Dr. A Velumani, MD & Chairman of Thyrocare Technologies Ltd. discusses which differentiators they have introduced in their products and how they have distributed the product in the market. Despite of being a late comer in the sector which had already become highly saturated, Thyrocare, not only established itself as a major player in diagnostic industry, but brought unprecedented disruptions in the market. Today, Thyrocare has: - Market capitalization of Rs. 2700 crores - Cash reserves of Rs. 125 crores - Processes 1.6 crores samples - Conducts 9 crores investigation per year - 1500 employees - Collects samples from 550 cities of India - World Class Laboratory of 2 lakh sq. ft. Central Processing Laboratory (CPL) - Regional Processing Laboratory (RPL) Thyrocare works on ‘hub and spoke model’. They brought samples to their laboratory from different collection centres. They build very good franchisees.   Let us understand how Dr. A Velumani, who was a Mathematician, is able to bring disruption in the medical industry. ### 1. Focus on One Product While entering into a highly competitive market, the first and foremost thing that can make you apart from others is your product.  As per Dr. Velumani, there are three segments in Pathology space- 1. Pathology 2. Bio-Chemistry 3. Micro-biology Dr. Velumani has neither worked on “Pathology” nor “Micro-biology”. He focused only on one segment of Pathology space, i.e. “Bio-Chemistry”. For example, all banks give housing loans along with other types of loans but HDFC gives only housing loans. Similarly, all the pathologists do bio-chemistry along with other segments of pathology space. However, Thyocare only works on bio-chemistry. So, they only focus on bio-chemistry. Dr. Velumani understood the future of Bio-chemistry as being: - Numerical - Scalable - Cash Cow - Idiot-Proof So, Dr. Velumani has scale-up his business with bio-chemistry. If he has worked on all the pathological segments, then he will not be able to scale-up his business. Thus, he first focused on bio-chemistry and then he focused only on thyroid gland because he has done PhD. in Thyriod. In addition, Dr. Velumani also sees scalability in thyroid business. So, he completely focused on it. Even the name of the company, Thyrocare comes from Thyroid. It’s punchline is: Think Thyroid, Think Thyrocare ### 2. Distribution Expansion According to Dr. Velumani, “a south Indian businessman cannot directly go and do business in Orissa, Bihar, and Punjab. He will need front-end people who know local language, understand local culture, and local business conditions.” So, Dr. Velumani classified his whole business into two parts: - Processing /Testing - Procuring Company is expert in processing or testing while procuring can be done by anybody. So, he decided to adopt the franchise model and allotted the job of procuring to an independent person or franchisee. ##### Thyrocare gives high margins to its franchisees. For example: If market or competitors are charging Rs. 500 for a test, Thyrocare charged only Rs. 300. Out of which, Rs. 200 is kept by franchisee and Rs. 100 goes to the company. It helps the company in following ways: Franchisees are eager to join Thyrocare as they are getting good margins. Increase in the customer base as the price of test is low as compared to the other laboratories Franchisee works harder to make more money. As a result, Dr. Velumani is making money while sitting in his cabin. Dr. Velumani says: When you give more than what you get; Soon you get more than what you gave Franchise Model to Scale up Business Dr. Velumani gives an example of a hotel to explain his franchise model. He says that a hotel has two segments – restaurant and kitchen. The job of a restaurant is difficult as it needs to engage the customers, keep them happy, and provide them services. On the other hand, the job of kitchen is easy as they just need to cook food. Like kitchen of a hotel, Dr. Velumani establishes his Central Processing Laboratory in Mumbai 20 years ago for all the franchisees or collection centres (like restaurant of a hotel) across the country. If every restaurant has a kitchen, it became inefficient. But, if there is a centralized kitchen, then it can became efficient. Thyrocare gets success from the efficiency they got from building centralized laboratory, i.e. Central Processing Laboratory. Franchisees of Thyrocare need to order the material from the company and distribute it locally. They need to brand themselves as Dr. Velumani or Thyrocare company and market and sell the product. This builds the market automatically. How Thyrocare Franchisee Model Works? Thyrocare build collection centre at franchises and does processing at its centralized lab. Franchisees