In an interview with ET Now, BS Ajaikumar, Chairman & CEO, Healthcare Global, shares his business outlook. Excerpts:
ET Now: For Indian healthcare players, the three main challenges are high realestate cost, high machinery cost and high profit-sharing ratio with doctors. How are you dealing with these challenges?
BS Ajaikumar: Our focus areas are oncology and fertility. We do not get into real estate play. As a rule with some exceptions we go for the rent lease model. That has worked very well for us. That is the real estate part.
In terms of the equipment, oncology is very capex-intensive because of the type of machinery we need. But we have a deferred payment arrangement with our vendors. We pay three years after purchase, by which time our centres mostly turn self-sufficient to service the loan. This has proved a winning formula for us.
As for doctors, ours is more of an institution-based model. Most of the doctors are full-time consultants working with us. That way our payout to doctors is significantly lower compared to areas where doctors are independent practitioners. This model has been veryeffective for us.
Our target is not only the Tier-1 big cities. We also aim for Tier-2 and 3 cities. This approach has helped us greatly in establishing centres of excellence all across the country.
ET Now: Which hospitals have been the best profit centres for you, and where are you looking at closing operations in?
BS Ajaikumar: Centres in Karnataka including those in Bengaluru, Gujarat centres, eastern Cuttack and some other areas are doing extremely well. There are areas where we are not planning on closing, but are revamping. Some such centres are in Delhi.
Having said that, most of our centres are performing as per expectations, or even better. Particularly, centres where we work with doctors as partners have been breaking even during the first year of operations itself.
ET Now: You are expanding focus from cancer care your mainstay to fertility now. Where do you see yourself in next five years? Can fertility be an even bigger value generator than cancer care?
BS Ajaikumar: I do not think so. Cancer care has now become need-based. Cancer is becoming a lifestyle diseases like diabetes. Patientslive longer now, so they need more follow-ups. Cancer care, for that reason, will continue to remain bigger.
Fertility, in contrast, is an unorganised sector. As of now, nearly 27 million couples require fertility advice. But of them, only 2,70,000 seek help. So, organisation is important for growth in this sector.
ET Now: Goldman Sachs said your top line could grow 25% over the next 3 years on CAGR basis. Your thoughts?
BS Ajaikumar: I do not like to comment on numbers. Historically, we have grown equal to that or better. The future will give us even healthier growth. From 17 comprehensive cancer centres today, we will soon be 26 centres. That should lead to significant growth for the group overall over the next few years.
Date: 8th June, 2016