So far the company raised Rs 200 crore funding from investors such as International Finance Corporation, SeaLink Capital Partners and Bessemer Venture Capital.
NephroPlus, which runs India's largest chain of dialysis centres, plans to raise about Rs 150 crore to fund international expansion by May 2019.
In an exclusive interview to Moneycontrol NephroPlus Founder and CEO, Vikram Vuppala said the company plans to open 20 dialysis centres in the Middle East and South East Asia.
The company has raised Rs 200 crore funding so far from investors such as International Finance Corporation, SeaLink Capital Partners and Bessemer Venture Capital.
"While we are not compromising on India growth story, we are trying to create an impact on other emerging economies, with low reimbursement setting like India; that's the challenge we are undertaking," Vuppala said.
NephroPlus acquired Indian operations of the world’s second largest kidney care-provider DaVita for an undisclosed sum in November 2018. DaVita has 22 centres in two cities with over 1,700 dialysis patients and Rs 50 crore in turnover.
The acquisition of DaVita took Nephroplus' network to 183 dialysis centres across 100 cities and 18 states.
The company operates around 137 dialysis centres outsourced by private hospitals, 37 in public-private partnership (PPP) and nine standalone.
Vuppala said many private hospitals have realised they weren't making money on dialysis, as volumes were low with cost structures. They started outsourcing operations of these centres to specialised players like NephroPlus.
NephroPlus is frugal and uses advantage of scale to negotiate prices for procurement of medical consumables, machines and maintenance. They 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. By keeping the hardness of the water low, they reduce the risk of damaging dialysis membranes and the sensors alert operations team, if maintenance is due. They also provide centralized dietitian services via Skype and also get higher output from nephrologists.
NephroPlus, which was in existence for nearly a decade, broke even only three years ago when it hit volumes of 60,000 dialysis treatments per month. Now the network clocks 1.25 lakh dialysis treatments and is growing at around 35 percent.
Vuppala said they are still scratching the surface, as the dialysis market size is just $300 million in India, while its potential is around $2 billion.
The company plans to add 30-40 centres every year. It costs upwards of Rs 1 crore to set up a state-of-the-art dialysis centre in India.
Vuppala, who worked with global consulting firm McKinsey, co-founded NephroPlus in 2009 along with partner Kamal Shah, a dialysis patient himself. Shah faced difficulties in finding quality dialysis centres and sensed the huge unmet need.
"We decided we wanted to create a dialysis network that didn’t treat patients as commodities," Vuppala said.
Death punishment and PPPs
Dialysis is an artificial process to filter harmful wastes, salt, and excess fluid from blood for people suffering from the last stages of kidney failure.
According to data, over 200,000 patients with end-stage kidney disease get added in India every year due to rising chronic diseases such as diabetes and hypertension. But this demand is only half met in the country with less than 5,000 dialysis centres.
It costs a patient around Rs 250,000 - 300,000 excluding drugs to get dialysis treatment per annum. While group insurance schemes cover dialysis, standalone schemes exempt dialysis.
The end-stage kidney disease is often a death penalty for most Indians, Vuppala said.
Realising this, the Central government announced the Pradhan Mantri National Dialysis Programme, under which all the district hospitals will have a dialysis unit, operated under public-private partnership (PPP) mode. The patients will be offered free dialysis, and the Centre will fund the treatment cost in the initial years, while states will operate the scheme.
NephroPlus has been running around 37 dialysis centres under PPP mode. It has signed PPP agreements with Andhra Pradesh and Uttarakhand. It also runs dialysis centres in PPP for Employees' State Insurance Corporation, Neyveli Lignite and Singareni Colleries.
But Vuppala said they are keeping away from PPP projects."The PPP project is going very well with the government of Andhra Pradesh with 27 centres, but at the end of the day, health is the state subject. The PPP's have to be executed by the state. Many states have come up with PPPs, but the payment doesn't come up on time, and some of the bidders have quoted unsustainable low prices to get contracts," Vuppala said.