3. DESCRIPTION OF EACH BUSINESS LINE

3.1 Product Description 

  Bumrungrad Hospital Public Company Limited (“the Company”)

  The Company is the operator of Bumrungrad International Hospital,
  Bangkok, which is the main revenue contributor. As at 31 December
  2008, the Company’s revenue from hospital operations is 95.7% of total
  revenues.

  The Hospital’s Services:

  The services of Bumrungrad International Hospital, Bangkok can be
  detailed as follows:

  1. Outpatient service has 33 outpatient clinics with over 200
  examination rooms, and capacity to service 4,500 patients per day,
  with the following details:

+---------------------------------+------------------------------------+
|   • Allergy Center              |   • Horizon Regional Cancer Center |
+---------------------------------+------------------------------------+
|   • Aviation Medicine Center    |   • Men Center                     |
+---------------------------------+------------------------------------+
|   • Behavioral Health Center    |   • Neurology Center               |
+---------------------------------+------------------------------------+
|   • Breast Screening Center     |   • Orthopedic Center              |
+---------------------------------+------------------------------------+
|   • Children’s Center           |   • Pathology Center               |
+---------------------------------+------------------------------------+
|   • Dental Center               |   • Physiotherapy Center           |
+---------------------------------+------------------------------------+
|   • Diabetes Center             |   • Plastic Surgery Center         |
+---------------------------------+------------------------------------+
|   • Dialysis Center             |   • Pulmonary Physiology Center    |
+---------------------------------+------------------------------------+
|   • Digestive Disease Center    |   • Radiology Center               |
+---------------------------------+------------------------------------+
|   • Early Intervention Center   |   • Rehabilitation Center          |
+---------------------------------+------------------------------------+
|   • Emergency Center            |   • Skin Center                    |
+---------------------------------+------------------------------------+
|   • Endoscopic Center           |   • Skin Laser Center              |
+---------------------------------+------------------------------------+
|   • Eye and ENT Center          |   • Sleep Disorders Center         |
+---------------------------------+------------------------------------+
|   • Eye Laser Refraction Center |   • Stroke Center                  |
+---------------------------------+------------------------------------+
|   • Fertility Center            |   • Urology Center                 |
+---------------------------------+------------------------------------+
|   • Health Screening Center     |   • Women’s Center                 |
+---------------------------------+------------------------------------+
|   • Heart Center                |                                    |
+---------------------------------+------------------------------------+

  2. Inpatient service has 554 beds, of which 26 are adult intensive
  care beds, 14 are cardiac care beds, 9 are pediatric intensive care
  beds and 5 are level III neonatal intensive care beds. As at 31
  December 2008, the hospital has 432 beds in operation.

  3. Emergency care and special facilities: The Company has 24-hour
  emergency care including emergency cardiac catheterization. In
  addition, the Company has 19 operating theaters fully equipped with
  modern medical equipment, 2 cardiac catheterization laboratories and 2
  cardiac operating theaters. The facility is fully equipped with
  PET/CT, MRI, CT, lithotripsy and 64-slice CT scanners. For patient
  safety and operations efficiency, the hospital has invested in lab
  automation and pharmacy robot. It also offers surgical navigation
  systems.

  In 2008, the Company treated a total of over one million patients. The
  revenue contribution by inpatient and outpatient in 2008 are as
  follows:

  Inpatient and outpatient (% of total revenue)

  -----------------------------------------------------------------------
  []

  -----------------------------------------------------------------------

  Data as at 31 December 2008

  International Patient Services:

  The Company has a strong and successful track record in increasing its
  presence in the international market. It has an International Patient
  Services Center to facilitate and accommodate international patients.
  The services offered include interpreters, international insurance
  coordination and international medical coordinators, referral center,
  email correspondences, visa extension counter, embassy assistance,
  airport reception and travel assistance. In addition, the Company
  operates two serviced apartments: Bumrungrad Hospital Residence (BH
  Tower) with 74 fully serviced apartments connected to the hospital and
  Bumrungrad Hospitality Suites with 51 fully serviced apartments for
  patients and families. The Company also has twenty-two overseas
  representative offices in twenty countries.

  In 2008, Bumrungrad International Hospital, Bangkok treated
  approximately 420,000 international patients from over 190 countries.
  The top three highest revenue contributors by country continue to be
  United Arab Emirates, the United States and Oman. The following graph
  shows the historical revenue contribution of international patients
  over the past five years.

  []Thai vs. international patients (% of total revenue)

  *Note: International patients are by nationality and include both
  expatriates and medical tourists

  The Bangkok Facility:

  At present, the hospital’s services are offered in two buildings:

  1. The new Bumrungrad International Clinic Building is a new 22-storey
  outpatient facility, with the first 10 floors being used as parking
  spaces and the top 12 floors as outpatient clinics and ancillary
  services. The building offers outpatient services only. Currently,
  five clinic floors are opened for service, including the health
  screening (check-up), heart, medical/surgical clinics, infectious
  disease, kidney, neurology, pulmonology, rheumatology, urology, and
  men’s center.

