After a sharp sell-off in the Indian hospital sector, shares of Park Medi World Ltd are likely to be on investors’ radar, as the company has said proposed caps on cancer and chemotherapy drug prices will have a negligible impact on its financial performance. The stock opened in the green at Rs 270.10 amid a rally in the benchmark indices. It started the trading session at Rs 270.10 against the previous close of Rs 265.10 on the BSE. The stock gained further and hit an intraday high of Rs 274.65, representing a gain of Rs 9.55 or 3.60 per cent. The market cap of the company stood at Rs 11,862.98 crore.
The industry-wide decline followed observations made by the Supreme Court. The top court asked the Centre whether a uniform cap should be imposed on the retail prices of medicines and medical devices to prevent excessive markups over the price charged to retailers. The bench asked why the maximum retail price (MRP) could not be restricted to 16 per cent above the Price To Retailer (PTR), particularly in cases involving life-saving medicines.
Why the price cap won’t affect the company
The firm said that the oncology and chemotherapy drugs account for less than 2 per cent of total company revenue. It also said the hospital runs on a volume-driven model and operates with an average revenue per occupied bed (ARPOB) of Rs 30,444, less than half the Rs 68,000–Rs 82,000 range of large metro chains. “Park relies on high patient volume rather than high drug markups,” the company said.
Incorporates subsidiary to set up 550-bed hospital
Meanwhile, the company has announced incorporation of a wholly-owned subsidiary to develop and operate a 550-bed multi-super-speciality hospital in Uttar Pradesh.
The new entity has been established to execute a project awarded to the company under the Public-Private Partnership (PPP) model by the Prayagraj Municipal Corporation, the company said in a regulatory filing. It owns 100 per cent shareholding in the newly formed healthcare services entity.
Founded in 2000, Park Medi World operates a network of 16 multi-super speciality hospitals under the ‘Park’ brand across Haryana, Punjab, Rajasthan, Delhi and Uttar Pradesh.
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(This article is for informational purposes only and should not be construed as investment, financial, or other advice.)