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BW Businessworld

A Crippling Sellout

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New Delhi-based fortis healthcare will buy 10 hospitals from Wockhardt Hospitals for Rs 909 crore, bringing it closer to industry leader Apollo Hospitals. The functioning hospitals of Wockhardt have a turnover of about Rs 310 crore. This, added to Fortis's 2008-09 revenues of Rs 630.69 crore makes it Rs 941 crore, compared to Apollo's Rs 1,614.2 crore in 2008-09.

The acquisition will give Fortis a stronger foothold in south and east India, and will help cash-strapped Wockhardt pay its debt. However, the sale puts a serious question mark on the future of Wockhardt's hospital business. Mumbai-based Wockhardt will sell all its hospitals in Mumbai, Bangalore and Kolkata, with a total bed capacity of 1,902 — including two hospitals under construction — to Fortis. This will leave Wockhardt with only seven super specialty hospitals in Nagpur, Hyderabad (two hospitals), Rajkot, Bhavnagar, Nasik and Surat, with a total capacity of less than 1,000 beds. In comparison, Fortis will have about 5,200 beds. Wockhardt also runs a general hospital in Navi Mumbai, Sterling Wockhardt, and two community healthcare hospitals in Bhavnagar and Goa.

"After this (sale), it will be difficult for Wockhardt to bounce back," says Monika Sood, head of healthcare division at Feedback Ventures. "Retaining staff will be a real challenge." Post acquisition, Wockhardt Hospitals' CEO Vishal Bali will join Fortis. But the group could rebuild its network in metros — it owns land in Delhi and Mumbai. "I wouldn't write them off," says Sood.

(This story was published in Businessworld Issue Dated 07-09-2009)

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