Winner of the ‘Franchiser of the Year Award 2003,’ Apollo Health & Lifestyle Ltd. (AHLL) has spearheaded an aggressive international expansion plan. With clinics in Kuwait, Saudi Arabia and Nigeria under different phases of development, AHLL signed a Master Franchisee agreement with StarCare Health System to set up 8-10 Apollo Clinics in Bangladesh.
Already in advanced stages of discussion to tap the opportunities in Qatar, Yemen and Pakistan, plans on the drawing board include Africa, England and Silicon Valley. Discussing AHLL’s increasing focus on the international Market, Ratan Jalan, CEO, Apollo Health & Lifestyle Ltd says, “There is an overwhelming need for a strong primary healthcare backbone in many countries. We intend to utilize our skill, standards and cost competitiveness to tap this immense opportunity. Our plan to leverage the opportunities in the international health market, primarily through the franchise route, will ensure widening of our footprint without affecting our focus on the Indian market.”
That said, how big is the market for primary healthcare in India? “In the Rs. 110,000 crore healthcare segment, 68% spend is on primary healthcare while 12% goes to hospitals. This is a global concept. Studies in the US show that 1/3 of spend goes on hospitals while 2/3 is outside the hospital context. The day-to-day healthcare segment presents a good opportunity,” Jalan tells exchange4media.
Meanwhile, Bangladesh stands to gain. “The limited presence of quality primary healthcare infrastructure in Bangladesh has led to a demand supply gap. We intend to pool our past experience with the expertise of Apollo Clinics to address this issue and enhance the health care standards in the country,” says Mohd. Akhtar Hossain, MD, StarCare Health Systems.
Each clinic is estimated to cost Rs 2 crore and will be structured on a debt-to-equity ratio of 1:1. “The model estimates an internal rate of return of 30% and, therefore, is expected to break even in less than four years time,” says Jalan. The cost of building the clinics will have to be borne by the franchisees, who will also have to pay a license fee of Rs 20 lakh. “In the healthcare franchising industry, more than big brand-building efforts, the selection of franchisees is more important,” points out Jalan. “The franchisee’s commitment is vital. That's why we prefer the franchise owner to be an entrepreneur rather than having several other businesses, because in the case of the latter, the commitment is lower.”
Apollo Clinics cater to the day-to-day healthcare needs of a family, offering specialist consultation services, diagnostic services, preventive health check-up packages, tele-medicine facilities and a 24-hour pharmacy. All clinics will be fully integrated and medical records of the patients will be available online. “Once a franchisee is selected, Apollo Health will provide assistance in mobilization of financial resources, site selection, architecture, and selection and installation of medical equipment. We will also provide customized clinic management software to the franchisee and assist in manpower planning, recruitment and training. Apollo Health will also assist the franchisee in the sourcing and selection of medical equipment as well as IT infrastructure to enable the clinics to deliver better service to the customers,” reveals Jalan.
On a broader perspective, what prompted Apollo Clinic to adopt the franchisee route for expansion? Are there any global models available? “The concept of Apollo clinics originated after we realized the need for bringing in branded health care services to boost the primary care infrastructure in the country. There are no specific global models available in hospital franchising; this is a unique venture by Apollo. The focus is on service aspect and we intend to usher in the same ‘Apollo-feel’ at our clinics. If you see, for a primary need, patients would not be willing to travel long distances and approach a specialty hospital like Apollo. They would prefer to visit the neighborhood clinic. Hence, the concept of an Apollo Clinic to fill the gap; the Apollo brand will reach out to the patients’ neighborhood,” Jalan tells exchange4media.
Other corporates in the estimated Rs. 80,000-crore retail healthcare segment include Max Healthcare, Fortis (promoted by Ranbaxy Laboratories Ltd.) and Nicholas Piramal.