Aster DM Healthcare Ltd Management Discussions.
Global Economic Overview
Global economy, in 2018, grew at 3.6%, while the advanced economy and emerging markets and developed economies (EMDEs) projected a growth of 2.2% and 4.5% respectively. There was, however, a temporary downfall in the economy on account of trade tensions between the US and China, loss of momentum in Europe and uncertainty surrounding Brexit. The major boost was received from the growth in USA economy which was able to offset the downside risks facing the other large economies. In addition, various policies adopted by major countries such as Europe, China and USA, responded well and helped in reversal of tightening financial conditions across various countries. While USA paused the interest rate increases, China ramped up its fiscal and monetary stimulus to counter the negative effect of trade tariffs. Furthermore, the outlook for US-China trade tensions has improved as the prospects of a trade agreement take shape.
GCC Economic Overview
The economic growth in GCC states is estimated at 2.4% for 2018 on account of increase in oil revenues and fiscal reforms of past years which provided necessary support for GCC countries to boost economic growth through capital expenditure. Although the recovery in oil prices did not last throughout 2018, GCC economies witnessed a considerable increase in oil revenues. The growth of UAE economy is estimated to rise from 0.8% in 2017 to 2.9% in 2018, while that of KSA is estimated to improve from 0.9 per cent in 2017 to 2.2 per cent in 2018. This growth is largely attributed to the implementation of public investment projects, including those consistent with the five-year development plan in Kuwait,
In 2019 the economy might face the after-shock of the current year risks, but is anticipated to stabilize in the later half of the year projecting a growth of 3.3%. Beyond 2020, the global growth would be sustained at about 3.6% because of the increase in the relative size of economies such as China and India, which are projected to have robust growth. This growth is projected on account of rebound in Argentina and Turkey and improvements in other stressed emerging market and developing economies. However, growth in advanced economies will continue to slow gradually as the impact of US fiscal stimulus fades and growth tends toward the modest potential for the group, given ageing trends and low productivity growth. Thus, across all economies, it is important to take actions that boost potential output, improve inclusiveness, and strengthen resilience.
Infrastructure investment projects ahead of the FIFA 2022 World Cup in Qatar (where the effect of the rift with Saudi Arabia has been contained), and ongoing preparations for Expo 2020 in the UAE. In Bahrain, the expected fiscal consolidation is projected to inhibit non-oil activity, despite rising aluminum production capacity.
The economic conditions are anticipated to improve in GCC with an overall growth of 3% in 2019 as the domestic demand will strengthen with ease in fiscal consolidation. However, a tighter monetary policy, due to pegged exchange rates in the GCC, might impact exchange rates and inflation in the region. Despite these challenges, the economy projects several opportunities in the areas of banking, investment, industry and economic diversification. But with a risk that oil prices may wane, countries will have to be prepared for these challenges to avoid downside risks. On the financial front, GCC countries are yet to systematically explore public wage bill and employment reforms as a strategy to achieve long term fiscal sustainability and to improve service delivery. Business environment and labor market reforms are also required to increase private investment, foster job creation, and ensure that Gulf nationals have the skills required by the private sector. (Source: Gulf Business, World Bank)
Indian Economic Overview
During the fiscal year 2018-19, Indias economy is estimated to have grown at 7.3% on receiving boost from robust private consumption, a more expansionary fiscal stance and benefits from previous reforms such as GST and demonetization. This robust growth is also fairly diversified with over 8% growth in manufacturing and about 9% growth in electricity and other utilities, construction, and public services. Further, this growth upturn was led by recovery of investment instead of debt-financed consumption as in the recent past. Private consumption was a major growth driver for the year demonstrating a growth of 8.3% despite rural consumption remaining sluggish under subdued crop prices, slow growth in rural wages and stress on nonbank lenders. However, core inflation during the year remained elevated at 5.6% reflecting price increase in housing, education and recreation services and health care sector. Fuel inflation also remained strong owing to both higher global oil prices and Indian rupee depreciation.
