Asia Healthcare Providers – Consolidation of hospitals and clinics
As the trend of searching for partners in Asia by global healthcare players continue, many companies have witnessed successful and unsuccessful stories of partnerships, be it an acquisition or JV or other form of strategic partnership. The increasing growth pressure, nevertheless, have driven decision-makers to discover tailored approaches towards inorganic growth that is sustainable to achieve the defined target. However, with many unsuccessful cases, the goal is now switched from “who is the best candidate in the market” to “who can be optimally integrated”.
With more countries in Asia are becoming open to private healthcare providers, international players are expected to expand their partnerships, however, very few candidates in Asia can offer the considerable scale of assets to justify the investment or return. While international players are aiming to enter Asian emerging countries through JV by establishing general hospitals, local/regional players are expanding into other Asian countries through acquisition of small hospitals/clinics.
An entry sample of international players can be seen from Chindex International who entered China through a JV establishment of Beijing United Family Hospitals and Clinics. We do not see partnership among healthcare providers only but investments have also been seen among other types of corporation, including: PE/VC firms, real estate/developers, medical equipment or pharmaceutical companies and even foreign education institutions such as Harvard who announced its partnership with Evergrade Group to establish private hospitals in China. At the same time, regional players such as: Thonburi, has expanded into China by acquiring small hospitals in Shanghai and Guangxi.
This trend is expected to continue and companies searching for partners are required to cautiously pick their target candidates. 3600 valuations towards target candidates are required to avoid the potential risk and in order to do that, companies will need to define their tailored toolkit to determine their prioritization in terms of country/market, customer sector, product segment, and business types/adjacencies. This toolkit is expected to outline select KPIs to be assessed based on the prioritization and assess the risk or challenges in target selection, partnership form, and most importantly integration process.
- Who are potential targets of partnership?
- What kind of partnerships would contribute to the growth of my organizations?
- What kind of partners are the most ideal in supporting our effort to achieve our inorganic growth target?
- How can partner (s) help in achieving our growth target?
- What do we need to offer to convince target candidate (s) to be our partner (s)?
- What are the potential risks posed by potential partner (s) towards our overall organization?