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UPDATE 1-Russia's rising birth rate gives new life to healthcare providers
March 20, 2017 / 4:44 PM / 9 months ago

UPDATE 1-Russia's rising birth rate gives new life to healthcare providers

* Women’s healthcare provider benefits as birth rate grows

* Plans to invest 5.3 bln roubles in 2017, up from 2016

* MD Medical’s 2016 net profit jumped 29 pct (Adds context, detail about dividends)

By Maria Kiselyova and Olga Popova

MOSCOW, March 20 (Reuters) - London-listed Russian healthcare provider MD Medical Group said on Monday it planned to hike investment in women’s health clinics, capitalising on a rebounding Russian birth rate and middle-class mistrust of state healthcare.

After years of population decline, the government has offered incentives to encourage Russians to have more children. About 1.9 million babies were born in Russia in 2015, up from 1.5 million in 2005, official figures show.

The rise has lifted interest in private healthcare in a nation where most people rely on state healthcare, while the wealthy usually travel abroad.

MD Medical Group, which specialises in fertility treatments and maternity care, became the first Russian firm in the sector to float in 2012, when it listed on the London Stock Exchange.

On Monday, it reported a 29 percent rise in 2016 net profit and said it would more than double investment in 2017, part of a five-year plan to expand its network of clinics and hospitals.

Analysts have said the company has not ruled out a secondary public offering, although MD Medical executives have said they had no immediate plans to issue more shares.

The company’s share price almost doubled over the past year to more than $10, but that is still below the IPO price of $12.

Reflecting rising interest in the sector, the Sistema business conglomerate, whose investments include Russia’s biggest mobile operator and a toy store chain, said it planned to eventually take public its Medsi chain of clinics.

“We see the outlook for private healthcare in Russia as positive,” Renaissance Capital said in a research note.

It cited government incentives to encourage private investors, which have included abolishing some taxes on the sector, and budget constraints on state spending as low oil prices have hurt the Russian economy.


People using state clinics in the past few months often complain about the service. Soviet-era restrictions, such as preventing fathers from being present at the birth of their child, are still enforced in many places. Waiting lists for treatments such as In Vitro Fertilization can be long.

Meanwhile, demand is rising. Russia’s Health Ministry reported a net increase in population in 2013-2015, after years of decline, and said the trend was continuing.

Private firms see an opportunity to fill the gap. MD Medical previously said 20 percent more babies were delivered in its hospitals in 2016 than in 2015 and the number of IVF cycles rose 51 percent.

The firm plans to open nine new hospitals and a number of clinics by 2021, and expand in new Russian regions.

Deputy Chief Executive Andrey Khoperskiy told a conference call that 2017 capital expenditure would be about 5.3 billion roubles ($92 million), up from 2.2 billion roubles last year.

Its biggest single investment is 2.6 billion roubles on a new hospital in Samara, central Russia.

The firm would also invest in other regions, such as Tyumen and Irkutsk, in Siberia, and was considering two acquisitions, Chief Executive Officer Mark Kurtser said.

$1 = 57.4459 roubles Reporting by Maria Kiselyova and Olga Popova; Editing by Christian Lowe and Edmund Blair

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