Corporate

How CK Birla Group Plans to Expand Its Healthcare Business

Akshat Seth, vice chairman of CK Birla Healthcare, says the group wants to focus on doing what it is good at and build on the legacy of the conglomerate  

Akshat Seth
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The Indian healthcare industry has been on a bull run the last few years. The International Trade Administration pegged the industry at over $370 billion in 2022. And consultants at Nexdigm estimate the industry to be worth over $610 billion by 2026. It is this growing pie of which the CK Birla Group wants a slice. The multinational conglomerate made a concerted foray into healthcare in 2016. And now, Akshat Seth, vice chairman of CK Birla Healthcare, says the group’s bet on the segment will grow bigger. 

The bigger bet comes at a time when the healthcare industry is booming, and markets have been rewarding companies in the segment. In only the last one year, Apollo Healthcare’s shares have surged 25 per cent, Fortis Healthcare has seen a 65 per cent jump in its scrip and shares of Max Healthcare have surged 41.5 per cent on the bourses. This year, the segment’s theme is consolidation amid rising competitiveness. 

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The Core Business Play 

In a bid to sustain and grow amid rising competitiveness, CK Birla Healthcare wants to play on specialties while building on the legacy of the CK Birla Group, Seth told Outlook Business during an exclusive conversation at the sprawling Birla Towers at New Delhi’s Barakhamba Road.  

CK Birla Healthcare runs two specialty hospitals in Delhi-NCR, one in New Delhi and another in Haryana’s Gurugram. “Our hospitals are not multi or single specialty. They are somewhere in between. The Gurugram hospital is fully scaled up and the Delhi hospital has broken even in just two years after launch. We are looking to expand both,” he says.  

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While the near-term goal is to expand on specialties and improve existing hospitals, Seth says the company will increase the number of hospitals to reach near double digit mark over the next five years. He estimates such an expansion to cost around Rs 500 crore. According to data shared by the company, CK Birla Healthcare has so far served over 3 lakh patients.  

Apart from hospitals, the company also has a separate chain of fertility solutions. Birla Fertility and IVF launched in 2022 and the company is optimistic about this arm of its healthcare business. The company pegs the fertility market value at $1 billion growing at a pace of 15–18 per cent compounded annual growth rate (CAGR) in the next 10 years.  

This, Seth says, presents a huge opportunity for the company. “We have a presence in 18 Indian states with 37 fertility centres. The immediate goal is to end the year with 50 centres and then move on to build over 100 centres in the country,” he explains. CK Birla Healthcare’s fertility arm recently acquired the Kerala-based ARMC IVF Fertility Centre which runs 7 centres in southern India. Overall, the company seems set to spend over Rs 1,000 crore in the next five years. It’s confident that a large share of this investment will come from internal accruals.  

The group expects the focused bet on fertility and hospital segments as a winning strategy in the long run. 

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Making Strategic Choices  

Several large players in the healthcare segment have of late attempted to expand their offerings and get into the whole healthcare chain. New apps which offer holistic solutions from diagnostics to prescriptions for medicines are on the horizon. But the CK Birla Group wants to remain focused on hospitals and fertility clinics.  

“It was a conscious choice from the beginning to focus on things we are good at. The decision was also based on our investment appetite,” says Seth. He adds, “There are a lot of exciting segments, but we cannot be everywhere. We want to offer standardised services which will be the same everywhere and the model should be scalable.” 

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In terms of growth, Seth says CK Birla Healthcare’s revenue has been doubling over the last few years and the management is optimistic about the strong momentum. “The pandemic was a wakeup call for people. They are becoming more demanding and discerning in their choices. There is welcome buoyancy in the healthcare value chain, and it is expected to stay,” he adds. 

There are concerns on the horizon for healthcare players too. The Union government is said to be in conversation with states to explore the possibility of standardising treatment rates across hospitals. Analysts say if this happens private healthcare players may get hit.  

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Asked if he sees this policy probability as a threat, Seth says he does not wish to comment on specific policy measures. He adds that affordable and transparent prices remain a key plank for the healthcare brand. “As the policy landscape evolves, we will be compliant as participants in the industry,” he says further. For now, CK Birla Healthcare, like other industry participants, is focused on increasing its presence in the value chain.  

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