Apollo Hospitals Enterprise’s ongoing restructuring to spin off its pharmacy and digital health business was a purely board-driven decision to sharpen strategic focus and create shareholder value, Suneeta Reddy, Managing Director of Apollo Hospitals, told ET, rejecting any suggestion of family differences or change in promoter dynamics. “Let’s not think about it from a family lens. Every decision is taken on what is right for the business and shareholders,” Reddy, who heads the country’s largest pan-India hospital chain by revenue, told Rica Bhattacharyya in an exclusive interview. “I speak to my sister (Shobana Kamineni – Executive Chairperson of the spun-off entity) every other day. We work very closely,” she said. The hospitals and pharmacy-digital businesses have very different economics, return profiles and growth drivers, making separation critical for value creation.
Was Apollo’s recent restructuring an exercise in future-proofing governance – something family-led groups often do to bring clearer ownership and leadership accountability?
What we do at Apollo is never from a family lens. It is what is good for the company. A lot of Apollo 24/7 (India’s largest and fastest growing online pharmacy and digital health platform) business is retail…it is a different business, the ROCE (return on capital employed) is different, it is measured differently, and the workforce is different. The spin-off was aimed at shareholder value creation. It was always a thought that this company needs to be separate; it must be more efficient and benefit all shareholders. Apollo Health Co (the holding company for omnichannel pharmacy distribution and digital health), which is on track to get listed by FY27, will grow at 20% while the hospitals business is seen growing at 18% over the next three years.
Apollo has been at the forefront of India’s healthcare transformation for decades. How do you define the company’s mission today?
We started 43 years ago when high-end clinical care was not there, and that transformation from nursing homes, trust-led hospitals and government facilities to setting up healthcare in the corporate space is what Apollo did. Now the second phase of our transformation is preventive healthcare with non-communicable diseases accounting for over 60% of the total disease burden. We have genetic disposition towards cardiac problems, incidences of cancer are rising by 18% every year, and we have the largest diabetic population in the world. So, our focus will be on prevention.
Apollo has added beds selectively rather than aggressively in recent years. What is the next phase of expansion in your hospital business?
Metros will continue to be a part of our expansion plans as well as Tier 1s. We have significant focus on Delhi and Gurgaon. Tier 2s are also emerging markets where we want to expand presence. India remains a land of opportunity for healthcare with less than 70,000 private beds in India and the disease burden increasing. We are happy to work with asset-light models where people give us the land and the building. We will also remain open to acquisitions while being mindful of the return.
Also, we really play out the network advantage well, that converts into market share. That network is what differentiates us from the rest. Competitors may have more beds but we have the network and the multiplier effect is how many people we are looking after.As far as Apollo, I would measure not just revenues but the number of patients we are able to treat and that is a key metric for us.To build a robust network, Apollo doesn’t need to build 1,000 bed hospitals as the need for the number of beds reduces when we can combine preventive healthcare, testing, telemedicine, and telehealth. Our intention is to cut down the length of stay and discharge patients as fast as they are cured because it is less of a burden on them.
You’ve led Apollo through major strategic shifts. What has been your most significant pivot so far?
One of the key changes has been the realisation post Covid that we need more hospitals like Apollo and the investments that have come into healthcare is more than dramatic. Second is that we have led one period of growth where we built out Tier 2 and now we are going back to strengthening our presence in Tier 1 as well as going back to Tier 2 and building the network. While we had all of these in different verticals – including healthcare services, retail healthcare & diagnostics arm Apollo Healthcare & Lifestyle, and digital and pharmacy business Apollo HealthCo – the significant thing that is now happening is the connectivity between all verticals. Next pivot will come from the government – it has done a great job rolling up insurance. Now the private sector needs to work in tandem so that more people continue to invest.
What are Apollo’s key strategic priorities over the next five years?
Currently, we have three strong verticals that are growing at a healthy pace. We are well-poised to serve our growing geriatric population as well as millennials. And then we have the third cohort – Gen Z – who will require a different kind of relationship with health. Their interventions will encompass preventive health, lifestyle and nutraceuticals, so that we can leverage all the learnings we have from the earlier cohorts.With this driving structural demand for quality healthcare, our verticals will continue to grow between 17-20% year-on-year over the next three years. This is fundamental. As the network aligns, the value of the integrated offering will be unlocked and be visible as a differentiated proposition for the consumer. We continue to remain early adopters and leaders in technology. Our investments in telemedicine and our AI-powered clinical intelligence have the potential to scale our high-quality clinical offering to large populations.
How is Apollo preparing for leadership succession and a smooth transition for the next generation?
We are well-prepared for transition through a strong family constitution that clearly sets out the transition and rotation plan for the executive directors. Given that we have worked well together for years, we foresee that any re-alignment of roles will happen very smoothly. As far as the next generation is concerned, they have already started contributing to various aspects of the business. We have tailored mentorship programs in place for each of them. We are keen on ensuring that their contribution prepares them for succession, as well as building new streams of growth.
