apollo case study strategy

8/3/2019 Apollo Case Study Strategy

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2009 RedSeer Consulting Confidential and Proprietary Information. www.redseerconsulting.com.

2009 RedSeer Consulting Confidential `and Proprietary Information. www.redseerconsulting.com [email protected] RedSeer Consulting Confidential `and Proprietary Information. www.redseerconsulting.com [email protected]

RedSeer: Thoughts May 2009


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AGENDA

Apollo - Background (evolution since inception)

Analysis of Apollos internationalization strategy

2009 RedSeer Consulting Confidential and Proprietary Information. www.redseerconsulting.com. 2


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Apollo Hospitals, started as the first corporate hospital ofIndia, has grown remarkably

First super-specialty

Hospital in India

Early 1980s

First super-specialty

Hospital in India

Early 1980s

1Liberalization

and Growth

Late 1980s;

Liberalization

and Growth

Late 1980s;

2

Wide Scale

Marketing

Efforts

Wide Scale

Marketing

Efforts

3Focus on

middle and

lower strata

Focus on

middle and

lower strata

4Global

expansion

and local

Global

expansion

and local

5

1983 Dr. PrathapReddy establishedthe first ever

1986 At thepersonal urging ofDr. Prathap Reddy,

Apart from individualpatient and doctorreferrals, which

1990s onwards Till early1990s, theservices of Apollowere restricted to the

Apollo has alreadyexpanded to morethan 45 Hospitals

corpora e osp a oIndia Faced skepticism

in his campaignthat super-

e en r meMinister of India,Rajiv Gandhi,liberalized theHospital Sector

serve as pr marymarketing tools inthe 1980s, Apolloexercised variousprint, audio and

e e s ra a o soc e y

Apollo facedcriticism that itsservices were not for

an more anApollo Clinics inIndia and abroad

Has centers of

was viable in India Was able to

attract doctorsfrom the west

Apollo's businessbegan to grow inthe 1990s, with thederegulation of theIndian economy,

tools

The successfulcoronary bypassoperation of the Vice

Apollo reacted byexpanding itsservices to the poorclass

Lanka,Bangladesh,Ghana, Nepal,Nigeria, Dubai,Qatar, Kuwait, etc.

Made an IPO andraised $4.6 million in1983

which drasticallycut thebureaucraticbarriers toexpansion and

President of India in1993 gave a majorboost to the Apollobrand and visibility

Has set aside freebeds for the poor Has set up a trust

fund Is pioneering

Further initiativesinclude SouthAfrica, Tanzania,Mauritius, Yemen,


ma e eas er oimport modernmedical equipment

remo e, sa e e-linkedtelemedicineacross India

man, a ra n,Vietnam andThailand, amongothers

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..and has become the single largest private hospital groupin Asia

19832006

ChennaiIndia

Chennai1 Hyderabad1

Delhi1

1

million patients in Indiaitself, from over 55countries

Ahmadabad1

Others (4)1

Others (250)2

Overseas The Apollo Hospitals Group is recognized as the "Architect of

Leadership, Quality and Network

r an a Bangladesh2

The UAE2

Nepal2

Ghana2

Healthcare" in India It is the largest corporate entity in healthcare in Asia and the third largest

in the world It has won multiple accolades both inside and out of India. The Apollo

Hos ital in Chennai was the first Indian hos ital to be awarded IS0 9002

Nigeria2 UK2

Saudi Arabia2

and ISO 14001 Certifications and has been named Best Private SectorHospital in India by The Week magazine

Apollo manages over 6400 beds in different centers and is currentlyinvolved in either the management or ownership of 45 hospitals in Indiaand abroad


(1) Apollo Hospitals(2) Apollo Clinics

Source: Literature Search, Company website4


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Apollo Hospitals Group The Group has an integrated

business model Across the Healthcare S ectrum

Third Party

Health and

Lifestyle Clinics

Pharmacy

Retailing

Insurance

EducationStrategy &

Im lementationTertiary

Healthcare

ConsultingServices

Clinical Trials

Telemedicine

HOSP info

System



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Apollo Hospitals Group Companies, besides Hospital

