SHANGHAI (Reuters) - Hospital operator IHH Healthcare Bhd (IHHH.KL)(IHHH.SI) is looking to expand its operations in China and is open to potential deals to help it grow its presence in the market, its chief executive said on Friday.
The world’s second largest healthcare group by market capitalization has ample cash to fund deals in the country and beyond, helping it tap “enormous” fast-growing Chinese healthcare demand, CEO Tan See Leng told reporters in Shanghai.
“Greater China is our key growth market and we are committed to significantly expanding our presence here,” he said at an event after the firm broke ground on a 1.36 billion yuan ($200 million) 450-bed private hospital in Shanghai.
“We are actually sitting on quite a lot of cash and our gearing is actually very low, so we have the ability to do fairly sizable M&As,” he added when asked about looking for deals in China. “ We would be on the look out for M&A opportunities.”
China’s healthcare market is a magnet for firms from medical devices to private hospital operators, especially as Beijing looks for help from the private sector to rein in a healthcare bill estimated to hit $1 trillion by 2020.
The firm’s Greater China CEO Paul Gregersen said an aging population and rising incomes were driving demand for healthcare services, creating the need for more private care.
“This is going to put a huge pressure on the public healthcare system,” he said. “Our private hospitals will help alleviate the strain from this pent-up demand.”
IHH has 50 hospitals in 10 countries, with a focus on Singapore, Malaysia, Turkey and India. It plans to open a new hospital in China each year from 2018-2020 and has a China pipeline of hospitals worth around 8 billion yuan.
China has been touting greater access to private healthcare operators over the last few years, though there have been hurdles including a lack of commercial health insurance coverage and a shortage of doctors willing to move to the private sector.
IHH said it was working closely with local insurer Taikang Insurance Group and that rising incomes would mean more people bought commercial health cover - important because of obstacles linking private hospitals with China’s public insurance schemes.
“With rising affluence we expect commercial health insurance to cover more people across Greater China, which will divert patience toward the private sector,” said Gregersen.
Reporting by Adam Jourdan; Editing by Vyas Mohan