21-6-2024 (KUALA LUMPUR) Malaysia’s IHH Healthcare, one of Asia’s largest hospital groups, is exploring opportunities to enter Indonesia and Vietnam through acquisitions as its existing markets become more saturated, according to its chief executive.
The company operates over 12,000 beds across 10 markets, including Malaysia, Singapore, India, and Turkey. Its portfolio includes prestigious names such as Mount Elizabeth in Singapore and Gleneagles in Malaysia. In 2018, the company acquired Fortis, India’s second-largest player.
In a recent interview with Nikkei Asia, CEO Prem Kumar Nair acknowledged that while there are “still a lot of opportunities” in IHH’s current markets, countries like Malaysia could reach a “saturation point” within the next five to ten years, prompting the company’s expansion into newer, growing markets.
“There are lots of reforms going on in Indonesia,” Nair added, referring to the liberalization of the healthcare sector to allow full foreign ownership. “Our business development team is looking at it. And I think the time is right.”
Nair stated that IHH’s hospitals in Singapore, popular choices for medical tourism among affluent foreigners, have recently witnessed a growing demand from middle-class patients in neighboring countries like Indonesia, which he considers “good signs” for the company’s potential entry into such markets. He noted a “shift” in medical tourism trends, with more middle-class individuals and professionals seeking treatments in areas like oncology and cardiology.
In 2022, IHH sought to fully acquire a joint venture of Australia’s Ramsay Health Care and the Malaysian conglomerate Sime Darby, which has hospitals across Malaysia and Indonesia. While the deal fell through, IHH stated that the acquisition would have cemented its leadership position in Malaysia, although some analysts viewed it as a stepping stone to enter the Indonesian market.
In Vietnam, IHH’s Singapore unit recently signed a memorandum of understanding with FPT Long Chau, a local pharmaceutical chain, to develop healthcare services in the country.
Competitors have already made inroads into Vietnam through acquisitions. In October, Singapore’s Raffles Medical Group announced plans to acquire a majority stake in the American International Hospital in Ho Chi Minh City, while Thomson Medical entered the market by acquiring the country’s largest private hospital, Far East Medical Vietnam, for $382 million last year.
“Of course, we will have to look at the [Vietnamese] market,” Nair said. “But the factors are all the same – the availability of good doctors and nurses, ability to get equipment and drugs. There are many things that go into looking at a market and seeing whether it’s suitable for us to go in.”
Listed in both Singapore and Malaysia since 2012, IHH has primarily expanded through acquisitions. The group reported a net profit of 2.95 billion ringgit ($625 million) in 2023, a 91% increase from the previous year, driven by the region’s growing healthcare demand.
While exploring opportunities in new markets, Nair emphasized that the company’s core strategy remains increasing its presence in its existing markets. IHH plans to add nearly 4,000 beds, or more than 30% of its capacity, globally over the next five years.
The company intends to add the most capacity in India, with 1,860 beds, bringing the country’s total to about 7,000. Nair cited India as “a very exciting country for us because it’s one of the fastest-growing healthcare markets in the world today,” highlighting the growing insurance coverage driving demand for private healthcare in a market with a middle-income group of as much as 400 million.
Nair stressed that the additions over the next five years will primarily involve adding beds to existing hospitals or acquiring adjacent lands to grow efficiently and seek quicker returns. Establishing hospitals from scratch will be the “last priority,” he said, as it typically takes three to five years to break even.
While Singapore, accounting for about 40% of the group’s profit, will remain IHH’s largest market “for many years,” Nair added that India will start moving up to become one of its main drivers.
