“We are investing `20 crore on total laboratory automation” : Dr A Velumani, Thyrocare, India

A former scientist at the Bhabha Atomic Research Centre (BARC) with a focus on Thyroid research, Dr A Velumani, started Thyrocare Technologies with the objective of testing blood samples for Thyroid in 1996. Today, Thyrocare, is among the top laboratory brands in the country.

In conversation with eHealth, Dr Velumani shares his perspectives on the clinical laboratory business in India and Thyrocare’s stint in this very dynamic market

What is your outlook on the diagnostic industry in India?

Diagnostics is widely classified into in-vitro business and in-vivo business. These sectors are almost equal in size in terms of turnovers and are growing at a 20 percent growth rate year over year. Consolidation is sensed in the in-vitro segment, where the unorganised laboratories account for around 90 percent of the business. Out of the 60,000 laboratories, where testing is done, only 200 are accredited and 1,000 are worth being termed as laboratories. By the year 2020, at least 60 percent of in-vitro business will become organised since, though slow, things are moving in right direction.

Please provide a brief background of Thyrocare and its reach in India and overseas?

Thyrocare is among the top five laboratory brands in the country. It is different from the rest as it has managed to tame logistics in such a way that a single laboratory caters to the needs of the entire country. Its focus, logistics, IT prowess, business model and costing model are different from the conventional pathology laboratory model. We do not do any overseas business as of now, while in India, we are present in 90 percent of towns with population of more than 1 lakh.

Which are the major areas that Thyrocare is focusing on in the diagnostics segment?

We do not do blood sugar testing, which means that we do not do what every laboratory does. Thus we focus on immunoassays largely and wellness profiles as specialisation. We have focus on tests and technologies that require higher-end automations and analyser-based testing, which can be scaled-up easily. We process, in a day, around 1,00,000 investigations, out of which 99,900 are analyser-based (bar-coded and bi-directionally interfaced) reporting.

Having accreditation is not helping adequately since common man or even medical doctors are not tuned towards the importance of accreditation

What is the level and nature of IT applications in your laboratories? How is it adding value to your business efficiency?

We call it a business of ‘front-end laboratory’ and ‘back-end IT’. We are IT focused from the day we started the business. Our website booking and web server operations are as old as 15 days and oldest in this industry. We have an in-house software called ‘Thyrosoft, which takes care of all our IT needs including controlling, monitoring and enhancing the productivity of network, laboratory and staff. 

What is the share of organised and unorganised laboratories in the diagnostic sector? What is the market share that Thyrocare plans to garner in the next 2 years?

As on date, the unorganised sector’s share is only 10 percent. Although, it took the sector almost 40 years to acquire this 10 percent share, yet, it is likely to grow to 50 percent in just next 10 years. Growing awareness on quality and brand puts the unorganised laboratory at check and thus allows the organised sector to move faster. Though the industry is growing 20 percent annually, the organised players are growing at 30 percent annually and Thyrocare is growing at 40 percent annually, which implies that market share of brands are growing faster.

What is the role of accreditation and regulations in the diagnostic sector in India?

Accreditation does help, but it is a costly exercise. For example, CAP accreditation, in which there are a lot of hidden costs in getting accredited since one has to share a lot of global 1st class travels of auditors. Having accreditation is not helping adequately since common man or even medical doctors are not tuned towards the importance of accreditation. Any laboratory gets even government business and that makes accreditation ‘unattractive for many’. It is just 200 versus 60,000 and it would take another 10 years to see 10,000 versus 60,000. A long way to go!

What is the average technology spends in your company and which areas would you prioritise for future technology investments?

We spend `10 crores per year in updating our technologies. Nothing much is happening in the laboratory technologies space and since we are focused in a particular segment capital expenditures are not really demanding. However we intend to update the automations to next level.

What are the investments that Thyrocare is making and what type of benefits you want to achieve with these steps?

We are investing `20 crore on Total Laboratory Automation using Siemens Track System. This means our productivity will enhance, our capacity will grow and it would also improve our quality while reducing the turnaround time. Once the TLA is in place our capacity will increase by 5 times and we can process 10,00,000 tests a day.

What is the future growth model of the company?

More cities, better network, improved training methods, enhanced IT and good presentation could help us to continue to grow 40 percent annually for next 10 years and we feel a lot in India has to be done and can be done. Market or investments or infrastructure are not problems but to get a right man and train him to do a right kind of task still is the biggest challenge, though India has 20 crore unemployed youth. 

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