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March 16, 2009

Healthcare cos. to ride out the recession

Business Today has an article on how healthcare firms are planning to accelerate their growth plans - never mind the recession.
“A slowdown is the best time for health care to consider growth,” avers G.S. Rao, Executive Director at Yashoda Hospital in Hyderabad. Rao is doing just that. He has set up an integrated and advanced cancer treatment center involving investments to the tune of Rs 100 crore; this includes over Rs 17 crore on installation of, what he calls, Asia’s first Rapid Arc Linear Accelerator, which is used for radiotherapy.

Rao also plans to invest Rs 250-300 crore on super-speciality services by 2010. His growth plans are driven by the fact that there is constant demand and it is only during a slowdown or recession that input costs come down. Funding isn’t an issue either, with Rao claiming that banks are vying with each other to offer good rates.

Yashoda is not the only hospital that’s using the headwinds of a downturn to take off. Industry major Apollo Hospitals is equally upbeat and is busy implementing its plans to add new hospital beds across various locations. The plan is to add 2,536 beds—to its existing 7,543 beds— by December 2010, including 900 in tier II and tier III cities. For this Apollo has drawn up a Rs 1,586 crore investment plan. “We had already put some of our funding in place pre-recession,” says Suneeta Reddy, Executive Director (Finance), Apollo Hospitals Group. She adds that over the past year, patient volumes are up 12 per cent. Net profits for the third quarter are up 27 per cent over the previous year’s December ended period.

Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports. Email the author at arun@ventureintelligence.in