PH conglomerates increasing investments in healthcare
For decades, conglomerates have been leaning toward the most profitable businesses, especially retail and infrastructure, to catch up with a rapidly evolving Philippines.
Ayala Corp., for example, did not start out as the business empire that it is today. Founders of the country’s oldest conglomerate opted to invest first in a distillery in 1834.
It eventually ventured into banking (El Banco Español Filipino de Isabel II, now Bank of the Philippine Islands and the country’s first bank), transportation, insurance, telecommunications and real estate, among others.
Metro Pacific Investments Corp. (MPIC), on the other hand, was founded in 2006 mainly as an investment holding company. Its core businesses include power (Manila Electric Co., or Meralco) and toll operations (Metro Pacific Tollways Corp., or MPTC).
It also has a significant shareholding in Maynilad Water Services Inc. Utilities, after all, are among the defensive businesses that are not easily impacted by economic downturns.
But as communities evolved, both conglomerates soon found another industry worth investing in, and one that is perhaps considered among the most vital sectors across the globe: healthcare.
While Ayala was already somewhat present in the healthcare scene in 2014 through QualiMed, the chain of hospitals and satellite clinics of subsidiary Ayala Land Inc., it was not until the following year that a new business unit was established.
In 2015, Ayala officially introduced Ayala Healthcare Holdings Inc. (AC Health) following its takeover of 50 percent of pharmacy chain Generika Drugstore, which had around 400 stores in its network. This is now at 1,150, including additional branches from recently acquired St. Joseph Drug.
In formally submerging into the waters of healthcare, AC Health chair Fernando Zobel de Ayala said they wanted to “help address the gaps in affordable retail healthcare.”
“We believe this is an excellent platform for Ayala to reinvent the space and serve as the foundation for our emerging healthcare portfolio,” Zobel said of their investment in Generika a decade ago.
AC Health president Paolo Borromeo also told International Finance Corp. in 2022 that they wanted to create “shared value” through “scalable, sustainable businesses with social impact.”
“[In 2015], 70 percent of national healthcare expenditures came out of the pockets of ordinary Filipinos; only 30 percent came from the government or private insurance,” Borromeo pointed out. “Many people went to a doctor only once every few years or didn’t go at all. This problem needed to be solved and we felt we could play a meaningful role in the healthcare sector.”
But perhaps its biggest investment that ultimately paid off was its takeover of Healthway Philippines Inc. in 2019.
Healthway had around seven mall-based multispecialty clinics that year, along with 40 corporate clinics. Healthway Medical Network has since expanded this into 236 corporate and multispecialty clinics and six hospitals.
Five years after taking Healthway under its care, AC Health established the country’s first cancer hospital for P3 billion. Located in Taguig City, Healthway Cancer Care Hospital’s capacity could be extended to treat 10,000 patients, Borromeo previously said.
“[The target] is high but attainable … we want to encourage treatment and screening, and those are the most important things,” he told reporters in an earlier interview.
Big and bold
MPIC, for its part, started big and bold with its acquisition of Makati Medical Center (MakatiMed) in 2007, marking its entry into the healthcare sector.
Four years later, it injected another P300 million into MakatiMed specifically to help the latter upgrade its facilities and medical equipment, an effort seen as modernizing and improving the services of the 56-year-old hospital.
After seeing the success of MakatiMed, MPIC, through Metro Pacific Health (MPH), went out of its way to acquire 26 more hospitals.
Previously called Metro Pacific Hospitals, MPH rebranded in October 2022 to expand its services to include digitalized healthcare through mobile applications and teleconsultations.
“We will not just provide quality hospital care, we will make our services accessible to a greater number of our people,” MPIC chair and billionaire Manuel Pangilinan said during the relaunch event.
This year, it plans to add four more into its portfolio, making it the largest private hospital network.
In searching for more deals to expand their healthcare portfolio, MPIC chief financial officer Chaye Cabal-Revilla explained they were particularly encouraged by the segment’s performance in 2024.
During the period, MPH, whose network also includes Asian Hospital and Medical Center, Cardinal Santos Medical Center and Manila Doctors Hospital, contributed P560 million to MPIC’s total earnings last year, representing a 70-percent surge.
Collaboration
Both companies effectively recognized the need to invest in healthcare, but it is worth noting that they did not completely move independently.
In February, the two prominent conglomerates united their digital healthcare systems in a bid to boost accessibility and provide a unified ecosystem for Filipinos.
Metro Pacific Health Tech Corp. (mWell), the digital health and wellness platform of MPIC, fully acquired KonsultaMD, the flagship healthcare unit of Ayala-led Globe Telecom Inc.’s 917Ventures.
“By integrating our resources with KonsultaMD, we are well-positioned to provide expansive and high-quality healthcare to all Filipinos, both locally and globally,” Revilla said.
Founded in 2015 as a health hotline, KonsultaMD currently has 2.7 million users and “a vast network of partner doctors.” This was added to mWell’s network of 3.1 million users, including 90,000 across other countries in Asia, North and South America, Africa, Oceania and Europe.
“By combining our expertise with mWell’s powerful digital health ecosystem, we are set to bring even greater innovations to telehealth,” KonsultaMD CEO Beia Latay also noted.