For 2019-20, Indias growth is projected to be at about 7.5%, on the back of the rebound from the shocks of demonetization and the goods and services tax (GST), and improving private consumption and investment climate. The economy is poised to pick up in FY2020, capitalizing on lower oil prices and a slower pace of monetary tightening than previously expected as inflation pressures ease. The domestic demand is estimated to remain a major factor driving the growth of the economy. Further, the manufacturing sector is likely to benefit from lower borrowing costs and increasing demand for the consumer goods, supported by government measures to boost disposable incomes. However, growth could suffer if tax revenue falls short or any disruption affects the ongoing resolution of the twin problems of bank and corporate balance sheets. Despite these challenges, India is anticipated to remain a fastest growing major economy projecting a growth of 7.7% in 2020-21. (Source: IMF, Livemint, ADB)
Global Healthcare Industry
Global healthcare spending is on a continuous growth trajectory and is estimated to reach $10.059 trillion by the year 2022. The annual growth rate in spending during 2013-2017 was about 2.9% which is now projected to increase at an annual rate of 5.4% during 2018-2022. This increase in annual spending is on account of strengthening of dollar against euro and other currencies, the expansion of health care coverage in developing markets, the growing care needs of elderly populations, advances in treatments and health technologies, and escalating health care labour costs.
Further, with the improvement in the industry in life expectancy is also increasing. This is reflected in the prediction for 2022 at 74.4 years from 73.5 years in 2018. In the year 2005, the number of aids related deaths were around 2.3 million which fell to 9,40,000 in 2017 due to improved treatments and better awareness. This is because upgradation and development in sanitation, living conditions and easier access to healthcare is helping in the fight against communicable diseases. Also, new vaccines dropped the count and spread of mosquito borne diseases like malaria and dengue during the year.
However, the emergence of personalized medicine, exponential technologies, disruptive competitors, expanded delivery sites and revamped payment models is adding to uncertainty in the global health economy and increasing the urgency for organizations to plan future moves to remain relevant and financially viable. Despite these headwinds, the year ended well for global health care industry. In order to comprehend and properly understand the determinants of health in a society, collaborations with sectors like housing, education, retail, banking etc. needs to be done so that more reliable data is received which will help in improving the present situations.
Globally, 2019 will be a year of value-based care for the industry. This initiative will continue to evolve from economic model/cost-effectiveness measures to more health outcomes and treatment focus with the help of data driven risk sharing frameworks and sustainable reimbursement model that benefits both providers and payers. In addition, the trend toward universal health care is likely to continue with more countries expanding or developing their public health care systems to reduce out-of-pocket (OOP) expenses. Further, technology will help increase access to and participation in clinical research. The most preferred way is to integrate technology such as AI and medical devices with smart data that can provide solution to meet each populations cultural and geographic needs. (Source: Deloitte 2019 Global health care outlook - Shaping the future, Forbes report, PWC report- Global top health industry issues: Defining the healthcare of the future)
GCC Healthcare Industry
Gulf Cooperation Council (GCC), is a regional intergovernmental political and economic union consisting of six Arab states namely, Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain, and Oman. The health care sector in GCC countries offers a range of investment opportunities on the back of demographic shifts, high incidence of NCDs, mandatory insurance and technological progressions. With healthcare infrastructure moving towards the private sector, particularly in the UAE and Kingdom of Saudi Arabia (KSA), there has been an increase in number of hospitals and beds in addition to on-going demand for more healthcare services. Despite current economic hardships, regional governments are continuously bearing a sizeable part of the healthcare expenditure, while encouraging private sector participation.
In 2019, GCC countries are anticipated to represent nearly 13% of global revenues for healthcare products with services growing at 12%. This is because the region is observing growing demand for healthcare services, largely backed by increased prevalence of chronic diseases and improved healthcare. Due to a rise in the no. of patients GCC might have to increase its bed capacity by including around 12,358 new beds. GCC countries have the highest prevalence of diabetes and obesity in the world due to consumption of high calorie foods as reported by the International Diabetes Foundation. Most of the deaths here have occurred due to Non Communicable Diseases like cancer, diabetes, cardiovascular diseases.
