The hospital industry is one of the most important components of the value chain in the

healthcare industry.
The industry is growing at the rate of 14% annually. The size of the Indian healthcare
industry is estimated to grow at Rs. 1,717 billion in 2007. It is estimated to further grow
by 3,163 billion at 13% compounded annual growth rate. The private sector accounts for
80% of the healthcare as compared to the public sector which is just 20%. According to
surveys conducted by WHO, a country as populated as India needs to add 80,000 beds
each year for the next five years to meets its ever growing population. The current rate
of hospitals and beds stands at a bare 15,393 and 8,75,000 respectively. (Apollo, 2009)
The growing standard of living of many Indians is leading to spurring demand for high
quality medical care and transforming the healthcare sector into a profitable industry. In
addition to that, medical tourism is fast changing the face of the so called traditional
healthcare industry. India's cost advantage and explosive growth makes it a favourable
place for healthcare opportunities. (Apollo, 2009)
The country has been well known around the world for spiritual healing and now with the
boom in modern medicine, latest technology and skilled healthcare professionals it is
soon becoming a preferred destination for medical tourism.
According to Ministry of Commerce and Industry, Indian medical tourism that was once
valued at USD 350 million in 2006 is estimated to grow into USD 2 billion. (Apollo, 2009)

Company Introduction
The dream for Apollo Hospitals was cultivated and developed within Dr. Prathap C
Reddy, the founder Chairman of Apollo Hospitals. In 1983 the chain began its first
hospital in Chennai bearing 150 beds. However, today the group comprises of diagnostic
clinics, pharmacies and over over 8065 beds across 46 hospitals in India and
overseas. The groups's efforts towards a better medical future in the country include
clinical research, BPOs and health insurance services. (Apollo, 2009)
After 25 successful years of achievement and dream realisation today Apollo Hospitals is
not just one of the country's premier healthcare providers but also a pioneer in helping
India become a centre-of-excellence in global healthcare. Apollo group has been
successful on a very large scale to take quality healthcare across India. They have been
successful in touching 10 million lives and giving hope to the medically backward Indian
population who had limited infrastructure. (Apollo, 2009)
Apollo has scripted the medical landscape in the country by continuous innovations and
gone out to become a quality healthcare provider. It has been a major player in scripting
the medical landscape of the nation. (Apollo, 2009)
By the beginning of the new millennium, Apollo Hospitals Group had become an
integrated healthcare group with owned and administered hospitals, diagnostic clinics,
dispensing pharmacies and consultancy services. In addition, the group offers visit to
patient's doorstep, clinical & diagnostic services, medical business process outsourcing,
third party administration services and health insurance. To boost performance and
service to clients, the company also makes available the services to support the
business of healthcare; telemedicine services, education and training programmes &
research services and a host of not- for- profit projects. (Apollo, 2009)

Structural Industry analysis

there is not such a large threat as any prescription drug that is sold has to be sold through a pharmacy only. (SWOT N PORTER 5 forces . (SWOT N PORTER 5 forces . injured. 2009) Porter's Five Forces -Healthcare Industry (Dobson et al. 2009) The industry as a whole is less responsive to negative changes in the economy due to its relatively inelastic demand. These companies may choose not to supply their medicines at the hospitals and their pharmacies that supply them to patients directly.indian pahrma) These types of Hospitals cater to patients who come in for treatments from either visiting doctors or resident doctors. (SWOT N PORTER 5 forces . clinical. drug manufacturers. Thus an institution providing all the above said services can only be termed as a hospital. According to market classifications the healthcare industry includes Healthcare equipment & services and pharmaceuticals. People need healthcare regardless of their economic situation. biotechnology & life sciences. The government often does not allow hospitals to get established in any given area specially if there is a hospital already existing in any given area. (Apollo. Hospitals are provided medicines and equipments by biotech and drug companies. Pp 26) Threat of New Entrants Hospitals face a very high barrier to entry as they are heavily regulated by the government. (Apollo. medical equipment and instruments etc. hospitals.indian pahrma) Supplier Power The Idea of supplier power is very interesting in the healthcare industry. The particular sectors associated with these groups are: biotechnology. This is done to prevent the hospital to acquire healthcare technology thus preventing it from entering in the market. diagnostic substances. A hospital by standards means an institution that provides medical.Industry Overview The Healthcare industry incorporates several sectors that are dedicated to providing services and products dedicated to improving the health of individuals. Companies could choose not to sell them their equipment but this is not a large threat as there are fairly large numbers of healthcare equipment companies. This very closely depends on the so called services provided by the hospitals.indian pahrma) Drug or biotech companies cater to hospitals and pharmacies and hospitals supply patients to insurance companies. (SWOT N PORTER 5 forces . Likewise in the case of Healthcare equipment. There is such a large conglomeration of different companies in the sector that it acts in an interactive manner with each other. pregnant etc. drug delivery.indian pahrma) However. Hospitals have low bargaining power or relatively small power over suppliers. (SWOT N PORTER 5 forces . Many hospitals provide just basic function of clinical treatments to patients. surgical or psychiatric testing and treatments for people who are ill.indian pahrma) .

