Apollo Hospitals to list digital health, pharma unit

Apollo Hospitals is looking to spin off its digital health and pharmaceutical business as part of a strategic reorganisation.

WHAT IT’S ABOUT

On 30 June, the company’s board proposed to demerge the digital health and omnichannel pharmaceutical business into a separate entity.

This unnamed entity will be made up of Apollo’s existing telehealth services, digital health platform Apollo 24/7, its offline pharmaceutical distribution business, and Keimed, one of India’s largest wholesale pharmaceutical distributors. 

Apollo also said that the upcoming spin-off company will seek listings on stock exchanges “within 18-21 months.” It will also retain a 15% minority stake in the new company. 

WHY IT MATTERS

According to Apollo, its separate digital health and pharmaceutical business will create “the largest, integrated omnichannel healthcare ecosystem.”

The publicly listed hospital group said in a corporate disclosure that it expects its spin-off company to generate 16,300 crore rupees ($1.9 billion) in revenue this year and 25,000 crore rupees ($2.9 billion) in revenue by 2027.

“The new entity, once integrated, will be a truly customer-focused healthcare leader, with capabilities across the value chain. Delivering medicines seamlessly from 7,000+ physical stores, [an] online delivery platform serving over 19,000 pincodes, [and] with Keimed ensuring supply chain integrity, our aspiration is that we will serve over 100 million Indians with trusted quality and availability,” said Shobana Kamineni, executive chairperson of Apollo HealthCo, one of Apollo groups’ subsidiaries focused on digital health and pharmaceuticals.

“The omnichannel pharmacy business and integrated digital healthcare ecosystem will be a unique model to enable access to high-quality healthcare for millions of Indians,” Apollo Hospitals chairman Dr Prathap C Reddy also commented.

Apollo runs an integrated healthcare business with over 10,000 beds across 73 hospitals, over 2,500 clinics and diagnostic centres, around 6,000 pharmacies, and more than 500 telemedicine centres. 

THE LARGER CONTEXT

Apollo’s emphasis on digital health comes as it was recently revealed that the hospital group plans to increase its investment in AI. 

Managing director Sangita Reddy told Reuters in March that it would increase its digital spend on AI this year after setting aside 3.5% of its digital spend on it over the past years. 

In 2021, it unveiled an AI-powered cardiovascular disease risk assessment tool based on 10 years’ worth of data from more than 400,000 Indian patients. It has also developed a self-learning clinical decision support tool, Apollo Clinical Intelligence Engine, which it has made publicly available to doctors in India via Apollo 24/7. At the beginning of this year, it was announced that Apollo would be integrating four AI copilots from Microsoft as part of their partnership to implement its AI roadmap.