SINGAPORE: No matter how healthy or rich Asian economies are, one thing is certain: Asians will never stop getting sick. That helps explain why Malvinder Singh left his home in New Delhi this year to move to Singapore. He first made a fortune in 2008 selling the generic-drug giant that his family built, Ranbaxy Laboratories.
Now, Singh, 37, is trying to expand Fortis Healthcare, another of the family companies, from a string of hospitals around the Indian subcontinent into a pan-Asian healthcare network.
“There is a huge opportunity for growth in Asia for healthcare,” Singh said in a recent interview. “There are multiple markets which need investment that we would want to be a part of.”
Fortis experienced a major setback in July when its bid to acquire Parkway Holdings, a regional hospital operator based in Singapore, lost out to a higher bid from Malaysia’s sovereign wealth fund. But Singh, who has a master’s degree in business administration from Duke in North Carolina, said he was undeterred. Having spent almost $1 billion in the past two years buying up assets in healthcare and other sectors around the world, he said he was already scouting for
new targets.
The attraction is clear: With a population of more than 1.1 billion, most with no access to formal healthcare, India represents one of the fastest-growing healthcare markets. And the country’s relatively low costs are increasingly attracting medical tourism patients from abroad.
But Singh is after much more: not only a slice of China’s 1.3 billion people and Indonesia’s 227 million, but also the emerging class of affluent Asian medical tourists, many of whom flock to Singapore for quality private care. By building a regional network of hospitals, moreover, he hopes to bring better care to the poorest parts of India.
“The challenge for the country and for us as healthcare providers is to see how to create a model where you’re able to create infrastructure and investment in healthcare and bring it closer to the people, so it’s more accessible,” said Singh, the Fortis chairman.
Many in India still wonder why Singh and his younger brother, Shivinder, decided to walk away from their pharmaceutical company, which has deep ties in their family.
Along with another Indian drug company, Dr Reddy’s Laboratories, Ranbaxy became known globally for overturning big drug companies’ patents in court fights and then churning out lower-cost versions of their best-selling products.
By the middle of the decade, though, competition from cheap generics was proving as tough on generic-drug makers as it was on big pharmaceutical companies. In 2005, Ranbaxy’s profit fell by two-thirds and its share price by nearly a half.So in 2008, the Singhs sought a solution by marrying Ranbaxy to the Japanese drugmaker Daiichi Sankyo. For Daiichi Sankyo, Ranbaxy offered low-cost manufacturing and access to 60 new markets, including crucial emerging markets like India, to offset falling sales at home. “We had what they wanted,” Mr Singh said.
Selling their stake in the company to the Japanese earned the Singhs $2.3 billion, vaulting them to No. 13 on Forbes magazine’s ranking of the richest Indians. Malvinder Singh retained his position as head of the company. In September 2008, however, the Food and Drug Administration in the United States banned 30 Ranbaxy drugs made at two of the company’s Indian plants, citing manufacturing problems uncovered that year. Ranbaxy’s stock dropped by two-thirds, and in May 2009, the company replaced Singh as chief executive and paid him a severance of `4.8 crore, or $9.6 million. Singh declined to discuss the FDA case or his departure from Ranbaxy.
Singh turned to another family company, Fortis Healthcare. Founded in 1996 , Fortis has grown from a single hospital in northwest India into a network of 48 hospitals and clinics. Last year, the Indian healthcare market was estimated at $38 billion, and given the country’s fast-growing, increasingly affluent population, more and more Indians are suffering from lifestyle diseases common to developed countries.
India already has the largest number of diabetics in the world after China, for example, yet Indians, on average, spend only $55 a year on health care. “There’s a huge gap in India,” Singh said. “The healthcare market in India is very fragmented. The corporatisation of healthcare is still emerging.”
To achieve the advantages of size, Fortis embarked on an acquisition spree, acquiring three hospital chains in India from 2005 to 2009. The company now has 10 more hospitals under construction.
In March, Fortis leaped overseas, buying 24% of Parkway from the private equity firm TPG for $685.3 million. With hospitals in Malaysia, China and India, Parkway gave Fortis a foothold across Asia. The chain is also popular with medical tourists; a third of its patients in Singapore come from abroad, mainly from Indonesia.
Some analysts expressed doubt about whether Fortis could benefit from an international network. Unlike the managers and engineers who follow manufacturing investments overseas, doctors and nurses often cannot work in countries where they are not licensed. Losing out on its bid to take over the rest of Parkway, therefore, was a blow to Fortis’ strategy.
As a result, Singh said, Fortis is now considering moving into hospital management as an alternative. “An acquisition to get kick-started might be the way to start,” he said. “But that doesn’t mean it’s the only way.”
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