After recently teaming up with Malaysia's Sime Darby, more and more opportunities are presenting themselves to Australia's largest private hospital operator, Ramsay Health Care (ASX: RHC), which is now considering its options in both China and Europe.
The corporation is currently embarking on a phase of aggressive expansion into the Asian market with plans to invest $500 million over the next three to five years, after having already signed a deal worth $500 million with Sime Darby in March to increase its presence in Indonesia.
Now, according to The Australian Financial Review, Ramsay is in discussions with potential partners in China, where it is believed the company has had two employees positioned there over the last couple of years collecting contacts and exploring opportunities.
Management consultant Bain & Co estimates that China's healthcare industry will more than triple by 2020 to be worth $900 billion, where private healthcare would be affordable to those residing in the nation's enormous cities.
Ramsay's chief executive, Chris Rex, has stated that China represents an "enormous opportunity" in the long-term, however, thinks that it is still some years away, due to there currently being "significant cultural and regulatory roadblocks". By forming relations now, the company is in a good position to strike when things look more attractive.
In the meantime, it looks as though Ramsay's more immediate plans will involve further expansion into Europe – particularly in France and Britain. Unlike its plans for Asia however, it is more likely that acquisitions in France would be made due to prices falling significantly as opposed to aggressive expansion, whilst a potential deal in Britain with Spire Healthcare may have to wait until April next year, when a Competition Commission review is due.
Ramsay Health Care has given investors' portfolios a very healthy boost over the past 12 months, having gained over 64%. Its competitors Primary Health Care (ASX: PRY) and Resmed (ASX: RMD) have also given astonishing returns, gaining 85% and 53% respectively.
Foolish takeaway
The healthcare industry is an area of the market that will always see high demand. As the company explores further large acquisitions and prospects overseas, investors look set to reap enormous benefits in the long-term.
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The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool contributor Ryan Newman does not own any shares in the companies mentioned.
