Gulf healthcare market saturated; opportunity lies in India: Azad Moopen

Azad Moopen in an interview said "We have already reached 27% of our YTD Ebitda from India, and we aim to gradually bring it up to 35-40% as we move forward"

Azad Moopen Interview: One of the leading healthcare providers in the Gulf, Aster DM Healthcare, a listed entity in India, is now focusing on expanding its footprint in this geography. It is opting for a mix of green-field and brown-field hospital expansion as it does not want to increase capex. Speaking to Sohini Das, Azad Moopen, founder chairman and managing director, Aster DM Healthcare, speaks about the company’s India plans. Edited excerpts.

You plan to expand your India network, primarily through brownfield hospitals. Can you elaborate.

It's not that we are focusing only on brownfield hospitals, we will also build Greenfield hospitals, but the strategy here is aimed at reducing the overall investment. A percentage of the new hospitals we are adding would be brownfield. A brownfield project is one where you already have an existing hospital and you go for an operate and maintain (O&M) agreement or a long term lease agreement for sprucing up the facility and adding equipment. This may cost Rs 15-20 lakh per bed, whereas if you are going for a new hospital, depending on the land price it can vary from Rs 80 lakh to Rs 1 crore.

Since we want to reduce capex, we thought this would be a good strategy, especially in areas where we have a good presence.


 

What category of cities are you targeting through your expansion plan?

We would like to set up hospitals in places where we already have hospitals. For example, we have three hospitals in Bengaluru, in Kerala we have four hospitals. So it is very convenient to set up hospitals around these areas. There is a lot of synergy around availability of doctors and some investigations.

Through this mother and feeder hospital network, how are you planning to take telemedicine more to the hinterland?

We are pushing for virtual care and telemedicine in all the geographies we operate in. We have a separate vertical for this. It is not only the consultation that we want to provide. The patient has a problem, wants to consult a doctor, get tested if necessary and then get the medicines prescribed. This was happening in the physical mode, and this was taking half a day or sometimes a full day. We want to reduce this to a few hours – the patient consults a doctor on our platform, if any test is recommended our Aster Labs will collect the sample, and once a prescription is generated our pharmacy network delivers the medicine to the patient. All this happens within a few hours and the patient is sitting at home.

What is your outlook for the organised pharmacy sector in India and are you open to inorganic expansion in this space?

Pharmacy is part of Aster’s healthcare ecosystem and overall strategy. We want to expand pharmacies to areas where Aster hospitals are not present. Our plan for this year is to roll out 150 pharmacies. We already have around 100 pharmacies. By next year we will have another 150 pharmacies, and in three years we aim to have 500 pharmacies. By 2025 we aim to have 650 Aster pharmacies. We are open to inorganic expansion, and are looking for suitable opportunities to acquire both pharmacy networks or even laboratories.

You are already profitable in the GCC market. Why the focus on India expansion?

We have a very profitable business in the GCC, both for hospitals as well as clinics and pharmacies. The population of UAE is 10 mn, and compared to that look at India. There is already a saturation in the GCC market, and there is also enough supply in that market. In India the demand-supply gap in healthcare is significant. We feel that in the next 10-20 years horizon, India has opportunities in healthcare. We have already reached 27 per cent of our YTD Ebitda from India, and we aim to gradually bring that up to 35-40 per cent as we go forward.

Has the third coronavirus (Covid-19) wave resulted in any change of outlook for the hospital sector in terms of revenue and ebitda?

Aster is looking at impressive growth in India in the present quarter and also in the next financial year. We are very positive about the prospects in India, and that is how it should be for other major players.

Medical tourism has been hit during the Covid-19 pandemic. What is the outlook now?

Yes, there has been a fall in medical tourism. Now most of it is behind us. From 10 per cent of our revenues it came down significantly to almost nil. But, now it is slowly going up. We have got one of the best persons – David Boucher from Bumrungrad International Hospital, Bangkok, where patients from 140 nationalities visit. He has just joined us for medical value travel both for GCC and India.

He spent some time in India and is now looking at how to improve the patient flow from other countries to Aster’s Indian hospitals.