UAE population is anticipated to grow at a CAGR of 3% during 2017-2022. Presently, adoption of sedentary lifestyles have led to diseases like diabetes, hypertension and cardiovascular problems. Lengthy treatment of such diseases is boosting the healthcare sector revenue. Globally, UAE is one of the fastest growing medical tourism hubs. By 2020, Dubai aims to increase number of tourist to 50,000 through relaxation in visa procedures and holding promotions. Further, Abu Dhabi is establishing a medical tourism network with a view to attract and serve patients from Russia, China and India. The growth of medical tourism bodes well for the expansion of healthcare sector.
|GDP Growth at current prices||%||2.9||2.9|
|GDP per capita||US$||62,415||63,046|
Kingdom of Saudi Arabia (KSA)
The population of Saudi Arabia is anticipated to rise continuously reaching a demographic size of 35.7 million by 2022. The country stands 13th in the world for rising incidences of diabetes and 14th for obesity. This is resulting in occurrence of major diseases which gives rise to spending on routine medical visits, related diagnostics, drugs and inpatient care. As a result, specialized hospitals, polyclinics and labs are set to grow in the country to meet the demand. Currently, there are 25 hospitals and 158 health clinics across the holy cities in the country.
By 2030, The Ministry of Health plans to privatize 295 hospitals and 2,259 healthcare centers by 2030 and upsurge the share of private sector in healthcare spending to 35% by 2020. Such plans are likely to attract private investors and enhance the quality and efficiency of healthcare services. In 2017, the government implemented the last phase of unified health insurance in order to cover nationals and their dependents working in private sector. Expansion of the coverage are further likely to increase utilization of healthcare services.
|GDP Growth at current prices||%||2.2||2.3|
|GDP per capita||US$||49,680||50,133|
In Qatar, the population is grew at an annualized averages rate of 8.3% leading to a significant increase in demand for healthcare services. Although the population growth is expected to slow down in the coming years, the rise in size of population and ageing people will continue to augur demand for care. With a high standard of living and growing number of international food retailers, there has been incidences of high intake of sugary and calorie-rich fast and packaged foods. This rise in incidence of lifestyle ailments has considerably increased the per capita spending on healthcare. Long duration and high cost of treating such diseases are likely to augment healthcare sector spending.
Further, the country is modifying the PPP framework to make it more effective and follow international best practices. On implementation, the law will attract foreign investments in the country and aid in development of sectors, including healthcare. Ashghal, the Public Works Authority, is likely to explore this route to develop healthcare projects. The authority plans to develop 60-70 healthcare centers over the next 10 years.
|GDP Growth at current prices||%||2.7||2.7|
|GDP per capita||US$||114,136||127,748|
Over the last 40 years, Oman has invested heavily in the health sector and has successfully created a relatively modern health care system. Health indicators attest to its comprehensive and well-developed standards. Meanwhile, the governments determination to provide all its citizens with free, basic health care, along with treating tenacious diabetes and cardiovascular disease, reflects a major increase in health-related expenditures. The Omani government presently expends more than USD 260 million annually on medicines and supplies, with over 93% of medical supplies, including laboratory, surgical equipment, and pharmaceuticals, needing to be imported from abroad. Oman is now contending with the rise in lifestyle diseases, such as diabetes, obesity, and hypertension. The health care sector is currently focusing on treatment rather than preventative care, as a result of which less priority is being placed upon wellness education and limited focus on rehabilitative care, including physical, occupational, and developmental therapies.
|GDP Growth at current prices||%||1.9||1.5|
|GDP per capita||US$||41,326||40,297|
Bahrains healthcare expenditure in 2018 is estimated to be USD 1.8 billion. This includes subsides of medicine, medical material, overseas treatment (for eligible patients) and construction and maintenance works for the countrys main hospitals and medical centers. The healthcare market in Bahrain has been growing at an annual average rate of 12.2%, from an estimated USD 1.1 billion in 2015 to USD 2.0 billion in 2020. The country is considering a proposal to implement compulsory national health insurance scheme. The scheme, if implemented, will encourage expatriates to use private as well as public healthcare facilities in the country and curb outbound medical tourism. In July 2016, Bahrain passed a new law allowing 100% foreign direct investments across various sectors including healthcare. This stimulated development of the sector as new foreign players found opportunities to capitalize on the countrys rising demand for care.
|GDP Growth at current prices||%||3.2||2.6|
|GDP per capita||US$||45,082||46,306|
Kuwait stands 11th in the world for incidences of obesity, which increases the chances of suffering from cardiovascular diseases and diabetes. During 2017-2022, the countrys population is anticipated to grow at a CAGR of 2.8%. This demographic growth is likely to support demand for healthcare services and the ageing population will spur the need for long term care centers. Kuwait also has one of the highest percentages of obesity in the world i.e. nearly 40% of the population is obese. The high prevalence of obesity can be attributed to lifestyle changes, foremost being the high consumption of fast food. This combined with very high summer temperatures and a lack of outdoor activities is making physical activity a dificult task for a great part of the year.
