Russian Gynecologist Becomes Billionaire in Cyprus Entity
Mark Kurtser, a 55-year-old Russian gynecologist, has become a billionaire after shares of his MD Medical Group Investment Plc, Russia’s largest private provider of women’s and children’s health care, surged 42 percent in five months.
Kurtser, MD Medical’s chairman, controls 68 percent of the operation through Cyprus-based investment entity MD Medical Holding. The company sold shares in a London initial public offering in October, raising $154 million for expansion. The billionaire collected another $135 million from the IPO.
“I did not imagine it when I was starting this business,” Kurtser, who is worth $1 billion, according to the Bloomberg Billionaires Index, said in a telephone interview. “I am a doctor first.”
Kurtser founded the company as a private Moscow hospital in 2006. Today, MD Medical runs 13 medical centers in Russia and Ukraine, offering childbirth, gynecological and in vitro fertilization services. It generated 3.5 billion rubles ($117 million) in revenue in the 12 months ended June 30, 2012, up 48.6 percent in a year. The company’s net income doubled to 1.2 billion rubles in three years.
Cyprus is seeking to rescue its economy, the euro region’s third-smallest, after local lawmakers rejected an unprecedented 5.8 billion-euro ($7.5 billion) levy on bank deposits demanded by European finance ministers as a condition for a 10 billion-euro aid package. Cypriot Finance Minister Michael Sarris is in Moscow this week to discuss a bailout with Russia, the nation’s biggest foreign investor.
The country is undermining trust in European banks and can be likened to Lehman Brothers Inc., whose collapse ignited the 2008 global economic crisis, Russian billionaire Vladimir Potanin said yesterday.
MD Medical is not affected by the Cyprus crisis, according to Anna Yarmarkova, a company spokeswoman in Moscow. It has about $30,000 in local banking accounts, she said. Russian companies are often held in Cyprus to take advantage of lower tax rates available under the double-tax avoidance treaty between the two nations.
Kurtser was named the city of Moscow’s chief obstetrician in 2003 amid part of a wider national effort led by President Vladimir Putin to improve the country’s health care. At the time, two-thirds of Russian children were born unhealthy, “smaller and sicker than in the past,” and to malnourished mothers, according to a 2002 study by EastWest Institute, a New York-based research firm focused on international security issues.
Under Kurtser, a graduate of Pirogov Medical University, death rates for birthing mothers in Moscow fell from 39.9 deaths per 100,000 newborns to 21.6, according data provided by MD Medical Group.
Three years later, he opened the Perinatal Medical Centre, a private hospital in Moscow. The clinic included private rooms big enough for fathers to stay in, according to the company, while most state-run hospitals have cramped birthing wards that are often shared by multiple mothers.
Charging an average of $10,000 per delivery, about 12.5 times the average monthly salary in Russia, MD Medical has benefited from Russia’s improving economy. Disposable income and consumer spending both rose about 13 percent from 2007 to 2011, according to the company’s website, resulting in increased spending on health services.
“MD Medical Group is the only alternative to state-run maternity hospitals,” Natalia Smirnova, a consumer and retail analyst at Deutsche Bank in Moscow, said by phone March 19. “They deliver quality service and people are ready to pay big money for it, rather than trying to save money on the birth of a child.”
Kurtser said he still delivers about four babies a week at MD Medical facilities and performs some of the hospitals’ most complicated operations.
From 2007 to 2011, payments to private health care providers in Russia doubled to 48 billion rubles ($1.5 billion), according to Mountain View, California-based research company Frost & Sullivan. Still, Russian spending on health care remains low compared to many western countries, and MD Medical delivers only about 3 percent of the babies born in Moscow, its most important market.
In 2011, per capita health-care spending in Russia was $525, compared with $4,668 in Germany and $8,362 in the U.S., according to data compiled by Frost & Sullivan and Russia’s Federal State Statistics Service.
In 2012, Kurtser finished construction on MD Medical’s second in-patient hospital near Moscow. He said the company will use the IPO proceeds to expand its reach, with plans to open clinics in the Yekaterinburg, Nizhny Novgorod regions and the Bashkortostan republic.
“We are going to build a big company,” he said.
The Bloomberg Billionaires Index takes measure of the world’s wealthiest people based on market and economic changes and Bloomberg News reporting. Each net worth figure is updated every business day at 5:30 p.m. in New York and listed in U.S. dollars.
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