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bne October 2021 Eastern Europe I 61
Pioneering healthcare
The Russian constitution obliges the state to provide any and all treatment that its citizens require free of charge. However, the chaos of the 1990s saw the system almost collapse. While the standard of the Russian medical system has recovered and provides a competent service, as Russians become wealthy they are paying more attention to health issues, looking for better and higher quality service.
The EMC’s first clinic was founded by the French entrepreneur Andre Kobyloff that originally comprised several offices of expatriate physicians, founded with the participation of Europ Assistance (a French medical assistance company) to provide medical services to Moscow’s expatriate community and to foreigners visiting Moscow.
As Western standard medical services were hard to come by in those days the business flourished from the start. In 2001 Kobolov opened its best-known location, a multi-disciplinary clinic on Spiridonievsky Pereulok in the centre of Moscow and at the heart of one of the most prestigious residential locations close to the Patriachsky Ponds. The staff of largely international professionals grew as more doctors were hired, but for many years the EMC maintained
a very French flavour.
The investment in the Spiridonievsky Pereulok clinic was perfectly timed. Russian President Vladimir Putin took over the reins in 2000 and quickly stabilised the economy and oversaw an eight-year-long boom that saw the economy double in size and a middle class emerged from the chaos of the 1990s.
Change of guard
In 2006 Kobyloff and his minority investors cashed out and sold a 100% stake to the fast-growing Russian pharmaceutical chain 36.6 (named
for the fact that a healthy person’s temperature should be 36.6C) that saw its business mushroom on the back of the growing middle class.
“It was one of the platform of medical businesses that 36.6 was building,” says Yanovsky.
At this point the current majority shareholder Igor Shilov, a former fur trader, took over ownership and started to build the business up.
Shilov initially made his fortune as a fur trader in Siberia before moving on to import-export and producing juices which he founded and later sold to Coca-Cola, using the proceeds to buy EMC for around $106mn on the eve of the 2008 financial crisis.
He quickly added a privately owned hospital to the original Spiridonievsky Pereulok clinic and started to roll out
a string of specialised clinics, including rehabilitation and paediatric clinics among other services that also includes cosmetic surgery. Today EMC has 57 specialisations, but remains entirely based in Moscow and has no ambitions to expand into the other big cities of Russia.
To fund further expansion, in 2012 Moscow fund manager legend Michael Calvey and his Baring Vostok Capital Partners bought a 27.8% stake in EMC to get an exposure to the burgeoning private medical services business. Calvey is famous for his almost unbroken string
The recent pandemic led to a change
in the demand for health services,
but the over-demand remained high. Yanovsky says almost wryly that during the lockdowns people drank more and were stressed, that cosmetic surgeries fell but psychological support and cardio treatments went up.
Yanovsky names four main elements that make the model: a full service
offer making the EMC a high-end “supermarket” of health services; clinical excellence where EMC has hired top doctors in each of the 57 disciplines from around the world; heavy investment into state-of-the-art equipment; and best-in- class operational management.
The investment into equipment, in particular, has been substantial and
by itself attracts clients. The EMC has invested in the best-in-class and has some unique offers. Amongst its arsenal is an accelerator that is extremely precise and can be used to treat cancers in the most difficult places such as the brain. There is only one similar machine in all of Europe, in Portugal, with the rest all in the US. Likewise, the EMC
eye surgery lasers are top quality and
“In our 32-year history none of the major crises in 1998, 2008, 2014 and 2020 have ever caused the business significant stress”
of savvy investments, taking early-stage stakes in companies that have gone on to become household names and earned the fund’s LPs hundreds of millions of dollars from their subsequent billion dollar-plus IPOs.
Yanovsky says that none of the major crises Russia has been through have made any real impact on the EMC’s business.
“In our 32-year history none of the major crises in 1998, 2008, 2014 and 2020 have ever caused the business significant stress,” says Yanovsky. “The model is extremely balanced and meets the position of the market.”
Muscovites elect to have this surgery done at the EMC simply because it has the best equipment in Russia run by
a highly qualified specialist staff.
Nevertheless, the EMC is a business and run as a business. Yanovsky himself is not a doctor and has no medical training, but cut his teeth working for Coca-Cola and other fast moving consumer goods (FMCG) companies where he learned the best-in-practice methods that he has brought to managing the EMC.
“I try to get the doctors to see this. Their attitude is to look at us and treat us for conditions, but are not concerned with the rest. For me the patient is a client
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