Apollo Health StreetIncorporated

Offers Business Process Outsourcing and IT solutions and servicesto global clientele

Established in 1999

Largest retail pharmacy chain in India and has round-the-clock-

Apollo Pharmacies,

medicines and other health and body-care related products Moving towards offering e-prescription based services

MedVarsity OnlineLimited (MOL)

Acts as a catalyst for students and is complementary to the existingeducation system - over 1500 hours of medical content that isaccessible to the medical community

Established in 2000

Apollo Telemedicine Allows the participant sites to collaborate with institutions in Indiaand abroad and rovides their clientele access to healthcare in


nterpr ses m te(ATEL)

areas not adequately served by the medical community Established in 1999

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Apollo Hospitals Group Companies, besides Hospital

Family Health PlanLimited (FHP)

Its the largest Third Party Administrator (TPA) in Asia - affiliated to1700 major Corporates and manages 4.7 million lives

Initiated managed care to control rising medical costs, and to

Online Hospital An electronic equipment exchange for medical devices and high-

Equipment ServicesPrivate Limited

It provides expert advice and services on technology, techno-commercial issues

Apollo Health &Lifestyle Ltd (AHLL)

Delivers family-focused primary healthcare services throughbranded Apollo clinics across India and its neighboring countries.

Keimed.com Used information Technology to create an e-marketplace that

would service Apollo and others through an end-to-end, logistic


Limited solutions partnerships for effective inventory management andcontrol

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AGENDA

Apollo - Background (evolution since inception)

Analysis of Apollos internationalization strategy



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Drivers for International Expansion

Huge opportunity

Large unmet need

medical care

Large unmet need for high quality medical care High unmet demand, specially amongst people who could not afford to travel

abroad for treatment

Major procedures like open-heart surgery were unavailable The medical treatment in many Asian and Gulf countries was conducted sloppily,

using low quality equipment

-


,they could generate higher ROI

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Apollos used the OLI Paradigm effectively for Internationalexpansion

OwnershipAdvanta es

Ownership: While the hospital group has maintained its ownershipit has found that in order to remain competitive and achievescalability it needs to relinquish some of power and has adopted thefranchising model in order to expand

Internalization

Advantages

,network. The chain has spun of subsidiaries under its main brandwhich include Apollo Clinics, Apollo Pharmacy etc. Apollo iscontinually characterized by change and innovation. Strategicinorganic and inorganic expansion in order to rapidly ramp up andhelp keep the company abreast with the dynamic businessenvironment

Location: A ollo has firml reaffirmed in its strate the belief that

Location

more is sure. The chain apart from setting up multiple hospitalsand clinics in each city have now set it footprints in tier 1,2 citiesalike. It has aimed to become a global brand by setting up centersin Dubai and other Asian countries and is continually looking to


expan

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Apollos branding and demand generation initiativesfocused on individuals, referring doctors and corporations

Awareness of high quality medical care and stress illness prevention Targeted mailings to promote Apollo clinics for various therapies such as

diabetes, asthma, back pain, cancer and cardiology Introductor discounts to attract first time users

General publicand

Developing an internal system to respond to all consumer queries promptly

Regular advertising in a variety of media to target urban consumers Screening programs for illness such as cancer and tuberculosis in rural areas

n v ua s

Local Doctors

Individual visits by Apollo sales force, to local doctors to build relationships Frequent mailing by Apollo to the doctors, to keep them informed about the

hospital's services and procedures

Track number of referrals made by individual doctors in a computerizeddatabase Inform and update referring doctors about the progress made with the

patients Encourage Apollo doctors to participate in national Medical Association

meetings to increase the Hospitals familiarity to doctors across the nation

Corporations

Corporate and government employers Less price sensitive than those whopaid out of pocket

Target key decision makers such as top executives, human resourcemanagers, trade union leaders and company medical advisors


