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BW Businessworld

The Power Of Specialisation

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Every once in a while, a radical business model causes a flutter in an established industry, and enhances its sex appeal. More often than not, it gets killed in the jungle war that is business, where mistakes can only be traded with extermination. Sometimes, though, the model not just survives, but changes the industry itself.

One such model seems to have taken root in India's nascent $35- billion healthcare sector. About a dozen medical entrepreneurs have muscled their way into specialty care ranging from oncology and ophthalmology to urology and renal care. What sets them apart from your neighbourhood super-specialist is that their ambition didn't die in that neighbourhood. Instead, they have morphed into specialty chains and the number of their outlets is almost doubling every year. Bigger chains already have as many as 15 outlets while others are catching up.

This is bad news for multi-specialty giants such as market leaders Apollo, Fortis and Manipal. Too many of these chains will eat into their client base and revenue streams. Evidently, the big players are taking note. Some, such as Apollo, are joining hands to launch specialty chains jointly, others such as Fortis have acknowledged the power of specialisation by asking them to run that department within its  hospitals.

There are many reasons why this model will not just survive, but also prosper. Their upfront capex is comparatively low and returns are better than their multi-specialty peers'. They are flexible enough to be hubs for some and spokes for others.

Unlike in the US, where Barack Obama has promised healthcare for all in his reform proposals, India isn't even thinking on those lines. So the average Indian's dissonance with the creaking and inefficient public healthcare infrastructure and dependence on private healthcare will ensure that this model is not subsumed in the maze of business models. More importantly, the burgeoning health insurance business in India, which enjoys a symbiotic relationship with healthcare, will ensure it flourishes.

From here on, it is the resolve of these entrepreneurs that is pitted against the usual hurdles of doing business in India. Big companies will lure them, or even kill some. But their success is nearly assured, provided they can hold their nerves.

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


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