Dubai South Africa India
GSK Velu-owned Neuberg Diagnostics targets new markets in India, Africa


Healthcare entrepreneur GSK Velu, who was one of the founders of pathology and diagnostics chain Metropolis before leaving it in 2015, now has big plans for his new venture Neuberg Diagnostics, which he is keen to expand not just in India, but even in overseas markets like southern Africa and the GCC (Gulf Cooperation Council) countries.

India's market for pathology labs and diagnostic centres is dominated by chains like Dr Lal PathLabs, SRL Diagnostics, Metropolis and Thyrocare. Velu, sold his stake in Metropolis to private equity firm Carlyle in 2015.

Neuberg was set up late last year just after the two-year non-compete pact with Metropolis ended and wants to focus on advanced techniques like genomics and data analytics.

“With Neuberg, we wanted to do something different. So, the philosophy was new generation techniques and partnerships of like-minded reputed pathologists. While we are not saying we will not do routine techniques, we need to put some extraordinary focus. So, we created Neuberg Centre for Genomics in Ahmedabad, we created another centre of excellence in Bengaluru, focused on data analytics and bio-informatics. In South Africa, we put a large lab for infectious diseases,” he said.

Velu claims that close to 70 per cent of the revenues of diagnostic labs in the US comes from such new generation techniques, where as in India, it is less than 5 per cent. As far as Neuberg goes, at least 10 per cent of the revenue is now coming from new generation techniques and will grow, he added.

“When you talk of new generation techniques, say if someone has a cancer. Earlier, based on assumptions, they were directly putting the person on a set radiotherapy or a chemotherapy treatment. The belief was for any patient a particular drug regimen will work. Today, what genomics allows you to do is conduct companion diagnostics tests through every step of the treatment, to
find whether the treatment is working or not and changing the drugs accordingly,” he noted.

Neuberg reported Rs 440 crore revenue in the first year of operations and Velu expects it to clock a revenue of Rs 600-650 crore in the current financial year.

Velu acquired Global, the fourth largest lab chain in South Africa, while also acquiring controlling stakes in Indian companies – Anand Diagnostic, Supratech, Ehrlich Lab and Minerva, which now together function under the Neuberg umbrella.

Velu has so far invested around Rs 400 crore in the company so far and it may look at a fresh funding next year. The company may also go public through an initial public offering after a couple of years. Meanwhile, in Africa it will grow with the help from private equity fund, International Fund for Healthcare in Africa.

Neuberg currently has 50 labs and close to 500 collection centres. This includes 10 labs in South Africa and one in Dubai. Over the next twelve months, the number of labs will double to 100. In India, it is largely present in south India and parts of western India like Gujarat. The company's next big target is to drive into the large market of Maharashtra, where it is in talks with potential targets. It is also keen on entering Delhi, where too it will seek strong local partners.

But, Velu wants a sizeable chunk of Neuberg's earnings coming from overseas markets.

“Particularly, Africa is where basic diagnostics is not available at many locations. So, we felt that we should create a very large footprint in Africa. In the first year of operations, at least 45 per cent of revenue and 60 per cent of profits are coming from the international business.”

It already has a strong presence in South Africa through Global and has now set sights on its neighbours like Kenya, Tanzania, Uganda and Mozambique, where it aims to start its labs.

The company is also keen on tapping to public-private partnership projects in the Gulf region and countries like Iran, Uzbekistan, Kazakhstan and Turkmenistan.