Conduct programs at the companies to increase awareness and teach skillssuch as first aid

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Apollo has taken various key Initiatives to increaseinternational presence and operational efficiency

Apollo built the first HMO (Health Maintenance Organization) in 1995, on the lines of HMOs in theIncreased

DescriptionStrategy

. .The HMO combines two methods of expansion building wholly owned facilities and licensing

Increased emphasis on Managed Hospitals in order to reduce risk, cost and to increasegeographical reach

Licensing will help spread Apollos influence and recognition more quickly than building whollyowned facilities

emphasis on

ManagedHospitals

Improvement in

efficiency andcost reduction

Improvement in efficiency through better asset utilization of all existing facilities Cost Reduction through simplification of processes in the areas of materials, manpower and

financing

Aggressivemarketing

Aggressive marketing to access overseas markets measures such as publicizing successfulsurgeries, awards, accreditations, alliances/ partnerships and accolades

Has established an AIC (Apollo Information Centre) network, establishing government-private' '

Backward

,

private patients through health insurance HMOs and TPAs and through local doctor referrals

There is increasing focus on providing wholesome health solutions, integrating to the Indianmethods of wellness.

2009 RedSeer Consulting Confidential and Proprietary Information. www.redseerconsulting.com.Source: Literature Search

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Apollo Hospitals has also taken other steps to expand itsreach and penetration globally

InternationalAffiliation and

The only international training organization for the American Heart Association Technicalsupport from Texas Heart Institute and Minneapolis Heart Institute for Cardiology andCardio - Thoracic surgery

Accreditation Exchange programs with hospitals in the U.S. and Europe Association with the Mayo Clinic and the Cleveland Heart Institute, USA Associate of the Johns Hopkins University, USA

Apollo Hospitals has entered into various alliances to broad base its value proposition

nternat onaResearchAlliances

em e esearc an erapy July 2005 - Tied up with Histostem, part of the Delaware Corporation, for the development of

a sustaining and mutually-beneficial relationship in Cord Blood Stem Cell Research andTherapy in India

Medical and Business Collaborations - - - ,

technology, partnerships with clinical departments especially in Oncology, Neurosciencesand Cardiology, nurse education, telemedicine, clinical research and medical education

The local partnership approach has worked very well for Apollo

LocalPartnerships/JVs

Local Partner Local partner usually deals with many local issues, besides providing capital, such as

provision of land and dealing with local authorities, doctors and other interest parties Help in creating a sound clientele base

Apollo Partial capital investment, and management

2009 RedSeer Consulting Confidential and Proprietary Information. www.redseerconsulting.com.Source: Literature Search

Example - Apollo Hospitals Group in a joint venture with its Bangladeshi partner STSHoldings, Dhaka

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Apollos success can be attributed to its organizationaround Five Stars to give patients advanced medical care

Hired top quality medical personnel top caliber, renowned doctors andsur eons were a ke to A ollos re utation and serviceMedical Personnel

The presence of top specialists garnered referrals from throughout the

world. Apollo took every opportunity to publicize the accomplishments of itsdoctors

part of Apollos service and appeal to patients and consultant doctors

Equipments have always been expensive but Apollo never compromised

Motivation Employees have been the middle star for Apollo, signifying theirmp oyees central role in the success of the Hospital. Every individual is valued

Culture Strong sense of community Compensation 10-20% higher than the industry average

Hospitality

need Every employee has to go through an induction training which emphasizes on

grooming, etiquette and hygiene and stressed Never forget to thank apatient

Focus on a number of ways to serve patients better than the competition

2009 RedSeer Consulting Confidential and Proprietary Information. www.redseerconsulting.com.Source: Literature Search, Harvard Business Review

Patient health has always been the most important indicator of success andhence the hospital has always been focused on providing the best medicaloutcomes

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Apollo is looking to expand aggressively in otherinternational markets

Fiji

Mauritius West Asia

TheCaribbean AfricaInternational

islandsxpans on

Mongolia Kazakhstan



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