The Kuwait government has recently begun implementing a number of reforms under Vision 2035 aimed at expanding the countrys healthcare infrastructure and placing importance on controlling lifestyle-related diseases. Under this, the Ministry aims to establish 8 hospitals and hospital extensions at a cost of $1bn. There has also been 4.2 billion USD allocated by the Ministry of Public Works to build 9 more hospitals creating new jobs. The new facilities will enable the government to provide more specialized treatment within the country, reduce the national health care bill by limiting the number of people going abroad for medical treatment and screening services. Kuwait is also planning to promote medical tourism in its own country by developing topnotch healthcare facilities. Billion dollar healthcare investments by private players to fortify their infrastructure base to develop a medical tourism healthcare sector for Kuwait will not only generate external revenue by attracting patients from across the globe but will also reduce the foreign visits of Kuwait locals for specialized treatment.
|GDP Growth at current prices||%||2.3||2.9|
|GDP per capita||US$||59,501||62,378|
GCC healthcare Industry Trends
Increase in insurance penetration: The implementation of mandatory insurance is one of the chief drivers attracting private healthcare providers to the sector. The gradual rollout of compulsory health covers across the region is increasing the utilization of medical services at private healthcare facilities. While Dubai, Abu Dhabi and Saudi Arabia have mandatory health schemes in place, Oman, Qatar, Kuwait and Bahrain are in the process of doing so.
Increase in Deal Flows: With increase in opportunities for the private sector in the GCC healthcare, the industry is witnessing a spurt in mergers and acquisitions. This is because amid growing competition and high operating costs, small and medium-sized clinics with low bed capacity utilization are finding it difficult to maintain profitability.
Growing focus on Preventive care: With a view to reduce the incidence of lifestyle diseases and associated costs, the regional governments are formulating ways to encourage preventive care. In several other developed countries, early diagnosis and other proactive steps have proved to be successful in cutting down healthcare costs and improving health.
Investing in Specialized centers: The rapid growth lifestyle diseases in todays environment has stimulated investments in specialized hospitals and clinics. Such centers are being built with a focus on few specializations, state-of-the-art technology, patient-centric care and high-quality standards.
Technology adoption: Technology is the core factor in upgrading GCC healthcare sector. Technologies such as the digitization of patient records (electronic health records), e-visits, telemedicine, connected medical devices, robotic procedures, health monitoring wearables and health analytics are gaining recognition in the region.
Some of the key factors aiding in the healthcare growth in the GCC region are as follows:
GCC countries have a large number of ageing population who requires more health care services as compare to young population. This senior population drives the growth of the industry.
The GCC countries are observing a swift transition in its epidemiological profile to non-communicable diseases, a major cause of most of the deaths and disability in the region. Improper diet, high blood pressure and high body mass index are the factors boosting the incidence of heart strokes, diabetes, hypertension and cancer.
Governments across the region have either made health insurance mandatory or are in the process of doing so. Dubai, Abu Dhabi and Saudi Arabia have mandatory health insurance schemes in place, while Oman, Qatar, Kuwait and Bahrain are discussing on implementation and will soon roll out. This will increase the utilization of medical services at private healthcare facilities.
The regional governments have framed national healthcare strategies primarily aimed at improving the quality of and access to care. The strategies are aimed at enhancing the effectiveness of the delivery system, encouraging PPP models, developing medical education and digitization.
Driven by the rising demand for healthcare services, governments and private players have laid down robust plans to develop related infrastructure. This development of massive infrastructure is likely to enhance the scale as well as the quality of healthcare services in the region.