they start to lose out on their monopolistic benefits and future prospects. Rather than making them competitors. however. 2009) If a person needs to be medically attended to. irrespective of the positive or negative economy. The only stiffness the pharmacies face is from companies that have patented products. they cater to different needs of the customers. the companies face the power of substitutes when their patent expires. However. he/she will not be affected by the economic crisis or inflation etc. They might not be willing to sell their products to the pharmacies at a lower cost and might charge a higher price. if a person needs healthcare. (Apollo. it is hardly a matter of concern to people as people in today's day and age are spending relatively more on healthcare.indian pahrma) Availability of Substitutes Overall. (Apollo. Their competitors will charge less for the same medicine as they did not have to incur R&D costs. this way they act in conformity with each other. this may not hold true in case of poor people or people below the poverty line as irrespective of the economic conditions they might still not be able to afford healthcare for themselves. providing each business as well.The supplier power pharmacies face also depends largely on the availability of generic medicines and their substitutes. But within the industry the availability of substitutes varies. poor people tend to be less healthy than wealthier people as the reach of healthcare amenities to them is limited. There are other forms of treatments or medicine available but it is not vast enough to over shadow modern medicine. Thus quoting that the healthcare industry is relatively unaffected by buyer power would not be inappropriate.indian pahrma) Buyer Power The healthcare industry comprises of all the companies that are involved in providing healthcare services. Whether the prices of medicines or price of services provided increases or decreases. If a person has to undergo an operation. then the pharmacies face less supplier power as there is more competition in the market. Economy does not affect the health or the choice of healthcare option for people. . They face less competitive rivalry as they are low in number in any given area and even if there are a set of number of hospitals in any area. in the case of hospitals. with the production of generic medicines. (SWOT N PORTER 5 forces . During the term of their patent the company can enjoy huge monopolistic benefits but as soon as their patents expire. he/she will have to seek the services of the healthcare sector only. he/she will have no choice other than to utilize it. the healthcare industry has no substitutes. Within the industry. Irrespective of economic conditions.indian pahrma) Competitive Rivalry Hospitals are an essential utility for people. thereby making the pharmacies more powerful. (SWOT N PORTER 5 forces . 2009) The pharmacies now have the power to drive down the price of the product. Hospitals have no substitutes. If the substitutes of the medicine are available. (SWOT N PORTER 5 forces .

better training facilities.indian pahrma) SWOT ANALYSIS (Dobson et al. High salaries and employee options are provided in the west. These pharmacies are open round the clock and provide for not only in house patients but other customers too. They prefer to obtain best medical attention.indian pahrma) Consistent revenue growth across business segments. (SWOT N PORTER 5 forces - indian pahrma) Positive advancement : growth of the sector in the country is directly proportional to good health care and better health treatments to the people of the country. (SWOT N PORTER 5 forces . Pp 26) Strengths : Integrated healthcare company: Apollo hospitals provide end -to-end services to the patients. (Apollo.indian pahrma) Impact of the Health Insurance sector: opening of the health insurance sector and the expected growth in the per capita income are key growth drivers from a long term perspective. 2009) There is a very high attrition rate amongst nursing staff due to competition from the Western countries.Also. They provide quality resources which provide a world class service to the patients. With the growing standard of living of the people. The hospital giant has recently acquired state of the art technology for in neurology and liver transplant. 2009) Penetration: Indian Healthcare market is one of the least penetrated markets thereby facilitating to existing players. 2009) Largest private sector healthcare provider in India. (SWOT N PORTER 5 forces . (Apollo. 2009) Opportunity: . Equipped with a well maintained in house pharmacy as well as standalone pharmacies. 2009) Best technology & resources to deliver quality services: Apollo Hospitals have been reputed to acquire state of the art technology and optimum infrastructure to serve to its clients. This leads to growth in the health care sector. (SWOT N PORTER 5 forces . The incubation stage of the pharmacies has had a draining effect on the few set running pharmacies. most hospitals cost the same and usually this price is covered by insurance companies so there is no price competition therefore very little competitive rivalry. (Apollo. (SWOT N PORTER 5 forces - indian pahrma) Weakness: Since more than 300 Stand-alone pharmacies have been added during the year and most the pharmacies are in the incubation stage. (Apollo. Apollo hospitals serve its customers a world class service to its customers. (Apollo. where it has got unique advantage compared to its competitors. this can depress the margins.

(Apollo. A large portion of these people comes from US.indian pahrma) Attrition rate in the healthcare sector is expected to increase with the surge in demand for medical professionals.11 beds available. (Apollo. an investment of Rs.8 nurses available while comparably in the western countries the figure stands at 1. As US is trying to provide quality healthcare services at low costs as per their new presidential plan. (Apollo. 2009) .e. this may reduce the revenue.23 doctors and 2. The market for Medical tourism is expected to reach $40 Billion by 2010.There is a growing opportunity for the healthcare sector in India as for every 1000 people there are only 1. (SWOT N PORTER 5 forces . 2009) A large amount of revenue is generated from foreign citizens who come for medical treatments to India. 2009) The Indian Healthcare market is expected to quadruple to $150 Billion by 2017 from the current market size of $35 Biilion. already a major player inthe market is very well positioned to maximise its share. In India for every 1000 people there are 0. upgrading technology.3 doctors and 0. 2009) Lack of qualtity resources : Growing opportunities means growth of the number of doctors and nurses per 1000 patients.85 by 2012. (Apollo. As the industry is majorly based on new and latest equipment thus the industry requires constant investment in the new healthcare devices i. 3480 billion is required. (Apollo. (SWOT N PORTER 5 forces . Apollo hospitals. Apollo Hospitals is very well positioned in the market to capitalize on this growth opportunity. (Apollo. To make this ratio rise to 1. (Apollo. 2009) Cost of the medical equipment accounts for 40% to 45% of the total expenditure in the hospitals. (Apollo. 2009) Booming Medical Tourism and options : India has an increasing number of medical tourists and courses every year.indian pahrma) Threats: There seems to be high competition prevailing amongst existing players in the industry. Failure in doing so may lead to loss of patients.56 nurses respectively. Such a huge investment is beyond the control of the public sector. 2009) Any change in technology will make the existing medical equipments obsolete. 2009) This type of business is capital intensive.