Enhancing life, the Nephroplus way

The Indian organised dialysis market is estimated at $300 million. The market potential in India is $2 billion – which means only 15 per cent of the population is going for dialysis. With government intervention and public private partnership (PPP) projects, 85 per cent population which doesn’t have access to dialysis is likely to go for dialysis gradually with a growth potential of 30-35 per cent every year, founder and CEO of Nephroplus, Vikram Vuppala tells Jayarama Emani

Tell us something about Nephroplus…
NephroPlus runs India's largest chain of dialysis centres. We operate around 137 dialysis centres outsourced by private hospitals, 37 in public-private partnership (PPP) and nine standalone. We are frugal and use advantage of scale to negotiate prices for procurement of medical consumables, machines and maintenance. We also rely on technology and automation.

For example, the water treatment plants at NephroPlus use specialised sensors to collect data about the flow rate, the hardness of the water and other metrics. After being in existence for nearly a decade, we broke even only three years ago after reaching 60,000 dialysis treatments per month. Now the network clocks 1.25 lakh dialysis treatments and is growing at around 35 per cent.

What made you set up Nephroplus?
All my professional career was in healthcare in the US. My stint at McKinsey healthcare strategy consulting gave me an insight into how healthcare industry works. I wrote a thesis on ‘Diabetes & Hypertension in India – Need for Products & Services’ to serve the needy. When I researched dialysis in India, I read my co-founder Kamal D Shah’s blog who was on dialysis at a young age of 21 in 1997 and found his fight against kidney failure very inspiring.

Together, we realised that there is a real opportunity to create a professional standardized network because Kamal would have all the insights to give us the patient perspective, I would chip in with the business perspective and the combination will be really fruitful.

Indian organised dialysis market is today estimated at $300 million while the market potential in the country is $2 billion, means only 15 per cent of the population is going for dialysis. With government intervention and PPP projects, the 85 per cent population which doesn’t have access to dialysis is likely to go for dialysis gradually. Addressable market of $300 million is growing 30-35 per cent every year.

What are the challenges that you have faced setting up Nephroplus?
Three broad categories of challenges – HR, 1.2 bn people in India, but they are not trained properly across levels. On the finance side, the banks refuse to give loans or funding when you are a startup. Fortunately, VC funding and private equity opportunities have matured over the years. Seven years back, loan from SIDBI and private equity from Bessemer Venture Capital helped us to kick-start operations in addition to our own inputs.

After two years, IFC invested in our venture followed by SeaLink Capital Partners. It takes about 6-9 months to raise a single round of funding. On the regulations front, there is nothing called ease of doing business in India. Right from setting up a standalone dialysis facility to getting a healthcare licence to a fire NOC, pharmacy licence – every step is mired with delays and frustration and that too if you plan to work ethically. Moreover, a majority the governments do not recognize dialysis units. They only recognize hospitals. Nobody from the health scheme centres has the skill to empanel a dialysis unit.

Tell us something about your DaVita India acquisition…
We did the Davista India acquisition in November 2018 which was generating Rs 50 crore turnover. It gave us access to the Indian dialysis network of DaVita Inc that has 22 centres across key metros in the country as also to four new cities in India. The staff of DaVita has been integrated into NephroPlus by December 31, 2018. We funded it using debt (70 per cent) and internal accruals (30 per cent). The acquisition further cemented our leadership position in the country. Acquiring an MNC was matter of pride for us.

Are you planning any other acquisitions?
We are on the lookout and expect at least two acquisitions this year (in India and abroad). There are plans to add 3-4 new centres in next one month in Hyderabad alone as a part of our pan-India expansion. We have presence of 183 centres (including 10 in Hyderabad) across 18 States of India and Nepal, its first overseas centre.

We are looking at a fund-raising opportunity as well as acquisition opportunities in India and overseas. We are looking at raising $25 million from a new investor in addition to existing investors. We had been talking to 15 plus investors in the last six months. We will put this money in our international foray. We want to expand our presence in Indonesia, Philippines, Vietnam and Middle East. Sooner or later, we will be going for a public issue to fund our expansion plans.

What do you think are key strengths of Nephroplus?
Patient centricity is our biggest USP. With one of the co-founders himself being on dialysis on a regular basis, it helps us to understand the patient’s needs much better. As we provide dialysis service, we are providing innovative packages like ‘holiday dialysis network programme’ under which we have centres in Goa, Hrishikesh, Dehradun (vacation), Tirupati, Varanasi (pilgrimage), Agra, Alleppey back waters (site seeing) and so on. We encourage patients to travel and we help them plan their itineraries. The whole point is ‘how do we make a life of a dialysis patient normal?’

How are you reaching out to the patients?
We are working with Andhra Pradesh and Uttarakhand governments in PPP route. We are talking to more States and working with few public sector enterprises to create dialysis centres for them. The company is seeing a 50 per cent revenue growth with an aim to disrupt the dialysis segment by improving access.

We have also established partnerships with several hospitals across India to create centres inside their premises. We have recently tied up with one more unit of Max Hospitals in North and Medanta Hospital in East. We have taken up with Ruby Hall Clinic of Pune and signed up a fresh partnership with Kohinoor Hospital in Mumbai, a NABH accredited hospital.

How much would it cost for one session of dialysis?
A dialysis session which usually take 4 hours costs anywhere between Rs 1,300 to Rs 2,800 depending on the location and price. It is a low margin business and needs lot of skill to ensure a patient’s health and generate revenue.