  2. The existing Bumrungrad International Hospital Building offers a
  combination of inpatient and outpatient services. All 554 inpatient
  beds are in the existing Bumrungrad International Hospital Building,
  while outpatient services offered in this building include services
  such as cancer center, dental, digestive disease, children’s and
  women’s center.

  To accommodate the patient volume growth, the Company continues to
  expand and upgrade its Bangkok facility over the next five years. In
  the next two years, both the outpatient clinics and inpatient rooms in
  the existing Bumrungrad International Hospital Building will be going
  through major renovations and upgrades to better accommodate patient
  safety and the needs of patients, doctors and nurses. The capacity
  expansions, on the other hand, will be through the new Bumrungrad
  International Clinic Building and BH Tower.

  BH Tower, which is currently used as serviced apartments, will be
  converted into inpatient beds as the beds in the existing Bumrungrad
  International Hospital Building begin to fill. The Bumrungrad
  International Clinic Building has five floors of outpatient clinics
  remaining unopened. The Company plans to gradually occupy both the
  five remaining outpatient clinic floors of Bumrungrad International
  Clinic Building and inpatient beds of BH Tower floor-by-floor as the
  additional capacity is needed. It is expected to take over five years
  before the buildings are fully occupied, which will ultimately
  increase the capacity to 650 beds and 6,000 outpatients per day, and
  making Bumrungrad International Hospital, Bangkok one of the largest
  private outpatient clinics in the world.

  Bumrungrad International Limited

  Bumrungrad International Limited, the Company’s 31.5% associated
  company, makes investments in overseas healthcare-related businesses
  through joint ventures with local partners and provides consulting and
  management services for those businesses. As at 31 December 2008,
  Bumrungrad International Limited has investments in two hospitals, a
  network of 82 dialysis clinics, and a prestigious management contract
  in the United Arab Emirates.

  Bumrungrad International Limited has a 54.4% effective investment in
  Asian Hospital Inc. (“AHI”) in the Philippines as at 31 December 2008.
  AHI commenced its operations on 15 March 2002 as the first major
  private hospital with tertiary care facilities in southern Luzon
  corridor of metropolitan Manila. It is a 253-bed hospital, well known
  for its modern medical equipment and experienced physicians,
  particularly in cardiology. Similar to Bumrungrad International
  Hospital, Bangkok, AHI targets the middle class population. AHI is in
  the process of expanding its capacity to 358 beds over the next five
  years. The capacity will gradually be increased as needed.

  Bumrungrad International Limited has a 49% joint venture with
  Istithmar PJSC, an investment arm of United Arab Emirates government,
  to operate a 250-bed private hospital under the name Bumrungrad
  Hospital Dubai. The project is currently on hold and under review. As
  at the end of 2008, Bumrungrad International Limited has made full
  provision for the investment.

  Bumrungrad International Limited has a 100% investment in Asia Renal
  Care Limited (“ARC”), the leading private provider of dialysis and
  related services in Asia for patients suffering from chronic kidney
  failure. ARC was founded in 1997 and is headquartered in Singapore.
  ARC currently operates 82 clinics (as of 31 December 2008) and treats
  over 4,400 patients in six countries, including Taiwan, Korea,
  Singapore, Malaysia, Philippines and Japan. In February 2009, ARC,
  together with the Company, expanded into Thailand by entering into an
  agreement to invest in Nephromed Company Limited, a chain of 14
  dialysis clinics throughout Thailand, resulting in an increase in
  number of clinics to 96 clinics in seven countries in Asia.

  In addition, Bumrungrad International Limited has a four-year
  management agreement with the Health Authority of Abu Dhabi to operate
  Bumrungrad Al Mafraq Hospital in Abu Dhabi, United Arab Emirates.
  Bumrungrad International Limited is among the three hospitals
  including Johns Hopkins and Cleveland Clinic of the United States to
  have been awarded such management contracts. Bumrungrad Al Mafraq
  Hospital is a public hospital with 460 acute care beds, 14 intensive
  care and 14 special care baby unit beds. It treats 310,000 patients,
  including more than 25,000 inpatients annually.

  In addition to the three existing investments, Bumrungrad
  International Limited is aggressively pursuing other investment
  opportunities in the region. Its strategic partners, including
  Istithmar, Temasek, Asia Financial Holdings and Bangkok Bank Public
  Company Limited, are sources of new investment opportunities and
  network in their respective regions, which are the Middle East and
  Asia.

3.2 Industry and Competition

  In general, the demand for healthcare correlates with the growth of
  GDP, the increasing trend of aging population, and the rise of life
  expectancy. However, with the domestic political instability since
  September 2006, followed by the global economic meltdown and airport
  closure in 2008, the domestic economy saw a slow-down, resulting in
  slower growth in consumption of private healthcare. With supply of
  private healthcare facilities in Thailand (344 private hospitals in
  Thailand as at 2006, of which 102 are in Bangkok) in excess of
  domestic demand, the competition for Thai patients remains intense. In
  any case, the private healthcare industry in Thailand is a fragmented
  market and only a few hospitals are operating close to its full
  capacity.

