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Apollo merger creates Asia's largest healthcare enterprise

Three hospital companies promoted by Dr Pratap C Reddy have been merged to create Asia's largest healthcare organisation.

The merger of Indian Hospitals Corporation Limited, Deccan Hospitals Corporation Limited and Om Sindoori Hotels into Apollo Hospitals Enterprises Limited was announced by Dr Reddy in Bombay on Wednesday.

"With the merger of these three units we have around 2,600 hospital beds which makes us the single largest hospital entity outside the United States," said Dr Reddy, chairman and managing director of Apollo Hospitals.

The merger of Sindoori Hotels will give the company an additional capacity of 175 hospital beds. With this, Apollo's turnover will go up to Rs 2.87 billion with a profit after tax of Rs 321.8 million.

The company is eyeing a turnover of Rs 5 billion in 2000 which is expected to double by 2004. Apollo will also consider merging the Delhi-based joint venture company Indraprastha Medical Corporation in 2000. Indraprastha currently has a turnover of around Rs 1 billion.

"The new entity will have over 1,000 doctors and 100 healthcare professionals. This represents a unique wealth of intellectual capital," said Sunita Reddy, joint managing director.

Apollo is also looking at brand valuation of its intellectual and human resources. "Healthcare will be the scrip of the future. There are distinct similarities with the IT industry, except that the intellectual resources in healthcare contributes significantly higher monetary value to their organisations, a fact that has not been appreciated so far," added Reddy.

Apollo has also lined up plans to enter other Afro-Asian countries starting with the Middle East where work has started on its new hospital project in Dubai.

"When we started this hospital in the '80s, there was no other facility of this level available to our people. Now there are over 175 hospitals in the country. What we should do now is to look at other developing and under-developed countries. I think we need to fulfil the great need that exists in our neighbouring countries whether it is SAARC (South Asian Association for Region Cooperation) or other Afro-Asian nations. We have started a project in Dubai and will get into Muscat, Bangladesh, Nepal, Sri Lanka and one or two centres in Tanzania shortly," said Dr Reddy.

Apart from this, Apollo is also looking at setting up a nationwide network of clinics and diagnostic facilities. Apollo is most likely to go for a private placement for funding its expansion plans.

Dr Reddy said: "If we can give a mix of good healthcare and cost effectiveness and run an organisation on professional lines, the way we've, I think funds will come to us. Today financial institutions are willing to advance to us funds to carry out our projects. So funding is not a problem.

"As far as raising the equity is concerned, there are two ways. One is to get financial investors. There are a number of foreign institutional investors and even local venture capital investors who are willing to fund us.

"Then there is the strategic investor -- someone who has the expertise to run a large number of hospitals like HCA Columbia in the US. If they are willing to come in, I'd look at it very seriously."

Apollo is also planning to launch a new subsidiary called Virtual Apollo which will offer tele-medicine facilities, for which talks are on with couple of US-based organisations.

"I think this is where the action is going to be. What we are planning is to make Apollo available to all times, at all places, to all people. Apollo will be able to connect all our doctors -- be it doctor to doctor or doctor to our specialty hospitals. Virtual Apollo will create a medical university on the web so that the entire medical information will be available for doctors at their desk tops. We will also connect different hospitals and more importantly connect with other medical supplies like pharmaceuticals," Dr Reddy said.

The hospital's board, which met on Tuesday, has decided to issue two fully paid-up shares of Apollo Hospitals Enterprises for every share of Indian Hospitals, one fully paid-up share of AHEL for every four shares of Deccan Hospital and one fully paid share of AHEL for every share of Om Sindoori Hotels.

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