Indian Healthcare Industry
Presently, India is witnessing an exponential growth in the healthcare industry. The industry is growing at a rapid pace on the back of increased investment and expenditure from public as well as private investors. The Indian government has also remained active in its approach towards the development of healthcare sector and is planning to increase public expenditure on healthcare from 1.1% to 2.5% of GDP in the next four years and to 5% in the following 5 years. This shows the progressive movement for the industry in the nation. Further, with the ongoing digital revolution in the country, telemedicine has also evolved in Indian healthcare space. Indian Government has shown a great interest in the development of telemedicine and started investing in this segment to provide better healthcare facilities in rural India as well.
With a vast array of opportunities available and lenient FDI policies, global players from other nations also started investing in Indian healthcare. Private business sphere is also witnessing huge transformation where Indias leading Industries have invested significantly in the field of telemedicine. This trend is estimated to continue as several other players are also coming to the forefront. Government has also allocated a considerable amount ofर61,398.12 crore to the health ministry for 2019-20, up 16.3% from the FY19 budget. Further, a high increase was witnessed in Pradhan Mantri Jan Arogya Yojana (PMJAY) with an allocation ofर6,400 crore as againstर2,400 crore in the previous year.
Indias healthcare market is likely to witness a threefold jump in value terms to $372 billion by 2022, due to growing incidence of lifestyle diseases and rising demand for affordable healthcare delivery systems. Further, with growth in single specialty hospital and clinics in India there will be a crucial change in the underpenetrated healthcare sector. Another rising trend of Budget Hospitals which has already become popular in the demographics of South India will gain traction in the healthcare sector in FY2020. This is because majority of Indian population belongs to middle and lower economic strata. With the growing demand for good medical facilities at affordable prices, Budget Hospitals will gain popularity in the country. Moving ahead, the country is likely to emerge as the most preferred healthcare destinations among the foreigners. The medical tourism from the Sub-Saharan countries is anticipated to grow by nearly 20%. With competitive medical facilities being available in India compared to western countries, Indias medical tourism is expected to grow further in the upcoming year. (Source: Interim Budget 2019-20, Health World, Express Healthcare)
Government of India launched Pradhan Mantri Jan Arogya Yojana (PMJAY) on September 23, 2018, to provide health insurance worthर5,00,000 (US$ 7,124.54) to over 100 million families every year.
The Government launched Mission Indradhanush in order to improve coverage of immunisation in the country. It aimed to achieve atleast 90% immunisation coverage by December 2018 including the unvaccinated and partially vaccinated children in rural and urban areas of India.
Approved the continuation of National Health Mission with a budget of Rs 31,745 crore under the Union Budget 2019-20.
In May 2018, the Government of India signed a US$ 200 million deal with the World Bank for 315 districts across India, under National Nutrition Mission (POSHAN Abhiyaan).
Allocatedर8,00 crore for the up gradation of state government medical colleges (PG seats) at the district hospitals andर1,361 crore for government medical colleges (UG seats) and government health institutions under the Union Budget 2019-20.
Allocated to the Ministry of Health and Family Welfareर61,398.12 crore, being 16.28 % higher than previous year.
(Source: Budget 2019-20)
One of the leading private healthcare service providers, Aster DM Healthcare Ltd (Aster), operates in multiple GCC (Cooperation Council for the Arab States of the Gulf) states and India based on numbers of hospitals and clinics. The company currently operates in all of the GCC states, comprising of the United Arab Emirates, Oman, Saudi Arabia, Qatar, Kuwait, Jordan and Bahrain. Besides this, Company also has operations in India and the Philippines. Its GCC operations are headquartered in Dubai, United Arab Emirates while Indian operations are headquartered in Kochi, Kerala. The company operates in complete lifecycle of healthcare - including hospitals, clinics and retail pharmacies to serve patients across economic segments in several GCC states through various brands Aster, Medcare and Access. Aster has 357 operating facilities including 24 hospitals with a total of 5,441 installed beds, as of March 31, 2019.
Long standing presence across GCC states and India with strong brand equity: Aster is one of the largest private healthcare service providers operating in multiple GCC states in terms of number of hospitals and clinics. Its long-standing presence in the GCC states has helped it gain an understanding of the respective markets and the regulatory environments and has contributed towards the success of its GCC operations. Further, its understanding of and long-term commitment to the Indian market across diverse segments and its financial strength enables Aster to further establish its brand in India.