  The bigger market that has been growing faster than domestic demand is
  medical tourism. The global medical tourism industry is expected to
  see continued strong growth as more and more people are traveling
  abroad for healthcare services. In Thailand alone, number of foreign
  patients treated in private hospitals has increased from 630,000 in
  2002 to 1.4 million in 2006. Thailand’s regional competitors are
  hospitals in countries such as Singapore, Malaysia and India. Private
  hospitals in Thailand have a competitive advantage compared to many of
  the countries, as Thailand has a unique combination of high quality
  healthcare, accessibility and affordability, coupled with Thailand
  being a popular tourist destination with a good supporting
  infrastructure. Within Thailand itself, there are only a few private
  hospitals that have the technology and sophistication to address the
  needs of international patients.

  The Company’s strategy is to maintain quality superiority through a
  differentiated product that includes Bumrungrad International
  Hospital, Bangkok as Asia’s first internationally accredited hospital.
  Also, pricing is targeted within the top tier of Thai hospitals while
  remaining price competitive in the region.

  For regional competition, in addition to maintaining the quality and
  the pricing strategy, the Company also seeks to continue as the
  dominant player by operating hospitals and healthcare facilities in
  key markets through investments abroad, which at present includes the
  Philippines, Singapore, Malaysia, Taiwan, Korea, Japan and the Middle
  East. In addition, the Company operates twenty-two overseas
  representative offices in its major markets and has the International
  Patient Center to accommodate the needs of international patients. The
  Company is also a tertiary referral center for both domestic and
  international hospitals.

Target Markets

  Domestic market can be divided into two types, middle to upper class
  Thais and expatriate community in Thailand.

  International market is the medical tourism from countries where the
  healthcare services are not up to standard or too expensive, or there
  is a long waiting list for the healthcare services.

  In addition, the Company also targets patients from corporate
  contracts, insurance companies and referral patients both within
  Thailand and from abroad.

 

Distribution and Marketing Channels 

  An effective way to attract customers is by way of obtaining patient
  referrals, both within Thailand and from other countries. With
  Bumrungrad International Hospital, Bangkok as a reputable tertiary
  hospital of over 28 years, specializing in the treatments of
  complicated diseases, the Company has established excellent referral
  connections with hospitals and doctors both within Thailand and
  abroad.

  The hospital maintains over one thousand corporate and insurance
  contracts as a method for directing patients to the hospital.

  For its international marketing, the Company has set up twenty-two
  representative offices in twenty countries.

3.3 Sources of Products and Services

Capacity

As at 31 December

  -----------------------------------------------------------------------
  Inpatients                      2008         2007          2006
  ------------------------------- ------------ ------------- ------------
  Total number of beds            554          554           554

  Beds in operation*              432          458           449

  Total capacity**                158,112      167,170       163,885

  Occupied beds per year (beds)   116,136      124,871       124,685

  Capacity Utilization (percent)  73.45        74.70         76.08
  -----------------------------------------------------------------------

  * Number of beds in operation decreased in 2008 as some of the beds
  were closed down for renovation

  ** Total capacity is calculated by multiplying the number of beds in
  operation with the number of days of service

As at 31 December

  -------------------------------- ------------ ------------- ------------
  Outpatients                      2008         2007          2006

  Capacity per day (persons)       4,083*       3,500         3,500

  Average outpatients per day      2,707        2,800         2,833
  (persons)                                                   

  Capacity Utilization (percent)   66.30        80.00         80.94
  -------------------------------- ------------ ------------- ------------

  * 2008 capacity is weighted average at 3,500 visits per day for the
  first five months and 4,500 visits per day for the last seven months

  The Hospital completed the construction of a 22-storey Bumrungrad
  International Clinic building to accommodate the rising demand,
  especially of the outpatient service. As of June 2008, five of the
  floors are fully opened as outpatient clinics. The outpatient capacity
  therefore increased from 3,500 visits per day to 4,500 visits per day.
  Details of the plan are in Section 6, Future Plan.

Raw Materials and Suppliers 

  Primary raw materials of the hospital business are pharmaceuticals,
  medical supplies and medical equipment. Suppliers of the raw materials
  are both local companies and international distributors with offices
  in Thailand. There are over 500 suppliers and the Company has no
  trouble sourcing supplies. In addition, the Company has an efficient
  purchasing and inventory control system, which evaluates the
  appropriateness of the price, and effectiveness and quality of the raw
  materials.

Environmental Compliance 

  The Company values the significance of the environment, energy and
  natural resources conservation. The Company has set up an
  environmental policy to communicate to employees its views on
  environment preservation and encourages employees to help protect
  global environment. The Company is committed to controlling
  environmental impact to neighboring communities and efficiently
  utilizing natural resources by practicing energy conservation and
  supporting material recycling. All employees and contractors of the
  Company are expected to follow the government environmental
  regulations and the Company’s environmental policies.