Young, rich India gives birth to maternal care boutiques

Written by Pallavi Ail | Mumbai | Updated: Jul 1 2014, 13:35pm hrs
HealthThe $4-billion birthing and maternal care industry has assumed significant focus.
With about 2.7 crore babies born in India annually, the $4-billion birthing and maternal care industry has assumed significant focus, and with an estimated 15% compounded growth rate, is expected to touch $8 billion in the next five years.

Healthcare providers are veering away from the local nursing home and hospital-delivery format to high-end, premium boutique birthing centres to cater to the service and quality needs of a younger generation of Indians.

People know that pregnancy is not an illness, so it should not be clubbed with other specialities in the hospital. The reason for the growth of these chains is that people see birthing as a sort of an experience and are willing to pay for it, said Rana Mehta, executive director, PwC India.

Over the last decade, birthing centres such as Cloud Nine, The Nest, Motherhood and Cocoon have mushroomed in cities such as Bangalore and Chennai. Established hospital chains such as Apollo Hospitals Enterprise and Fortis Healthcare, too, have created their own offshoots, The Cradle and La Femme, respectively.


The Cradle offers rooms ranging from deluxe to suite range from R80,000 to R1,10,000, while La Femmes rates, depending on the type of room, range between R67,000 and R2,51,000. Cloud Nine charges between R80,000 and R95,000 for its services.

From a financial perspective, the returns are more efficient. Hospitals require high capital investment which translates to a longer return period. Formats like Apollo Cradle require lower capital, thus offer a better ROCE (return on capital employed), said Neeraj Garg, CEO, Apollo Health & Lifestyle.

We are focused on the population that recognises the importance of clinical excellence but also seeks a personalised experience, Garg added.

The R13,400-crore Apollo Hospitals has a chain of 50 hospitals across the country. It established The Cradle operated by its fully-owned subsidiary Apollo Health & Lifestyle in 2003. It operates Cradle as a standalone and a womb-within-a-hospital format.

The typical investment for a Cradle facility would be R15-20 crore depending on the final size of the facility. The chain does not buy land but leases it. With two facilities already functioning, the Chennai-based healthcare provider is looking to establish 40 Cradles in the next five years, not including the ones initiated within existing Apollo hospitals.

In the large metros like Mumbai and Delhi, we will have multiple centres, like in Bangalore where we are opening our third Apollo Cradle soon. In Mumbai, real estate cost is a barrier but we believe we shall be able to enter the eastern and western suburbs. South Mumbai remains a challenge. The interesting thing is that there is a strong demand for such services in the non-metro cities like Nagpur, Indore, Surat, etc, where we believe a strong potential exists, Garg said.

Gurgaon-based Fortis established La Femme in August 2004. Currently operating one centre, the company is planning to develop an exclusive Fortis La Femme facility in Bangalore. The hospital is already constructing a 100-bed facility in Ludhiana in Punjab with completion targeted in 2016.

Competing against the likes of established healthcare majors such as Apollo and Fortis is the seven-year-old standalone chain Cloud Nine operated by Bangalore-based company Kids Clinic India, which focuses exclusively on mother and child care.

Initiated in the city of start-ups, Cloud Nine has now set up six centres and is looking to open in Mumbai and Pune.

Cloud Nine Chairman and Managing Director Dr Kishore Kumar, who is a neonatologist himself, said the high infant and maternal mortality rates spurred him to set up the delivery centre. We now have five centres in Bangalore and one in Chennai. Soon we will be opening one in Pune and one in Mumbai, Kumar said.

If you want to offer an state-of-art maternal centre with a neonatal unit, you need nearly Rs 30 crore per centre. If you want a centre just to deliver a child with no other benefits, which is what a lot of copycats are doing, then you need Rs 10-15 crore. It all depends on what you are providing, he added.

The company more than doubled its revenue in FY13 y-o-y. It recorded a topline of R74.64 crore in the year ended March 31, 2013, according to the corporate affairs ministry. The company also has a fully-owned subsidiary, Sure Fertility (India), which provides infertility treatment services. It registered revenue of Rs 19 crore in fiscal 2013, a rise of 87% year-on-year.

From a business perspective, there is a difference in the equipment that is used for a mother and child which is not as sophisticated as what you require for example, a cardiac surgery. So the these centres they tend to be low-capex. Often the facilities are also leased so they are asset-light in nature. They can be set up quickly, Mehta said.

Chains such as Cradle and Cloud Nine also function as specialty neonatology units for pre-term babies and take in high-risk patients. The sector has also seen a lot of interest from private equity players but faces teething problems. Cloud Nine had difficulty shoring up support in its initial period as the format was new and untested, according to Kumar.

All these investors expect return in one or two years but medicine and healthcare is not like that, investment takes seven to eight years to get return, Kumar said. In October 2013, PE firm Sequoia Capital India Growth Investments II invested Rs 100 crore in the company along with Matrix Partners India Investments. Birthing centres have evolved to centres that offer prenatal and antenatal services. For example, both Cloud Nine and Cradle offer fertility treatments. Fertility treatments itself is a $1.8-billion business in India growing at 20% CAGR.

In recent years there has been what is called as 'unbundling' of hospitals. So a lot of services that need not necessarily need to be provided in a multi-specialty hospital have moved out. One of best examples you can see is eyecare. This is a part of a larger trend of specialties trying to become centres of excellence and refocusing, Mehta said.