tycoon has a stake in a Mauritius hospital, its only investment overseas, but manages a few hospitals overseas on contract.

“An Indian hospital chain can operate successfully in Sri Lanka due to two major reasons. The first being it can help to offer cheaper drugs and services to patients and the other is Sri Lanka doesn’t have the bed capacity needed in light of the projected increase in grey heads in future” a stock market analyst who doesn’t want to be identified said.

According to recent labour ministry data, the percentage of people above the age group of 60 years increased from 6.3% in 1971 to 9.2% in 2001 and was estimated by the United Nations at 11% in 2008. By 2031, 21.9% of the people will be over 60 years, or one out of four will be an aged citizen.

“Now the no-brainer is the tourism industry. Almost everyone is looking to put-up a hotel somewhere to be a part of the expected tourism boom. Healthcare poses almost the same opportunities being a defensive sector with strong growth prospects” another analyst said.

He also pointed out that health insurance facilities and medical benefit schemes provided by corporate employers also play a major role when analyzing the growth prospects of healthcare sector in the country. “This has supported and in demand for paid private sector healthcare services which will continue” he said.

He remarked that the number of beds in government run hospitals is almost stagnant due to budgetary constraints. “This allows private sector both local and foreign investors to make money by setting up new and expanding the existing ones”.
At present about 25% of the total hospitals in the country are private owned (numbering 174) with a total bed capacity of 8,650, i.e.15% of the total bed capacity of Sri Lanka, which is concentrated mostly in urban areas and especially in Colombo. According to Health Ministry data, the capacity of beds in the government hospitals amounts to 68905 in its1,016 hospitals.