Kicking off this month’s Executive insight section is Dr A. Velumani – the CEO of Thyrocare, a Clinical Chemistry Laboratory specialising in metabolic disorders. It is a unique business model that works on scales of economies by providing solutions to Nursing homes, hospitals, laboratories and clinics – focusing on diagnostic tests that do not have volume on their table. Started by an investment of $2000 in 1995 – one man, one technology – it has today become a public listed company with a market cap of USD 500 million. A business which is a brand around a Gland, and was built solely on frugality and focus. Here Dr Velumani tells Finance Monthly all about the exciting journey that founding and running Thyrocare has been to date.
You were a government officer till 1995. How did you discover the entrepreneur in you?
I was in my niche, a comfort zone as we call it. 37 years old with a cool job and 2 kids (7 and 5 years of age). So even for my own family members and close friends, the decision to quit that job came as a shocking blow. But in life, you have only two options to choose from – Security or Prosperity, as “Secured prosperity” in reality exists nowhere. I took a decision without discussing it with anyone, focused on Thyroid – in which I had a PhD and chased a new dream for healthcare betterment. Fortunately a lot of things worked in my favour and today, I am recognised as an “Entrepreneur”, when 20 years back, I was nothing but clueless about the term “Entrepreneur”!
What are some of the major challenges that you face today, after reaching this half a billion $ mark?
Success is not as difficult as sustaining it in the long run, and so is growth. We have had a 25% CAGR for the last 10 years and we also could sustain a 40% EBDITA – while I am the cheapest in the world. It is a pleasure to have reached such heights, but also a pressure to sustain it for long. Fortunately, India is a country with a 1.25 Billion population and the healthcare industry is in an infancy stage. It thus would be possible to sustain this growth for a period of 10 years, and hence, the focus is for too long! The true challenge is not the market – it is the ability to get talents, train them and retain them with motivation, which of course is a challenge for every company that has embarked upon a long journey.
What interests you most about operating within the healthcare field?
Firstly – it is recession proof, secondly – it has good profit margins and finally, I am serving those who are in pain and turmoil due to diseases/disorders for a speedy recovery/management. Healthcare in India is cheap and in the country, my services are cheap, yet highly profitable. This feeling is particularly rewarding. Additionally, Thyroid testing is sold at 100$ in the US, 100 pounds in the UK and 100 Euros in Europe. In comparison, in India, it costs me only 2$, which makes my path clearer towards developed market for disruption.
What’s the biggest mistake you’ve made in your career and what did you learn from it?
I can’t think of any mistakes that are worth talking about. However, there have been errors that I have managed to correct before they become mistakes. I believe that if mistakes are not corrected in a year, then they become blunders. I have always been alert throughout my journey. The very fact that I have managed to add a zero every 5 years shows that my approach has been flawless. Still, one important advice that I can offer is – have a quality team, lead them with spirit and keep them focused – then and only then you can achieve something!
Dr Velumani tells us all about the exciting journey that founding and running Thyrocare has been to date
What excites you the most about the future?
Disruptions and disruptors. If you do not disrupt, you would be disrupted. The world is changing so fast, there is hardly any time for extensive discussions – so decide fast. 50 % out of everything that has changes in the past 100 years, changed in the last 5 years. The pace of technological change is faster than ever and although I am 58 years old, I can very well foresee a lot of changes happening before 2030.
In your opinion, what do you owe your success to?
I simplified on 4 fronts:
- Model (HR)
- Information Technology
- I priced my Services at a very low cost. I willfully lost half a million dollars in the first year. It is my belief that if one plans to loose, they will never lose. This pricing disruption was so powerful that, for the first time in 20 years, we finally about to see a new (5th) Organised Player entering the industry.
India’s economy is so complex – 25 Languages, 25 cultures and a billion of people. Given this diversity, it was not possible or easy to plan and operate a fully-owned network across the country. So I got into a franchise model in which the franchise was advised to stay 25 % cheaper than other market competitors. We were also asked to retain 50 % of what we collected from the market. This made way for a business that is simple, scalable and profitable.
Thyrocare has a very robust logistics where the specimens are collected from 1200 franchisees who serve 36,000 laboratories at an average of 30 labs per franchisee. These specimens are channelised using 40 hubs which are placed in the proximity of 40 air-connected cities to my centralised lab in Mumbai. Every evening, just before midnight, I cover the length and breadth of the country.
- Information Technology:
Thyrocare’s webserver is the oldest one in the Indian Healthcare Industry. We used IT effectively by barcoding the sample carrying tubes thereby connecting the customer and the analysers through the webserver.
What do you dream of?
Healthcare expenditures are too high in developed markets and I wish to contribute in clinical chemistry by bringing them down by half of what they are now. Billions of people have no access to affordable healthcare in the emerging markets, and I would like to touch their lives. If possible I would like to screen 50% of the world’s women population for Thyroid testing at $2 per head cost.
Have you already stepped out of India?
Yes, we are currently experimenting in a high per capita income market – Bahrain and a low per capita market – Bangladesh. We believe that this business is ideal for insurance companies who assist with chronic illnesses by monitoring vital biochemistry parameters. This is a low capex business and can be set up in any country for a 2 Million $ investment. Since operating it would need local partners to procure business, we are looking for partners currently.
Something worth mentioning:
Last but not the least, I’d like to mention that I lost my wife, the co-founder of Thyrocare, to Pancreatic Cancer at the age of 55. She unfortunately couldn’t witness the historic IPO (with 75 times subscription) and stellar listing with 40% gains on the listing day. She used to always ask me to employ 100,000 freshers, which I would now be keen to execute.