Apollo hospitals was initiated in 1983, by Dr. Prathap C. Reddy. It propagated comprehensive health insurance and launched a medical insurance scheme in 1986. Apollo had reported the first dividend within three years of its operation and by 1988 had expanded to Hyderabad. The 90s saw Apollo expanding itself in operations and infrastructure, most of them being in the Southern part. It also launched the 24 hour ambulance service in 1993. The next decade saw Apollo expanding into the Northern areas as well, including Bilaspur and Kolkatta. This was also the time when it marked its presence on the foreign soils of Sri Lanka, Dubai, Saudi Arabia and Ghana. For the years 2003 and 2004, Apollo Hospitals was recognized as a ‘Superbrand of India’ in the healthcare sector. According to a study by the Boston Consulting group, Apollo Hospitals featured in the world’s top 50 local dynamos list in 2008.
It has been three decades since its inception and the success story of Apollo Hospitals has seen it becoming a Harvard case study.
At a time when Apollo had just started expanding in the North, a 26 year old guy was involved in the setting up of Fortis Healthcare. Shivinder Mohan Singh, then in 2001, had expressed that he wanted it to be big. He was aided by his elder brother, who belonged to the promoter family along with him in Ranbaxy laboratories. Fortis was set up at Mohali, Punjab. The young guy was burning with ambition, backed by his wise observations on hospitals services. He applied all his skewness and vision to make multiple acquisitions. The Escorts Hospitals acquisition took place in 2005 which included the Escorts Heart institute of Delhi. Shivinder concentrated on building Fortis while his brother, Malvinder was rising ranks in Ranbaxy.
Apollo has mostly worked on greenfield projects to expand. Fortis has been very fast on making acquisitions and it surpassed Apollo in terms of average revenue per operational bed, 7 lakh INR above Apollo. Until last year, Fortis had seen a major portion of its revenues coming from its assets located abroad. It was during this time that Fortis sat on a debt of 7,039 Crore INR, but Fortis has been responsive enough to clear its debts and focus on the domestic business. A series of divestments indicate that more than 90% of the revenues will now come from domestic business. Moreover, the fund-raising tactics have reduced the debt to 2,963 Crore INR in this year. It is planning to add 1,000 beds by the end of this fiscal year. Apollo’s expansions have now started hurting its toes. While the recent revenue growth of 17% has been the highest in last three quarters, the operating margin was down 80 bps from last year. The new projects in Chennai and Bangalore have shown operating losses and affected the net profit. Apollo, like Fortis aims to add 1,000 beds by this fiscal. Net profit margin taken over last eight quarters clearly place Apollo Hospitals above Fortis, but Fortis’ agility in changing strategy can not be ignored. It would be interesting to see how these two major healthcare providers are competing against each other after next 5 years.
Afterburn 