Corporate structures are often a giveaway. Of strategy, culture, growth, and increasingly, of intent. Last week, shareholders of Apollo Hospitals Enterprise Limited (AHEL), India’s largest hospital chain, approved a major corporate restructuring. AHEL will de-merge its pharmacy business, Apollo Pharmacy Limited (APL), a country-wide chain of 3,428 pharmacies, effective April 2020. Antitrust regulator Competition Commission of India already gave the go-ahead for the move in September this year.
Bring to front
Apollo Pharmacy demerger: More than what meets the eye
In demerging its pharmacy business, Apollo Hospitals is splitting the ownership multiple ways. As baffling as it is, the endgame is not very hard to guess. It’s also one that could benefit one shareholding group more than the others
India’s largest hospital chain, Apollo Hospitals, is demerging its pharmacy business. But it’s a deal that makes it look more like a parking exercise than a clean demerger
By adding more layers to ownership, in an already complex corporate structure, the group will perhaps hurt the pharmacy vision and minority shareholders
Because if the buyback, as stated by AHEL, happens, the front-end pharmacy will not have much to show for
The group might end up combining the back-end distribution and the front-end retail. And there’ll be one shareholding group left on the sideline