STRATEGIC

MANAGEMENT
Apollo Hospitals- First-World Health Care at
Emerging- Market Prices
AN ANALYSIS

PGP-1 SECTION 6
GROUP AE1

Members
Mayukh Bhattacharya - 15S626
Ridhima Modi - 15S635
Srinath Srinivasan - 15S647
Tejas B N - 15S649
Parinita V Kumar 15805

Apollo Hospitals Group is a dominant company in the Indian tertiary health care market.
Established in 1970 by Dr. Prathap C. Reddy, twenty years later, it emerged as the single,
largest for-profit private health care group in Asia. Apollos business extends into 33 hospitals
with 6400 beds, catering to patients from more than 50 countries. Indians spent only 5.2% of
GDP on health care and only 15% of the Indian population was covered by insurance. Apollo
provided quality care at prices that were surprisingly lower compared to global standards.
India, therefore, has a competitive advantage in the Health Care Cost making it a preferred
destination for medical tourism.

Vertical Integration by Apollo Hospitals Group

Apollos first strategic focus was on the development of the domestic market and build up a
vertically integrated health care network. They took the following steps to materialize this
strategy:

Franchising Primary Care Clinics:

Apollo was the first healthcare giant to choose a franchising concept to roll out its
clinics. In a highly fragment primary care clinic market in India, Apollo was well
positioned to exploit its brand equity. In exchange for its one-time franchisee fee and
5% royalty on sales in these clinics, Apollo offered comprehensive support services.
This helped deepen the trust of its customers in the brand.

The Pharmacy Network:

Initially, Apollo added pharmacies in its own hospitals to benefit its patients. however,
by 2005, Apollo operated the largest pharmacy network in India with 189 outlets,
70% of which were standalone pharmacies. This step was taken to standardize the
quality of medication, given the highly varied quality in the market.

International Consulting & Projects:

Apollo initiated its first international project in Colombo, Sri Lanka. Other
international projects included projects included those in Ghana, London, Dubai,
Dhaka and in the Middle East.

PORTFOLIO

RESTRUCTURING

TRANSFERRING

SHARING

MANAGEMENT
ADAPT/
REPLICATE

Adapt
Portfolio
consisting of
Clinics,
Pharmacies &
Hospitals having
horizontal and
vertical
intergration

COMPETE
ALONE/
COLLABORATE

Compete
Competing in
portfolio
management will
give them the first
mover advantage,
thus benefiting
them

INFLUENCE/
ACCEPT THE
MARKET

Influence
Portfolio
management will
attract both
domestic and
international
markets, thus
making Apollo
very influential.

ENTER/ WAIT/
EXIT

Enter
being the market
leader, its best to
enter into the
market and
execute the
business and
corporate
strategies

CAPABILITIES
Adapt
Restructuring could
work as both, a
strategic and tactical
decision. This could
be done by
venturing into
insurance policies
and health
management
services such as
medical
gymnasiums.
Compete
Competing in
restructuring with
strategies such as
vertical integration
will help maintain
their competitive
status in the market.

Adapt
Transferring
capabilities would
help in building
trust in the brand.

Influence
Apollos first mover
advantage will help
them influence the
market with its
brand name, quality
and services. Its
strategy towards
medical tourism
could be a major
deal maker.
Enter
Restructuring
towards vertical
integration is best
suited to be
executed
immediately.

Accept
Acceptance of the
markets they are
venturing into
would be crucial in
their success in the
international
markets

Collaborate
Collaboration with
the Sinhalese in Sri
Lanka instilled a
great deal of trust
in them.

Enter
given the urgent
need of medical
facilities and
services in the
global market, it is
the right time to
enter

ADVISE AND
PRACTICE
Replicate
Venturing into
international
markets would
require them to
replicate the
standards set by
the company in
India. For
example, the
standard of Indian
doctors.
Collaborate
They could
collaborate with
domestic services
in their
international
ventures in order
to build a global
brand.
Accept
In order to be
successful in the
foreign markets,
they will need to
be accepting of
the culture and
practices of the
market.

Enter
Being in the
market leader
position and
considering the
tremendous scope
of the market, now
is the right time to
enter.