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Corporate Report

Published on: Sept. 22, 2023, 12:52 p.m.
Neuberg's healthy growth
  • Velu: always stayed relevant in the segment; PHOTOS: SAJAL BOSE

By Sajal Bose. Executive Editor, Business India

People who enjoy tinkering with something, fuelled by determination, often excel in their respective fields. A classic example is Gomathy Babu Sadacharam Kulandaivelu (GSK Velu), a first-generation serial entrepreneur in healthcare. His aptitude for innovation, technology, and keen business acumen has grown his pathology chain, Neuberg Diagnostics, and it is now one of the four largest national players in the segment. “Our success is founded on precision, supported by state-of-the-art infrastructure, specialised tests, customer trust in our consistency, and a dedicated team of doctors and skilled technicians,” explains the 55-year-old founder and chairman, Velu.

Since its establishment in 2017, Neuberg Diagnostics has consistently achieved a CAGR of 30 per cent, surpassing the industry’s growth rate of 12-13 per cent over the past 5 years. In fiscal 2023, the company achieved an impressive turnover of R1,050 crore. Neuberg Diagnostics has primarily expanded through acquisitions and strategic partnerships. Its journey began with the acquisition of a majority stake in Bengaluru’s renowned Anand Diagnostic Laboratory. “Our core strengths lie in acquisition, partnerships, and integration, which pave the way for our future growth,” explains Velu. Cricket icon MS Dhoni serves as their brand ambassador.

Right strategy

The company is always on the lookout for acquisitions. “The acquisition or joint venture of a reputable diagnostic centre helps us gain an established market and customer base,” explains AG Ganesan, Vice Chairman. He further elaborates: “Our role involves developing the right strategy, managing finances, overseeing sales and marketing, including branding, and providing technical expertise for business growth when necessary. Neuberg always secures the majority stake in any joint venture.”

In order to expand its presence in Eastern India, Neuberg recently announced a joint venture with Pulse Diagnostics in Kolkata. This initiative aims to establish integrated diagnostic centres that combine advanced pathology and advanced radiology modalities across Eastern and North Eastern states. Currently, Neuberg holds a 51 per cent stake in this joint venture.

This collaboration will bring together 10 laboratories operated by Neuberg in Eastern India with the nine integrated diagnostic centres of Pulse Diagnostics in Kolkata. As a result, close to 20 integrated diagnostic centres, 20 labs, and over 200 collection centres will cover all of Eastern India within this financial year.

“Pulse Diagnostics is a well-known name in the diagnostics industry in Kolkata, and Neuberg aims to extend state-of-the-art, high-end diagnostic services, combining Pathology and Radiology, to the Eastern and North Eastern states of India,” states Velu. He further adds: “We plan to invest Rs500 crore for expansion in the next 3 years, with our target being to achieve annual revenues of over Rs100 crore in this financial year.”

Sunaina Bihani, CEO and Managing Director of Pulse Diagnostics, highlights the benefits of this collaboration, saying: “This partnership will allow us to expand our pathology capabilities by upgrading our central lab in Kolkata to become a reference lab for the East. We will introduce all subspecialties of Lab medicine, including histopathology with immunohistochemistry, genomics, metabolomics, new-born screening, and advanced initiatives such as data analytics and AI-based diagnostics, as well as total lab automation solutions.”

  • Ganesan: growing wisely

When inquiring about the intense competition following Neuberg’s recent acquisition of Pulse Diagnostics, Pinak Pani Bhattacharya, a seasoned radiologist and director of another reputable diagnostic centre in Kolkata, Quadra Medical Services, remarked: “We have never viewed anyone as our competition in this field. Our commitment to quality is unparalleled, and we have never engaged in the practice of offering commissions to attract patients, as many do in this sector. Instead, we pass on the benefits directly to our patients.” Interestingly, Chandra Shekhar Ghosh, the Managing Director of Bandhan Bank, acquired a 67 per cent stake in Quadra in May 2000. Ghosh is also in the process of establishing a hospital in Salt Lake.

