BGH looks beyond hospitals for profit gain
Bangkok Dusit Medical Services (BGH), Thailand’s largest hospital group, plans to rev up investment in non-core medical businesses to increase profit.
“The healthcare business by nature is to provide medical services to as many people as it can, but for business purposes we could not allow our profit margin to exceed 12% a year,” president Prasert Prasarttong-Osoth said yesterday.
“So we have to look for lucrative segments – non-core medical laboratory, X-ray service, pharmaceuticals – where profit margin is as high as 18-24%.”
Non-core business contributed about 3 billion baht last year as total revenue reached 37.8 billion baht, up from 24.4 billion a year earlier. Net profit last year doubled to 4.38 billion baht.
“We set our revenue target to grow by at least 15% a year,” said Dr Prasert.
“But we had limitations on making profits as we could not raise prices, despite our medical service charges being three times lower than those charged by hospitals in the US and Europe.”
BGH is spending more than 1 billion baht to set up what it says is the most advanced and integrated medical laboratory centre in the country, expected to open this year.
Moreover, the company is negotiating with several foreign pharmaceutical firms to co-invest in a medicine plant in Thailand. That deal is also expected to conclude this year.
“Thailand’s healthcare industry imports medicines worth more than 200 billion baht each year,” said Dr Prasert.
“If the company can produce medicines in Thailand, then this should help cut pharmaceutical costs in Thailand.”
BGH operates the Bangkok, Samitivej, BNH, Phyathai and Paolo Memorial hospitals.
The company’s market capitalisation has grown from 700 million baht in 2000 to 140 billion baht now.
Pongsak Viddayakorn, a member of the BGH board, earlier said the company plans expand its hospital network to at least 35 by 2015 from 29 now to prepare for stiff competition when the Asean Economic Community takes effect in 2015.
The investment cost for the new hospitals is 400-500 million baht each.
BGH shares closed yesterday on the SET at 90.25 baht, up 75 satang, in trade worth 48.8 million baht.