Valuation A Complicated Game, Startups, Tech Cos Visualising Future: Thyrocare's Creator, Dr Velumani

Startups and tech companies across industries are being valued today at mountain-high valuations, with investors sprinkling the dry powder and founders aiming for volumes, scale and consolidation and not minding the losses. But the industry today is also not new to certain post-listing debacles of tech companies and a recent valuation turnaround of a health-tech company PharmEasy lowering its valuations by 90 per cent to fund its debt.  

Speaking exclusively to BW Healthcare Word on the sideline of BW's Healthcare's Annual Summit and Awards, Dr Velumani, Creator, Thyrocare stated, "Valuations today have become a complicated game, earlier there were standard industries assessing companies on total turnovers, profitability and all-over growth and there would be least errors in assessing. But today people are funding so much, the topline is growing and the losses are growing with them but still, those companies are valued on the assumption that once they get volumes their profits will build up. If the profits build up the valuations are right and if it doesn't build up valuations are totally wrong."

Dr Velumani continued, "Today startups and tech companies are claiming success, visualising the future with more errors than correct predictions. Valuation today is pretty challenging and a risk that people are playing across industries, not just in healthcare. Sometimes overvalued sells very fast and sometimes for example my own company landed at Rs 1400 per share and at that time everyone was buying and today it's available at around Rs 500 and not many are buying."

What do you think about startups trying to build scale, volumes, moving towards saturation and not looking at the losses for the first years? 

Scalability giving profit is perfectly right in theory but in reality, what happens is all businesses are not scalable because businesses need a lot of human expertise to run. So if your business is not scalable don’t scale it for instance even in pathology biochemistry is scalable microbiology is not scalable, and histopathology is not scalable. 

Secondly, if you scale without creating a system it will collapse faster, so it should be a leakproof system executed by a well-trained staff. The next and most important aspect is the execution skill of scaling, people think 1 to 10 is scaling, 10 to 100 is scaling and it's not. 1 to 2 is scaling, 2 to 4 is scaling and if you are greedy you are gone.

Business is not a 100-metre race but it's a marathon, hence people should plan the scale. I reached the scale over 25 years but if you are scaling in five years be prepared. 

What disruptions do you foresee in healthcare five years from now? 

In the entire world, healthcare in India is the cheapest and in India, even the cheapest is costliest because of the per capita income of Indians. So if you ask me, the healthcare pricing is high and it has to come down. The prices will not naturally come down as no one wants to willingly reduce prices. But somebody will disrupt as they say “zero the game” in the stock market. 

I believe in healthcare somebody will disrupt like that and the disruptor will price it in such a way that the core business is not profit-making in diagnostics but the core business will be using patient data, and analytics and creating a fortune from that. But having said that, I believe all industries will go through disruption and in healthcare all aspects will go through disruption be prepared if you are comfortable then someone is out to disrupt you.      

What do you think about the future of home diagnostics?

The word home diagnostics is a bit confusing, I would put it as home service and point of care testing. Point-of-care testing happens at home or in a clinic but home service is given today for the common man because from food to grocery everything is being delivered at home. 

In diagnostics earlier the home service was only 1 per cent, available to only the old and disabled today 90 per cent is home service and that's the evolution. So home service is going to be the final destination but having said that the point-of-care testing has not improved as much as it was imagined.