Well diversified portfolio of service offerings to leverage multiple market opportunities: Aster has an established presence across multiple geographies and healthcare delivery verticals and serve several economic segments. The company operates in a number of formats providing a wide range of services through its diverse network of 12 hospitals, 106 clinics and 219 retail pharmacies in the GCC states, 12 multi-specialty hospitals and 8 clinics in India as of March 31, 2019.
Provision of high quality healthcare service: Aster constantly strive for a high standard of clinical excellence at all its hospitals, clinics and retail pharmacies. The company follows well defined quality and patient safety protocols in patient handling and care. Its focus on quality is reflected in the quality certifications and accreditations that its facilities have obtained from various local and international accreditation agencies.
Ability to attract and retain high quality medical professionals: Aster has 18,798 employees as of March 31, 2019, including 1,695 full time doctors, 6,268 nurses, and 10,835 other employees (including paramedics pharmacists).
Experienced core management team: Asters management team is composed of directors and senior officers with an average of approximately 18 years of experience in the healthcare services industry, as well as doctors with both clinical and administrative experience.
Aster provides diverse range of services through its 12 hospitals in GCC; 7 in UAE, 3 in Oman, 1 in Qatar and 1 in Saudi Arabia and 913 operational beds as on March 31, 2019. The output patient services provided by the company includes consultations for various issues and preventive health screenings. The operations at GCC hospitals contribute 83% to the total revenue of the company.
|Hospitals-GCC||Location||Commencement or Acquisition year||Bed Capacity||Operational Beds||Owned or Leased|
|Medcare Hospital||Dubai, UAE||2007||64||55||Leased|
|Al Raffa Hospital||Muscat, Oman||2009||85||74||Leased|
|Al Raffa Hospital||Sohar, Oman||2010||74||64||Leased|
|Medcare Orthopaedics and Spine Hospital||Dubai, UAE||2012||33||27||Leased|
|Aster Hospital Mankhool||Dubai, UAE||2015||126||108||Leased|
|Medcare Women and Child Hospital||Dubai, UAE||2016||108||91||Leased|
|Medcare Hospital||Sharjah, UAE||2017||130||113||Leased|
|Sanad Hospital||Riyadh, KSA||2011||218||218||Owned|
|Aster Hospital||Doha, Qatar||2017||61||30||Leased|
|Aster Hospital Qusais||Dubai, UAE||2018||154||99||Leased|
|Ibri Hospital||Ibri, Oman||2019||31||24||Leased|
|Cedars Hospital||Dubai, UAE||2019||17||10||Leased|
Aster possesses largest network of clinics in UAE, operating to the highest quality of standards and offers affordable health care, thereby, setting new benchmarks in care to make a positive difference to the lives of its patients. The company has 85 clinics present in UAE and 2 clinics in Bahrain and employs over 2,900+ employees and over 30 specialisms across all our brands.
GCC Retail Pharmacies
Aster has a huge pharmacy network of more than 200 stores catering to its customers a wide range of products including nutritional supplements, baby care, personal care, medical device, rehabilitation products etc.
Aster has 12 hospitals in India with a capacity of 4,340 beds of which 2,977 are operational beds. These hospitals offer a wide range of care services such as Cardiac, Orthopedic, Neurology, Oncology, etc. The company, during the year, also witnessed a significant rise in inpatients and outpatients count in its Indian hospitals.
|Hospitals India||Location||Commencement or Acquisition year||Bed Capacity||Operational Beds||Owned or Leased|
|Aster Aadhar Hospital||Kolhapur, Maharashtra||2008||176||151||Owned|
|MIMS Kozhikode||Kozhikode, Kerala||2013||678||537||Owned|
|MIMS Kottakkal||Kottakkal, Kerala||2013||229||171||Owned|
|Aster CMI||Bengaluru, Karnataka||2014||509||289||O&M|
|Aster Medcity||Kochi, Kerala||2014||670||421||Owned|
|Prime Hospitals Ameerpet||Hyderabad, Telangana||2014||158||100||Leased|
|DM WIMS Wayanad||Wayanad, Kerala||2016||880||798||O&M|
|Dr. Ramesh Guntur||Guntur, Andhra Pradesh||2016||350||175||Leased|
|Dr. Ramesh Main Centre||Vijaywada, Andhra Pradesh||2016||184||160||Leased|
|Dr. Ramesh- Labbipet||Vijaywada, Andhra Pradesh||2016||54||50||Leased|
|Dr. Ramesh Sanghamitra-Ongole||Ongole, Andhra Pradesh||2018||150||90||Owned|
|MIMS Kannur||Kannur, Kerala||2019||302||35||Owned|
Beds: During the year under review, the bed capacity was expanded from 4,762 units in FY18 to 5,441 units in FY19. Of this, the growth in number of bed in India were 4,340 units from 3,887 units while that of GCC was 1,101 from 8,75 units in FY18. The total number of operational beds also increased YOY from 2,777 units to 2,977 units in India and from 7,61 units to 9,13 units in GCC hospitals.