Velu’s success story reads like a fairy tale. He was born into a lower-middle-class Tamil family in a remote village called Aralvaimozhi in the Kanyakumari district of Tamil Nadu. His father, a librarian, worked for the Tamil Nadu government. Velu completed his education in a local public school. Although he was a diligent student, his dream of becoming a doctor to serve his village was shattered when he missed securing an MBBS seat by a few marks in the entrance exam.

Following his passion for life sciences, he enrolled in the B Pharmacy (Hons) program at BITS Pilani and successfully completed his undergraduate degree. “My mother had to sell her mangalsutra to finance my admission in Pilani. However, afterward, I managed to fund my education through scholarships. The only asset my family possessed was a bicycle,” he reminisces while seated in his expansive corner office in Chennai.

Velu also pursued an internship at the Cancer Institute, Chennai, under the guidance of Professor Shantha, a renowned oncologist whom Velu considers his mentor. After graduating, he took a job at a medical device supply company called IMI in 1985 to support his family, earning a monthly salary of Rs2,100. Subsequently, he pursued an MBA from the Loyola Institute of Business Administration and completed his PhD in Pharmacology from IBAM, Kolkata.

Identifying opportunities

After a failed partnership venture that began in 1990, Velu returned to corporate employment and became the regional head of Chiron Diagnostics Ltd in 1992. During this time, he spent a significant period in China, gaining insights into international markets. He identified an opportunity to provide cost-effective medical solutions and established Trivitron Healthcare, which has since become one of India’s largest indigenous medical device solution companies with a turnover of Rs1,000 crore.

In 1998, he ventured into the diagnostic space and co-founded Metropolis, a pathology chain. During this period, the sector witnessed the entry of major players through consolidation. In 2015, Velu sold his stake in Metropolis and founded Neuberg Diagnostics in 2017.

Headquartered in Chennai, Neuberg has now grown to become one of the top four pathology lab chains in India and has a presence in overseas markets including the UAE, South Africa, and the USA. Neuberg’s laboratories are accredited by CAP and NABL, making it one of India’s fastest-growing diagnostic centres with a workforce of 5,500 employees. The other 3 largest players in the segment are Dr Lal Path Labs, SRL Diagnostics, and Metropolis.

  • Shah: our genomic lab is one of the best in the country

In addition to routine tests, Neuberg Diagnostics offers high-end testing services such as biochemistry, histopathology, genomics, metabolomics, proteomics, new-born screening, and preventative wellness services including radiology, cardiology, and pathology investigations. The company is a leader in genomic testing with state-of-the-art genomic labs in Ahmedabad, Chennai, and North Carolina, USA. Neuberg operates more than 160 labs and 2,000-plus collection centres across India. “Eighty per cent of the labs are owned by us, and the rest are franchisees. We operate through a hub-and-spoke model,” says Ganesan.

Neuberg has made advanced diagnostic technologies accessible and boasts a team of exceptional clinical pathologists, biochemists, geneticists, and certified clinical lab professionals. “We have the capability to perform over 6,000 varieties of tests, whereas even the largest hospitals typically offer only around 1,000 variations of tests,” claims Velu. Neuberg Diagnostics is at the forefront of implementing next-generation diagnostic techniques in the realm of personalised medicine, with the aim of providing affordable and accurate diagnoses to people from all walks of life.

Neuberg has successfully entered into joint ventures with Anand Diagnostic Laboratory (Bengaluru,), Supratech Micropath (Ahmedabad), Ehrlich Laboratory (Chennai), Pulse Diagnostics (Kolkata), Global Labs (South Africa), and Minerva Diagnostics (Dubai), collectively processing over 30 million tests annually.

Neuberg Supratech is among the most trusted names in Pathology Diagnostics in Ahmedabad, and serves more than 5,000 patients daily. “We have developed a state-of-the-art Genomic lab called Neuberg Centre for Genomic Medicine (NCGM), aiming to provide comprehensive, accurate, and affordable genetic testing for all. It is considered one of the best genomic labs in the country,” says Dr. Sandip Shah, Director of Neuberg and the founder of Supratech Lab. NCGM is also the first private laboratory in India to acquire the NovaSeq6000.

