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Virgin Group eyes slice of Australia's $65bn healthcare market

RICHARD Branson's Virgin Group is looking to break into the $65 billion Australian healthcare sector and expand its network of fitness centres here and in Asia as part of a strategy to ramp up the global operations of its burgeoning health and wellness business.

Virgin quietly entered the British health market two years ago with the purchase of the healthcare division of medical services group Assura and now runs more than 100 NHS services, including GP, radiology, community health and children's social care centres.
 
The group's global chief executive, Josh Bayliss, said it was looking at opportunities in Australia, where total public and private expenditure on healthcare was about 10 per cent of GDP.
 
"We think health and wellness is an industry we can do well in. Our model is about prevention and flicking it around to make the focus wellness rather than illness," he told The Australian.
 
"(Healthcare) is one line we think we can take in Australia. To get involved in that part of the proposition, we would look to partner with people that have the right expertise in this part of the world but also transfer some of the models we have developed in the UK to this part of the world."
 
He declined to be specific on any imminent Australian opportunity. Virgin's British healthcare business turns over more than pound stg. 200 million ($312m) a year.
 
The move coincides with a push by Virgin Group into the higher end of markets across its global business driven by the pursuit of better margins and the fact its core customers are getting older and wealthier.
 
Virgin is also actively working on bringing to Australia its Virgin Health Miles business, which provides employee engagement software and solutions that help companies improve the wellbeing, motivation and productivity of their employees.
 
"The buyer of the product is the big employers who in the US want to know their medical insurance bills are going to be manageable," Mr Bayliss said.
 
"So they want a healthy and active workforce who are more productive. That is what we facilitate. That is something we are looking at doing (in Australia).
 
"We look at what is happening to the Australia population with demographic trends and we think there is an opportunity to focus on good nutrition, weight loss and wellness."
 
Virgin is now planning to extend its chain of Virgin Active health clubs in Australia and Asia, building on its presence in Britain, Italy, Spain, Portugal and South Africa.
 
The group currently has three clubs in Sydney and one in Melbourne, and Mr Bayliss said another would open in each capital in the coming months.
 
Virgin is also understood to have more sites under consideration nationally.
 
"We are very happy with how the business has started here, but it has been a slow process. We want to ramp that up. And we want to springboard that business out of Australia into Asia," Mr Bayliss said.
 
Earlier this month, Virgin Active opened its first club in Singapore and the company, which is partly owned by private equity firm CVC, is set to use this as a springboard to other countries in Southeast Asia.
 
"We have advanced discussions going on across Thailand, Indonesia, Korea, Hong Kong," Mr Bayliss said.
 
Virgin continues to pursue plans to offer a 4 1/2-star hotels/apartments in Australia at four-star prices.Two years ago, it formed a partnership in the US with investors Alberto Beeck and Diego Lowenstein to buy $500 million worth of properties to roll out a hotel portfolio, but it has struggled to get that off the ground. Its first hotel will open in Chicago next year.
 
Virgin had previously revealed ambitions in Australia, but was forced to put these on hold to focus on the US. But Mr Bayliss said the time was now right. "There is nothing in the market down here right now which compares," he said. "So we are looking here at both hotels and serviced apartments because that is an interesting opportunity for our brand. There is a good opportunity to provide a better customer experience.
 
"I would hope we would have an announcement on something in the next three to six months. Quite a few of the incumbents here are resting on their laurels. We would look to partner with capital to acquire the real estate."
 
(Source: The Australian)
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