Hospital Patient Visits: The number of inpatients count increased from 2,01,700+ in FY18 to 2,18,100+ in FY19. Further, the growth in number of outpatient counts was observed at ~3.14 million in FY19 from ~2.83 million in FY18.
|Revenue (H in crore)||7,963||6,721||18%|
|EBITDA (H in crore)||8,63||6,13||41%|
|Adjusted PAT (H in crore)||3,35||1,39||140%|
|Debt equity Ratio||0.6||0.6||-|
|Interest coverage Ratio (in times)||3.1||1.7||1.4|
|EBITDA Margin||10.8%||9.1%||170 bps|
|PAT Margin||4.2%||4.0%||20 bps|
|Return on Net worth||9.1%||8.4%||70 bps|
*Adjusted PAT excluded exceptional income/expense during the year
The Company reported a robust topline growth along with a significant increase in revenue and EBITDA. The major factor driving the growth during the year was addition of new specialties, services and increase in beds. The company also acquired 3 new hospitals and opened 2 new hospitals during the year and expanded its clinics network to a huge extent. The improvement in product mix coupled with exclusive tie ups and strong associations with various pharma companies have all resulted in a healthy profitability profile of the company for FY19.
Aster plans to expand and strengthen its brand with the help of its geographical presence in India. In the next 5 years, company plans to increase its revenue contribution from India to 25% and GCC to 75%. Presently the company has 24 hospitals in India and Middle East together. A 220-bed hospital has been commissioned at Bengaluru in April 2019. In addition to this, Aster is also planning a 500-bed tertiary care hospital in Chennai which is estimated to be commissioned within the next 2.5 years. As regards GCC states, 3 more hospitals are planned to come up in Dubai, Sharjah and Oman in the next couple of years.
Strategies for road ahead
Strengthening of hub and spoke model in GCC
To capitalize on the existing primary care clinics network in GCC by adding secondary tertiary care hospitals.
In FY18, 61 bed Aster Hospital, Doha commenced operations to utilize the untapped Aster clinics network in Doha.
In FY19, 154 bed Aster Hospital, Qusais, UAE commenced operations to utilize the Aster clinics network in northern Dubai region.
Planned addition of ~120 beds over next 2 years in UAE to capitalize on Aster and Access brand clinics located farther away from the existing Aster Hospital in Mankhool, Dubai.
Above strategy will enable expansion of companys quality services in middle and low economic segments category of patients, where there is a supply-demand gap.
A comprehensive human resource strategy utilizing Asters geographical diversity and catering to future growth
To create an enabling environment for skill development and growth of doctors and paramedics providing quality care to its patients.
Maintain the current high retention of senior doctors across the group.
Identify and add to the strong pipeline of doctors for expansion & replacement requirements; early identification is key, especially in GCC countries due to strict licensing requirements.
Selective GCC licensing of doctors from Asters Indian hospitals to enable need based transfer to GCC hospitals & clinics.
Retention of skilled paramedics in Indian operations by fulfilling aspiration of career growth outside India.
Scalable systems implementation tightly integrated with operations/market requirements
Systems implementation with focus on scalability and future business requirements.
Enhancement of patient experience through technology at each patient touch points.
Information systems to drive productivity improvement.
Strengthening of our medical tourism network
To further strengthen integration of GCC & India operations to provide consistent quality experience to patients across geographies.
