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
  2009, the revenue from hospital operations of the Bangkok facility is
  95.4% of total revenues.

  The Hospital’s Services:

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

  1. Outpatient service has 34 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 |   • Spine Specialists Center       |
+---------------------------------+------------------------------------+
|   • Fertility Center            |   • Stroke Center                  |
+---------------------------------+------------------------------------+
|   • Health Screening Center     |   • Urology Center                 |
+---------------------------------+------------------------------------+
|   • Heart Center                |   • Women’s Center                 |
+---------------------------------+------------------------------------+

  2. Inpatient service has 538 beds, of which 37 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 2009, the hospital has 457 beds in operation.

  3. 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,
  pharmacy robot and PACS (Picture Archiving and Communications System
  for Medical Imaging). It also offers surgical navigation system and
  image-guided radiotherapy or IGRT.

  In 2009, the Company treated a total of over one million patients. The
  revenue contribution by inpatient and outpatient in 2009 is as
  follows:

  Inpatient and outpatient (% of total revenue)

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

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

  Data as at 31 December 2009

  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: BH 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 28 overseas representative offices in
  25 countries.

  In 2009, Bumrungrad International Hospital, Bangkok treated over
  400,000 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. Bumrungrad International Clinic Building is a 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. Bumrungrad International Hospital Building offers a combination of
  inpatient and outpatient services. All 538 inpatient beds are in
  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.

  The Company plans to continue to expand and upgrade its Bangkok
  facility over the next five years. For Bumrungrad International
  Hospital Building, both the outpatient clinics, including Women Center
  and Digestive Diseases Center, and inpatient rooms are currently going
  through major renovations, taking into consideration patient safety
  and the needs of patients, doctors and nurses. The project is expected
  to be completed by mid-2010.

  In addition, the Company is in the process of expanding its capacity.
  BH Tower, reacquired in 2008, adds needed space to the Bangkok campus,
  permitting the addition of beds in the future. 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 over 600 beds and 6,000 outpatients per day,
  and make 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 2009,
  Bumrungrad International Limited has investments in a hospital, a
  network of 102 dialysis clinics, and a prestigious management contract
  in Abu Dhabi, United Arab Emirates. As at 31 December 2009, share of
  income from investment in Bumrungrad International Limited contributed
  3.5% to the Company’s net profit.

  Bumrungrad International Limited has a 56.4% effective investment in
  Asian Hospital Inc. (“AHI”) in the Philippines as at 31 December 2009.
  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 217-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 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 102 clinics (as of 31 December 2009) and treats
  over 5,600 patients in seven countries, including 32 clinics in
  Taiwan, 10 clinics in Korea, 22 clinics in Singapore, 8 clinics in
  Malaysia, 12 clinics in Philippines, 2 clinics in Japan and 16 clinics
  in Thailand.

  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 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 networks 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 prolonged domestic political instability
  which led to airport closure at the end of 2008 and the global
  economic meltdown, 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
  totaling 35,806 beds in Thailand as at 2006, of which 102 hospitals
  totaling 15,500 beds 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 their 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.

  In the past year, the Company has focused on marketing activities for
  the domestic market in order to expand its customer base. The
  activities include advertising on all media including television,
  radio, newspapers and magazines, in order to promote brand awareness.
  The Company also sponsors a television program that focuses on
  health-related topics. In addition, the Healthy Living Club membership
  program was launched, where members get discounts and other
  privileges, in order to maintain loyalty among existing as well as new
  customers. Moreover, various activities are organized in each quarter,
  such as Health Fair, Big Heart Fair and Stop Cancer Fair, emphasizing
  on health education on focused topics, as well as sale of packages, in
  order to attract new customers.

  For regional competition, the Company 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 28 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 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 30 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-eight
  representative offices in twenty-five countries.

3.3 Sources of Products and Services

Capacity

As at 31 December

  -----------------------------------------------------------------------
  Inpatients                      2009         2008          2007
  ------------------------------- ------------ ------------- ------------
  Total number of beds            538          554           554

  Beds in operation*              457          432           458

  Total capacity**                166,805      158,112       167,170

  Occupied beds per year (beds)   113,081      116,136       124,871

  Capacity Utilization (percent)  67.79        73.45         74.70
  -----------------------------------------------------------------------

  * 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                      2009         2008          2007

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

  Average outpatients per day      2,677        2,707         2,800
  (persons)                                                   

  Capacity Utilization (percent)   59.49        66.30         80.00
  -------------------------------- ------------ ------------- ------------

  * 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 the 22-storey Bumrungrad
  International Clinic Building to accommodate the rising demand,
  especially of the outpatient service. Five of the floors are fully
  opened as outpatient clinics since June 2008, resulting in an increase
  in outpatient capacity from 3,500 visits per day to 4,500 visits per
  day.

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.