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Oxford Business Group: Interview with Hend El Sherbini, CEO, Integrated Diagnostics Holdings

A merger of Al Mokhtabar and Al Borg Laboratories in 2012, IDH was created with a vision of becoming a large pure emerging market diagnostics group.
04.02.16 | Interesting article at Oxford Business Group

How does listing on the stock market create benefits for Egyptian health care companies?

EL SHERBINI: We considered an initial public offering for quite some time before finally listing in 2015. In our case, we wanted to raise capital and institutionalise management in order to continue expanding our reach, while at the same time improving the quality of our diagnostic centres by implementing the latest in international standards. Given that we mostly work with international suppliers, we also thought that growing our business in this way would give us greater leverage in negotiating contracts, which is something that applies to all large companies, no matter which sector, vis-à-vis smaller ones. Right now there is a lot of interest in health care in general, not only in diagnostics but also in hospitals and medical supply manufacturers. For instance, a number of private equity companies have, or are in the process of, acquiring private hospitals. There have also been some recent acquisitions of local pharmaceutical companies. This demand is not only coming from the local or regional market. When we were on our road show, investors from Dubai, South Africa, the US and Europe all expressed interest in the sector.

Which are the most important factors driving demand for health care services?

EL SHERBINI: The biggest factor is the population, which is driving demand for everything from diagnostics to pharmaceuticals to hospital care. Health care in Egypt remains highly fragmented and localised, which has a negative impact on service quality. This, however, also creates opportunities for consolidation, economies of scale and, consequently, improved services. For instance, when we were conducting research on the diagnostics market, we found that there were more than 5000 labs with at least one doctor in the country. While this looks like a reasonably adequate number when you consider the country’s total population, after further examination we realised that demand actually far exceeded supply because most of these labs are very small, with limited and outdated offerings. This is further complicated in a heavily congested place like Cairo, because patients often have to go to more than one lab to complete all of their tests, spending a significant amount of time in traffic. Through consolidation, and by putting all the necessary tests under one roof, efficiencies can be achieved and the lives of ordinary Egyptians can be greatly improved. The quality and price of services are very important in Egypt, as the vast majority of health care spending that is not provided by the state, whose resources are lacking, is out-of-pocket. Consumers are becoming savvy and they quickly figure out which centres offer the best quality for the right price.