NCGM conducts a wide range of genomic testing for personalised medicine, including oncology, reproductive medicine, inherited genetics, pharmacogenomics, nutrigenomics, and other segments. The centre processes more than 20,000 genomics samples per month across its facilities in Ahmedabad, Chennai, and Raleigh (North Carolina, USA).

NCGM boasts various types of large and small next-generation sequencers, microarray instruments, genetic scanners, Sanger sequencers, and more. “Technology and equipment are costly and rapidly evolving, so we need to constantly upgrade to keep pace with the times,” notes a doctor at the centre.

“Partnering with Neuberg has helped us expand our presence. The lab’s revenue has grown over six times since then,” says Dr Shah. Currently, the lab operates in over 100 centres across Gujarat, Rajasthan and Madhya Pradesh.

“Our plan is to establish centres of excellence in multiple locations,” explains Velu. “For instance, in Bengaluru, we specialise in digital pathology, mass spectrometry, and high PLCC. Ahmedabad has become a hub for genomic medicine, and now in Chennai, we are establishing a centre for transplant immunology, given Chennai’s status as the transplant capital of the country. Our aim is to become an advanced diagnostic chain.”

Neuberg’s modern diagnostic centre in Chennai is being constructed on a 60,000 sq ft area with an investment of Rs50 crore. “This will be one of the largest integrated centres, featuring CT, MR, Mammography, and all pathology modalities like molecular and genomics under one roof. The centre is nearly ready to open and will serve as the central lab for the South region, catering to Tamil Nadu, Kerala, and more,” explains Velu.

Last year, Neuberg also launched its first high-end integrated diagnostic centre in Raipur, offering both pathology and radiology as an integrated model. The management claims that Neuberg is the market leader in this segment in Gujarat, Tamil Nadu, Karnataka, Madhya Pradesh, and Southern Maharashtra.

  • NCGM: pride of Neuberg

Significant growth

The Indian diagnostics industry has witnessed significant growth in recent years. The increasing awareness among both urban and rural populations about the importance of timely diagnosis and treatment of diseases and ailments for maintaining good health has created substantial opportunities for the segment. The Covid-19 pandemic acted as a catalyst, further boosting the market and increasing healthcare expenditure.

The estimated size of the Indian diagnostics market is around $20 billion, and the industry is expected to grow at a CAGR of 12-13 per cent over the next 5 years. However, organised players constitute only 20 per cent of the market.

One of the main challenges in this sector is the fragmented market structure. It comprises standalone centres, large chains, and hospital laboratories, with limited regulation. There are over one lakh centres across the country, but only accredited labs conduct complex tests. Additionally, a significant number of online players have entered the preventive segment, which accounts for approximately 30 per cent of the total market. “I believe these online operators have two options: either consolidate or perish,” remarks Ganesan.

There has been a paradigm shift in medical treatment over the past 4 decades, transitioning from opinion-based medicine to evidence-based medicine. In the last 5 years, the world has been moving towards personalised medicine, which requires a deeper understanding at the cellular level. Genomic medicine plays a crucial role in diagnosing critical diseases such as cancer and Alzheimer’s.

“This is the future of diagnostic centres and they will play a vital role. Investing in high-end equipment for accurate diagnosis is essential to remain competitive in the fiercely competitive pricing environment. We offer a comprehensive range of tests, from routine to advanced levels,” describes Velu, who also leads a consortium of business ventures in healthcare as an investor.

Sujay Prasad, the medical director at Neuberg, believes that genomics is here to stay, along with advancements in detection techniques, testing speed, and bioinformatics. Furthermore, aspects of diagnostic medicine will inevitably incorporate artificial intelligence in some form or another.

Neuberg is not ruling out the possibility of an IPO in the future. “We have a strong balance sheet, but the business requires more investments for future growth. Therefore, we will explore the option of an IPO in the future,” points out Ganesan. The Neuberg management has set a target to achieve a turnover of Rs5,000 crore in the next 5-6 years.

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