Healthway Medical's growing in China

Singapore's domestic market is tiny. Instead of opening hospitals in Singapore and waiting for patients to visit us in Singapore, go to the patients instead in countries where high quality medical services are lacking! I like the Chinese RMB. Earning Chinese RMB is a great strategy.

Video Clip added on 11 Feb 2010:



Business Times, December 14, 2009 Monday
Healthway plans to invest another $20m in China;
It is targeting a dozen first and second-tier cities there.
Ven Sreenivasan

AFTER expanding rapidly into one of Singapore's largest clinic chains, Catalist-listed Healthway Medical Corporation has set its sights on equally rapid expansion into the huge China market.

Less than a year after investing in its first venture in Shanghai via Crane Medical through a $3.3 million convertible loan, the company is preparing to spend another $20 million to expand its footprint in a dozen first and second-tier cities across the country.

'We will initially set up medical centres in Suzhou, Nantong and Nanjing,' said managing director Wong Weng Hong. The next phase will be expansion to other gateway cities like Beijing, Guangzhou, Chongqing, Chengdu, Tianjin, Dalian, Shenyang and Qingdao by 2015.

In Singapore, the group's business has been growing rapidly. The number of its clinics and doctors will double to 120 and 400, respectively, by by 2013. This includes the establishment of a complex diseases diagnostic centre in the city. Dr Wong, however, is particularly bullish on his company's growth prospects in China.

'This is a huge US $118 billion a year market which continues to grow at almost 20 per cent a year,' he said. 'The country is now undergoing a US $800 billion healthcare reform. It has a population of over 1.3 billion, of whom only 400 million have medical insurance. The numbers speak for themselves.'

The group currently operates on a management contract via Shanghai-based Nobel Hospital, an eye/ENT/dental practice. But going forward, according to Dr Wong, this will be expanded into general medicine, specialist and diagnostic services.

But would the plans pit Healthway against more entrenched players like Singapore's Parkway group and American health services group United Family?

'Right now the foreign players largely target the expatriate population,' Dr Wong said. 'Our aim is to provide accessible and affordable medical services for the local population. There is rapid shift in the demographics of the country, both in terms of geography and financial status.'

Dr Wong envisions a country-wide roll-out of a rapidly scaleable model of diagnostic clinics, specialist clinics and general practices which will have a presence in rural, suburban and urban areas, focusing on the growing demand for better quality and more reliable medical services.

'We will focus on specific specialist and sub-specialist services,' he said. 'This will include multi-specialty medical centres for locals and foreigners, dental clinics, eye and ENT, hospitals and GP clinics.'

The company, which has a gearing of 30 per cent, intends to use internal resources (it has cash of some $28 million) and credit lines to fund the China expansion. It recently announced a 67 per cent rise in profits to $12 million for the nine months to end-September.

Healthway is not planning to grow via acquisitions, at least in the initial phase of its China roll-out.

'At the initial stage, we will go in for management contracts,' Dr Wong said. 'This will enable us to be asset light and not burden our balance sheet.'

This is a model it follows at its Nobel Hospital in Shanghai, run by Crane.

Still, given that the China expansion will also have to dovetail with the planned roll-out of more clinics and a major medical diagnostic centre in Singapore, Dr Wong does not rule out raising funds from the market.

But one thing is certain, China will feature prominently on Healthway's books by 2015.

'If all goes according to plan, China's contribution will dwarf Singapore's, both on the top line and bottom line,' he said. Healthway Medical: Growing a defensive business