Yet a decade and half later, Thyrocare, a venture which was born in a 150 sq ft garage with an investment of Rs one lakh, has grown to become one of the largest thyroid testing facilities in the world. Today, it is a nation-wide networked diagnostic laboratory with 20,000 service centres across 1,000 cities across India and covering over 100,000 doctors through 600 franchisees. Accredited by National Accreditation Board for Testing and Calibration Laboratories (NABL) and also the College of American Pathologists (CAP), it has the capacity to conduct over 100,000 investigations per day in its current facilities based in Navi Mumbai which sprawls over 2,00,000 sq ft.
Recently, Norwest Venture Partners, who picked up a 10 per cent stake in Thyrocare valued it at Rs 1,200 crore or $220 million, double the value of the firm in 2010, when CX Partners invested Rs 188 crore valuing it at Rs 550 crore. Thus, as far as the profitability of the venture is concerned, the numbers speak for themselves.
Thyrocare proved Dr Velumani’s business acumen, established him as a successful entrepreneur and demonstrated that marching to a different drummer can sometimes be a very good idea. Apart from these personal triumphs, he also managed to prove a point on an issue of national importance. While the world continued its debate on affordability vs quality in healthcare, Dr Velumani, through his Thyrocare venture, very effectively demonstrated that balancing both effectively and yet having a sound bottom line is by no means an impossible task.
Venturing into new terrain
As an extension of his dream, Dr Velumani has now trained his focus on a new challenge, a new venture – offering low cost treatment to cancer patients. He has set up a new company, Nueclear Healthcare Ltd (NHL) to help him ‘provide a low cost and high quality diagnostic solution to cancer patients throughout the country.’
The Nueclear story
As the name itself suggests, Dr Velumani has chosen nuclear medicine as the medium to fulfill this aim. He claims that though nuclear medicine has a lot of potential, it remains largely untapped. He points out that despite the presence of around 2000 cancer centres across the country, there are only 60-70 PET/CT scanners installed and they operate way below their actual capacity i.e 4-5 scans per day or sometime even per week while the capacity is about 20-30 scans per day. He blames the high costs of PET/CT scans, which can go as high as Rs 25,000 to Rs 40,000 per scan for this scenario. He and opines that PET scanning – a promising technology – is not being put to optimum use since it is unaffordable to a large chunk of the masses. NHL has been formed to get this obstacle out of the way by applying Dr Velumani’s motto of ‘Take less to get more”.
His game plan is more or less similar to the one he adopted while building up Thyrocare. He plans to offer PET/CT scans at around Rs 10, 000 each (as opposed to the current market price of Rs 25,000 per scan) by setting up a network of medical cyclotrons in 16 major cities across the country within a period of five years. He believes that this, in turn, would lead to wider usage of this technology and also contribute towards lowering the costs of cancer treatment to a certain extent. Thus, his plan is to make nuclear medicine more accessible to the masses by reducing the cost of PET scans, while earning a profit for himself. He claims, “Ten years from today, PET will be a strong industry. I am getting a foothold in it now itself.”
Success saga in the making or a foolhardy venture?
Dr Velumani’s plans for Nueclear are king-size but will he be able to pull it off? A question that exists in the minds of almost everyone who is connected to the industry. Quite legitimate too, since there are some formidable challenges that stand in his path towards achieving his goal.
To name a few:
Untested waters: First and foremost, the field is quite new to him. He has been into in vitro diagnostics (thyroid testing) and the dynamics of in vivo (PET scanning) could be quite different. Moreover, he is aiming to achieve a goal which no one else in the country has even attempted to do. Hence, Dr Velumani has set forth on an uncharted journey without any set guidelines about the do’s and don’ts, which makes it an extremely risky endeavour, at least as far as the financials are concerned.
Huge initial costs: The expense of setting up a PET/CT scanner, arranging for the supply of essential radiopharmaceuticals and transporting it to the scanning centres are very high, which accounts for the high cost of the scans. So, the question that arises is how will he manage to lower the costs of the PET/CT scans, something that the rest of players have not been able to do effectively until now?
