perkinelmer-728×90-20191127-1227

Aster DM Healthcare Eyes Diagnostic Services Clinics

Dubai-headquartered Aster DM Healthcare which runs 13 hospitals in India and is in the process of adding another 1500 beds, is now eyeing the diagnostic services space apart from pharmacies and clinics. Moreover, the company is bringing in its Access brand to India for low income group patients. Access hospitals would also cater to Ayushman Bharat medical insurance covered patients.

With an aim to become a comprehensive healthcare provider, the Rs 7,900 crore BSE listed company has drawn up plans to start a central laboratory for its diagnostics business at Bangalore within the next three months. Following this, the company would be establishing satellite laboratories in the state starting its diagnostic business from Karnataka and eventually spreading to the other southern states, informed Aster DM’s chief financial officer Sreenath Reddy. He elaborated that the plan is to acquire a diagnostic services provider in the southern states that would enable Aster DM to expand. “We would start with our own laboratories and then look for a suitable acquisition. We have not set any target price for the same. It would enable us to gain scale in the business,” he said

Investment for setting up the central laboratory would be around Rs 40 crore which the company would fund from internal accruals. The rationale behind getting into the diagnostics business is that it enables them to reach out to potential patients directly in their house, who can then opt for treatment at the Aster DM clinics and hospitals.

Aster DM is in the process of setting up clinics too – to start with four pilot clinics in Bangalore. These clinics would also have Aster DM pharmacies, similar to the hospitals. However, for standalone pharmacies, the company is yet to take a call.

Reddy explained that there are regulatory challenges in the pharmacy market here which is largely unorganised too. “We are a foreign headquartered group, so we want to take a well informed call. As such we are weighing options like e-pharmacies, brick and mortar pharmacies and even pharmacy aggregator models for India,” he said.

As for the hospitals expansion, the company is in the process of adding another 1500 beds here over the next three years. This would include two hospitals in Bangalore, one in Chennai and expansion in Kochi. One of the Bangalore hospitals would be a brownfield one which was earlier operated by Narayana Hrudayala. Aster is expanding that hospital into a 350-bed facility at Whitefield. The second one coming up at Bangalore is a 600-bed greenfield facility. “We follow an asset light model for our hospitals where we do not own the real estate. Thus our cost per bed is lower. The overall investment for setting up 1500 beds would be roughly around Rs 750-800 crore,” said Aster’s chairman and managing director Azad Moopen. Following the investment, the India bed-count would cross 5000 beds and expansion would be funded from internal accruals and borrowings.

Aster is also bringing in its Access brand to India to cater to low income group patients. These would be extensions of existing facilities. The first such hospital under the Access brand would come up at Kochi. The company is yet to take a call on the number of beds. Ideally, a facility like this should have large number of beds, it said.

The Access hospitals would be more affordable and would also cater to patients those are covered under the government insurance scheme Ayushman Bharat. At present, some of Aster’s tier II and III town hospitals are on board Ayushman Bharat, while those in metros are not.

“Aster is increasingly focusing on expanding its footprint in India. India currently accounts for around 17 per cent of Aster’s overall revenue. Aster’s medium-term goal is to increase the contribution of its India operations to around 25 per cent by adding around 3000 beds under an asset-light model with most of the incremental capacity expected to come up in Tier I cities with high average revenue per occupied bed (ARPOB), JM Financial noted in a recent report.

Apart from India, the company is also adding beds in the Gulf – around 400 beds (at an investment of Rs 500 crore) over the next three years. The ARPOB is higher in the Gulf (Rs 1.6 lakh) as compared to India (Rs 27,000). This is because most of the Gulf hospitals are secondary and tertiary care.

Reddy explained, “We are adding more beds in India as the population here need more beds. Gulf hospitals are relatively smaller in size and cater to a smaller population.”

Aster DM posted revenues of Rs 4,115 crore in the first half of the current fiscal, of which only Rs 802 crore came from its Indian hospitals. It got 1.1 mn patients visits in India while its Gulf hospitals had 8 mn patient visits. However, of its 4794 beds capacity, around 3693 are in India. It has posted revenue of Rs 7,963 crore operations in FY19 and a revenue CAGR of 23 per cent.-Business Standard

Share this:

Related Post

Stay Updated on Medical Equipment and Devices industry.
Receive our Daily Newsletter.