collect the sample and take it to the lab for processing. Processing/testing is done by the company. After that, Franchisees collect the test results and give them to their customers. ### 3. Disruption brought by Thyrocare Whatever else you do, it is Innovation Only Price is known as Disruption As discussed earlier, Thyrocare competitors charge Rs. 500 from its customers while Thyrocare charges only Rs. 300 for the same test. So, it is cost-effective for the customer. Thus, Thyrocare has brought price disruption in 1995. Like the price disruption that Jio is doing today, similar type of price disruption was done by Thyrocare in 1995 in diagnostic industry. ### 4. Inclusive Growth Dr. Velumani works on the philosophy of inclusive growth. He says that some companies think that their franchisees are earning good money from their brand and instead of getting benefit from it, they get worried from their growth and not able to focus on their own growth. But, companies should not get worried from the growth of your franchisees. You should let the franchisee grow as this will encourage other people to join you as a franchisee. This will ultimately lead to the growth of the company.   The company should not only focus on its growth, rather it also helps franchisees earn and grow as much as they can. The company’s success lies in the fact that it always help their partners and stakeholders become successful, which create a vast network  that untimely make it successful. Those who always win, may get fail sometime; But, those who let others win, can never be defeated. ### 5. Focused Manpower There are many people who are: - Highly qualified - Skilled or expert in English - Highly knowledgeable But, only few have the ability to focus on what they are doing. A person who has the focusing capability can become very big in life. Dr. Velumani’s focusing capability is very strong. This is the reason he is able to: - Give a lecture in Hindi as well as Marathi despite of being a south Indian - Built a business in medical industry despite of being a mathematician - For all these transformations, one should have a focused ability. - 10-20% of Thyrocare employees focus on their work very well. These employees are promoted very quickly. - The employees of Thyrocare who cannot focus remain at the level they deserve to be.  Whether you are an employee, employer or entrepreneur, there are only two type of people – one who is successful and another who didn’t focus. ##### Only Focus will Give you Success With this notion in mind, along with developing a focused product, Dr. Velumani worked on building a team which is focused towards a common goal. On this, Dr. Velumani gives life lesson with following steps: - Focus -> Learn -> grow -> enjoy - If you don’t focus, you can’t learn - If you don’t learn, you can’t grow - And if you have not grown, you can’t enjoy Similarly, he instilled focus in his product, people, process and procurement that helped the organization grow. ### 6. Transportation of Sample in Diagnostic Business People think that the transportation of samples is not easy. If a consignment of 10 kgs is coming, it will cost Rs. 5000. But, in one consignment, 5000 samples can also be brought. So, in this way, Rs. 1 is spent to transport 1 sample. #### What is the power of diagnostic business? Every night, same night, before midnight, and only in night all the specimens comes to Mumbai. This is the power of logistics. Following things are very important in any business: - HR - Logistics - IT Dr. Velumani has not read all these three things in his college but he has become a master of logistics in his business. Every night the specimens or samples from different parts of India come to Mumbai through flights and they are processed or tested in the night only. In other 1 lakh laboratories, tests are done during daytime while in Thyrocare laboratories tests are done only in night. In Thyrocare, testing is done at night and samples are collected in day like newspapers are printed at night and read in day. Dr. Velumani has copied the concept of newspaper and not from his competitors or industry. So, his way of doing business is different from others. Don’t do what your competitor is doing Because then you will be at same position as your competitor ### Key Learnings Focus on inclusive growth of your company and your partners or franchisees Focus on your product and people to get multifold growth Bring disruption in prices of your product through innovation of new ideas and processes Those who always win, may get fail sometime; but, those who let others win, can never be defeated. Don’t do what your competitor is doing because, then you will be at same position as your competitor