The Story of Arokiaswamy and Business Strategies of Thyrocare.
Arokiaswamy Velumani was born in a small district of Coimbatore, Tamil Nadu, but still made the world’s largest diagnostic center.
His father was a farmer and his mother used to sell milk for survival. Arokiaswamy’s father asked him to pursue B.com because it is less expensive than B.sc but one of his teachers supported him financially that could help him to pursue B.Sc.
After completing his graduation he tried getting some jobs but couldn’t get one because he was a fresher.
After some time he got a job in a capsule manufacturing company. But it also got shut down.
Then he thought of going to the city of dreams, Bombay,(Mumbai). His family members didn’t allow that and gave several reasons why he should not go there but he took his call and took a train to Mumbai having Rs.500 in his pocket.
Out of Rs.500, he spent Rs.82 on rail tickets now he was left with only Rs.418. He didn’t have any relatives in Mumbai he had to it all alone. Somehow, he got a job at Bhabha Atomic Research Centre.
After some time, he got married.
Arokiaswamy always knew, to create something big he had to take the risk. He did the same, in 1995 he resigned from his job. But it was a calculated risk. He had saved an amount of Rs. 2,00,000. Because his family’s monthly expenses were only Rs. 5000 at that time he had enough money to survive at least for 3 years.
In 1996 he started Thyrocare. It is a diagnostic testing company and operating in India, Nepal, and Bangladesh. It became the World’s Largest Testing Company in 2002.
USP and How Thyrocare maintains the cheapest price
They followed Cost Leadership strategy and have the cheapest price in the market that make it difficult for their competitors to compete with them.
Its competitor includes Dr. Lal PathLabs, SRL Diagnostics, Metropolis, Oncquest Laboratories.
The question that might come to mind is how it could make it that affordable?
Fully Automated Labs: Because Thyrocare focused on technology upgradation it was easy for them to reduce the staff cost, which ultimately led to less variable cost.
No Middle-Man Commission: Other pathology labs provide a commission of around 30% to doctors but Thyrocare doesn’t do that. It also reduced the cost of tests.
High Number of Tests Per Day: Because of the advanced technology they can conduct 50,000 tests per day that mean 1.5 million per month, which reduces the cost per test.
Less Profit Margin: All the above reasons contribute to making it economical, but less profit margin is also a reason that minimizes the cost. A high volume of tests maintains the overall profitability of the organization.
Now Pharmeasy has acquired a 66% stake in Thyrocare and now they can focus on increasing the market share in other tests as well.
Pharmeasy might install some more labs on the franchise model to expand.
Thyrocare has a package Thyrocare Arogyam that provides any 60 tests in just Rs. 1200, in future Pharmeasy is panning to launch more such affordable packages.
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Business Strategies and Learnings of Arokiaswamy Velumani
Expansion Strategy: Thyrocare integrated Air Cargo Logistic, which helped to grow even without installing multiple laboratories in different cities.
This Idea came from the Printing Press Industry. there are 4000 cities in India, opening newspaper press in every city could be exorbitant for them.
That is why the newspaper printing press print all the newspaper at night and distributes it to different cities in the early morning and then newspaper boys distribute it in different cities.
Similarly, instead of opening different laboratories in different cities, Thyrocare focused on strengthening its logistic.
One Niche: Thyrocare provides various types of tests but the main focus they had is on Thyroid tests. This helped them to capture the target market in the beginning and now they can expand in other segments as well.
Focus On Your Vision: Arokiaswamy Velumani’s always had a vision of providing tests at a very reasonable price and he always worked towards it by decreasing cost and the profit margin and that is the reason Thyrocare is the world’s largest diagnostic center.
Never Fear Taking Risk: Almost all the entrepreneur created something big in life by taking risks but at the same, it is also important to take a calculated risk, just like he did. He garnered the amount of money that he and his family needed and then jumped into entrepreneurship. Otherwise, it could be very challenging.