To position Asters premium segment Medcare hospitals as service provider of choice for affluent international patients travelling to Dubai for medical tourism; Strategy in-line with
Dubai governments medical tourism strategy with a vision of making as a globally recognized destination for elective health and wellness treatments.
Profitability growth & brand positioning using product mix and technology
Focus on margin expansion through sale of own / exclusive licensed products.
Shift to online ordering of prescription for enhanced patient experience.
Building of brand, talent and capability in KSA a key market
There is significant demand for quality healthcare services in Kingdom of Saudi Arabia (KSA), currently the largest economy in GCC with the highest population; Further, current policy reforms expected to improve the business environment in KSA.
Having successfully diversified the revenue streams in KSA, ADMHL further plans to strengthen its brand, talent pipeline and management capability.
Specialized, asset-light growth in India
Focus on key centres of excellence - Orthopedics, Medical Oncology, Cardiac Sciences, Neurosciences, Gastroenterology, Women and Child, Bariatric, Integrated Liver care, Nephrology, Urology, NICU & Dermatology.
Growth in addition to the current committed projects to follow an asset-light model in metropolitan and tier-I cities with large format hospitals (400 to 500 beds each).
Expansion into tier-II and tier-III cities in partnership with local hospitals by leveraging IT/telemedicine, instead of building/ leasing hospitals.
Back office integration across strategic business units.
Clear demarcation of medical and non-medical activities hospitals/clinics and re-allocation of activities accordingly.
Centralization of purchases utilize companys economies of scale.
Risks and opportunities are inherent to entrepreneurial activity. Aster have put systems and processes in place to identify risks at an early stage and to counteract them by taking appropriate action.
|Rising Competition||The company operates in an environment which is highly exposed to increased competition from new players as well as existing players who have established their brand name. As a result, the business may face intense pricing pressure from its customers and suppliers.||The company has a robust business model in place which allows it to compete within the current industry structure. With the experience of over 30 years, it has created healthcare eco-system across two geographical regions GCC and India. Further, its primary clinics act as the initial touch-points in the patient journey, while pharmacies and hospitals continue to provide other healthcare facilities. The holistic business model allows the company to withstand competition from other new entrants as well as existing established players.|
|Legal Factors||In order to fully operate its business, the company is required to obtain and hold permits, product registrations, licenses and other regulatory approvals from, and to comply with operating and security standards of, numerous governmental bodies.||The company constantly strives to minimise and control its legal risk.|
|Non-compliance or concerns over non-compliance may affect the operations of the company while also attracting liability claims and lawsuits.||For this purpose, it takes necessary precautions to identify threats and defend its rights where necessary. Corresponding standards and guidelines are used in order to identify risks at an early stage which are then reviewed and evaluated and corrective actions are taken to mitigate the same.|
|Talent Risk||Companys growth is highly reliant on its innovative strength. Thus, the expertise and engagement of employees in all sectors in which it operates are crucial to the success of the company. Unavailability of such talent in the company can directly impact its operations, thereby affecting profitability of the company.||Recruiting and retaining specialists and talent is one of the key priorities for the company. In line with this belief, the company has a comprehensive human resource strategy in place which creates a healthy work environment for skill development and growth of doctors and paramedics at all Aster Hospitals. During the year, the company worked with a strength of 19,859 employees consisting of 59% women employees, 2,756 doctors (including 1,061 fee for service doctors).|
|Technology Risk||Technology is evolving every passing day and it is important for the company to keep itself updated with latest and improved technologies. It helps them carry out smooth operations and also facilitate cost control.||Aster offers a comprehensive range of medical technology to facilitate accurate diagnosis and efficient treatment. Each of the hospital of the company possesses state-of-the-art technology & protocols, which are capable of handling the most complex cases and achieve best clinical outcomes.|
|Compromise to product quality and patient safety||Product quality and patient safety may be compromised if a facility is found to be in non-compliance and negligence in clinical trials. This may put patients lives at risk and companys reputation may also be damaged if regulatory compliance is not ensured.||The quality program at Aster DM is structured to develop a culture of improvement that inspires, engages and prompts the company to achieve desired results. In addition, the company has also implemented Patient Safety Friendly Hospital Initiatives, which involves implementation of a set of patient safety standards in hospitals & medical centres.|