Strict regulations: Dr Velumani will have to wade through several levels of bureaucracy, and strive for compliance with the strict safety regulations laid down by the Atomic Energy Regulatory Board (AERB) before he will be allowed to set up his centres and cyclotrons.
Low demand: Dr Velumani intends that each of his PET scanners should conduct around 25-30 scans each day. However, there are people who claim that the kind of market demand that Dr Velumani is envisaging simply does not exist. Hence, he might find himself facing a situation where the demand is less than supply, which will cause him to incur huge losses.
Dr Velumani: Gung-ho on growth
Addressing the concern that he is new to the field of in vivo diagnostics, Dr Velumani says that he is quite ready to live and learn. He is of the view that enthusiasm and willingness to learn is more important than experience when it comes to achieving something.
He has an answer for the cost concerns as well. He accepts that PET scanners come costly but also states that if they are bought in bulk, as he intends to do, then it is definitely possible to cut down the price by a good margin. Suiting his words to action, the entrepreneur has struck a lucrative bargain with leading healthcare equipment player, GE Healthcare—they would provide 20 advanced PET/CT imaging systems and 12 PET Trace Medical Cyclotrons for NHL—on the grounds that anything purchased in volumes should come at a reasonable price. Thus, he has found a way to lower hardware costs.
Coming to the issue of radiopharmaceuticals as well as the isotopes needed for the scans, Dr Velumani informs that he intends to produce them in-house, which would help him in saving a substantial amount of money. Stating that the reason behind the high costs of radiopharmaceuticals is their short life span, he informs that their effectiveness gets halved after each 110 minutes. Hence if the scanning centres are far away from where the cyclotron is located, by the time these radiopharmaceuticals and isotopes get used, huge amounts are needed to serve the purpose, which in turn leads to escalating costs. He has decided to counter this problem by setting up the cyclotrons which would produce these reagents at an easy distance from the molecular imaging centres. He informs that his PET scanning centres would be located within a 300 km radius from each cyclotron that he plans to set up across the country, thereby creating clusters of molecular imaging centres around the cyclotrons. He reasons that as the transportation distances would be less, the effectiveness of the isotopes would be more and hence would require lesser amounts to be used, thereby causing a decrease in the cost per scan. Not to forget the amount saved in the transportation itself.
The process of putting all the approvals from AERB in place is also on. While admitting that it is a time-consuming affair, Dr Velumani is confident about getting it all together sooner or later. He plans to commence the whole enterprise with two machines in Mumbai and then Hyderabad. Both are likely to be operational by the end of December 2012; thereby marking the beginning of the first phase of his campaign for NHL; wherein he intends to set up cyclotrons and PET scanning centres in six major cities i.e. Mumbai, Delhi, Kolkata, Hyderabad, Coimbatore and Bangalore.
He also doesn’t share the view of the cynics who claim that 30 PET scans per day at each centre is a pipe-dream. On the contrary he says, “Molecular imaging and nuclear medicine are at a nascent stage presently, however it has tremendous potential. The problem is that no one is creating a market, all are intent on only consuming the existing one.” He believes that when the medical fraternity and patients see that it is possible to get PET scans at affordable rates, many more would opt for it, thereby increasing demand. “No one has lost business if they have priced their products low,” he states.
Creating a win-win situation
Dr Velumani intends to adopt the franchisee model in the second phase of his growth plans for NHL. Here, anyone who has the space and the manpower to set up a scanning centre would be given the requisite machines and the isotopes by his company. In return, the centre would have to do a certain number of tests i.e. 20,000 scans in five years and offer ‘X’ amount per scan to NHL.
Conquering new peaks
Thus, Dr Velumani has huge plans for his new venture. He says, “I know that by the end of five years, I will have a Rs 100 crore turnover with 50 per cent profitability.” The fact that his path is rocky and the destination lofty, only adds to its allure. While only time will tell whether he will succeed or fail in this venture, one would want to root for his success for the sheer confidence and conviction he has for his dream. To all detractors who consider his plans far fetched and crazy, it might be better to remember the famous American entrepreneur, Steve Jobs’s words – “The ones who are crazy enough to think that they can change the world, are the ones who do.”