Dr B. S. Ajaikumar gave up a lucrative career in the US to set up a cancer care hospital in India which would not only provide patients the latest in treatment, but also ensure it was affordable and accessible. Today, HCG has 18 centers all across India, as well as one in Kenya, and remains devoted to its cause of ensuring that cancer patients can benefit from the latest global innovations.
As an entrepreneur, he has worked carefully with his investors, walking away from those who did not understand his mission and his motives, and expected unrealistic returns. The journey was exhausting, but worth every obstacle. He firmly believes healthcare ventures like HCG need to be run by doctors and medical personnel – it is perhaps this belief that has motivated the hospital chain to open high-end treatment centers in Tier II and Tier III cities, bringing specialty treatment to people’s doorstep. I caught up with him last week to discover what keeps him going after so many decades and what his plans are for the company he took public in 2016.
Here are some edited excerpts.
Shradha: You are an inspiration and a role model for everyone in this country. You are a doctor, you came back from the US and started HCG which is making cancer care affordable - a very big requirement in a country like ours. Tell us your story!
Dr Ajaikumar: I am from Bengaluru, and did my medicine here from St John’s. At that time, in the 1970s, because the technology was not there, we all felt there was a gap in our higher studies in medicine. So, we (doctors) were all interested in going abroad. Back then, you could get a Green Card (US permanent residency) at home! (laughs)
I went to the US to do higher studies and was fortunate to do it in one of the world’s best centers, MD Anderson Cancer Centre. I did my residency fellowship there and learned a lot about cancer care. It was a game changer for me.
At that time, there was no proper treatment for cancer. The situation was hopeless. Cancer patients were called victims, terms like ‘terminal care’ were used.
I have always liked challenges. One time, I remember, in seventh grade, one of my classmates was beaten by the teacher. I created a delegation of students and we went to the head of the institution and made him remove the teacher.
I have always fought for the underdogs, and I grew up in a family where a lot of value systems were important. My father was the dean of law school; he used to have evening discussions on the political field of India and the world. I grew up in an environment where challenges were important for me. Even though I wanted to be a cardiologist, when I saw what was happening to cancer patients in my rotation at the University of Virginia, I decided I should take it up as a challenge because I saw patients in pain and people saying there was no treatment available.
That is why I chose to do my MD at Anderson, which is considered the Mecca of Oncology. I was offered the job of heading the lung programme and later to head the center in Saudi Arabia. But I chose to come to India because I had decided that someday, I wanted to move to India and I wanted to learn the ropes of putting your own center together.
That is how the next (step of the) journey began of me: learning to put (together) the center on my own, which I did outside Chicago. I got partners and I told them they had to spend at least three months in India. I did the same – this was in the 1980s.
And then I took six months to travel across India, and it was a great learning. I saw the cobalt treatment (we had then) – very low end. I thought, why is this happening? Everybody said we are a poor country.
Cancer doesn’t know poor or rich. Because we are a poor country, the Canadian Government manufactured Cobalt for so-called poor countries, but not a single Canadian was treated with Cobalt. I asked the question ‘why’ to one of the manufacturers, and they didn’t have an answer. So, I wondered why we were accepting poor quality machines. It was an eye-opener for me, and it made me determined to come back to India. The question was when.
I always plan ahead. Like all young oncologists from India, I was doing very well in the US. I had a great practice and people came as far away as a hundred miles to see me. When I thought about coming to India, I said let me do a not-for-profit, so I developed a Trust in the US. The US government gave me a tax-free (grant) to build a cancer center in India. Can you believe that? The US government did that, not for the US but for India. So I built a center in Mysore. When I started that, I realized, how can I depend on grants? How can I depend on people to give me money (because) I am doing great service. I don’t have that DNA.
So I decided to start a private enterprise with cross-subsidy and wanted to see how we could enable make it value-based medicine – i.e. what costs $10 in the US, $7-$8 in Europe, can I do that for $3, and get the same outcome? Can I bring the same technology? That was the challenge. People thought I would fail because there was no way you could bring expensive technology here as nobody could pay for it. All people talked about was the cost.
Nobody talked about outcomes. Everybody wanted cheap medicine, but not outcomes – good outcomes from the treatment.
This is what I took on, and fortunately, after starting the Mysore-Bangalore Institute of Oncology – the first private center with a group of doctors, oncologists in Bengaluru. The majority of them are still my partners. Together we started this and we learnt a lot over the next eight-10 years.
When I brought in Linac (a treatment machine) here, people opposed it. Even my oncologist friends opposed. Only a few hospitals had it. I said I’ll bring it. With great difficulty, I brought it with Siemens. But the interest rates (on the loan) were 20 percent. I made an agreement with Siemens for 5 percent interest. I went to Germany and met the board. I said, ‘Look, this is the time, and I’ll be your partner for a long time.’ They said take it for 5 percent and let us see. And I did because we all come from middle-class families. We don’t have wealthy parents and or wealthy fathers-in-law (laughs).
The majority of patients chose Linac. We were charging Rs 10,000-Rs 15,000 for Cobalt for the whole six weeks. When we started charging Rs 30,000-Rs 40,000, because Linac is a lot of consumables, 70 percent of the people moved.
My colleagues also realized that people wanted good care. So ultimately, with that, I started creating a model. One day I came home from work and told my wife that I wanted to leave and go back to India. She was pregnant with our twins then and wanted to wait at least till she delivered the babies. The kids were born in October of 2000, and that year I left Boston and came to India with the idea of spending six months and working on my plans.
When I started coming to India in 2001-2002, I realized I had to be here. I told my wife I had to move to India. She just looked at me, shocked. But she was very supportive. She stayed back to do her Master’s programme in Chicago and I moved to India with my twins. With that, the journey of HCG began.
In 2003, I met Gangadhar Ganapathi (aka Gans). He was a businessman. He was passionate to do something in molecular diagnostics. He had started a small group called Triesta. I was already running a hospital. He was interested in research. It was my passion to do something - deep down go back and research. It was great, and together we started making a plan. I knew I couldn’t borrow at the high interest rates (that were being charged). So, I told Gans, ‘I can’t borrow, I can’t do all this. I want to create this Centre of Excellence with Cyclotron, Petscan, Cyberknife. He said there was a way to do it: private equity. I didn’t know how that would work out. They would want some returns. At the time, nobody was talking about healthcare. The Week magazine had come up with a cover story on which specialities would do well. Cardiology and orthopaedics were the best. Oncology was rated the worst, so nobody would invest.
So, we went knocking on doors like you see in the movies! “I have got a plan…” and the guy would shut the door. (laughs)
I was exhausted, Gans kept us going. He was very persistent. Finally, we met IDFC. There was a gentleman called Luis Miranda. He had done his MBA from Chicago. A very nice guy. He and his group met me, through Satish Shenoy who was our investment banker. Initially, they were hesitant. Then I gave him the whole spiel – how we could expand to 10 centers.
He thought about it and came visited me in Chicago. I still have a place there. He came and said, @I am going to give you $10 million, and no conditions.” I had three term sheets, but all of them had conditions – if you achieve this, I will give you this. If you achieve that, I will give you that! I said I am an oncologist, I will do what is best for the patient. Every day in the morning I cannot think about revenues, etc. I can’t have this stress, because I want to do the right thing for the patient. With that, what Luis did was ideal – an unconditional $10 million at a certain valuation. Whatever the valuation was, I accepted. I got diluted which I didn’t mind. So, with that, in few years, I had this hub-and-spoke model. We created the hub which is in Bengaluru, and put in Cyclotron. I had already started the Cyclotron process, and then brought in CyberKnife, made it a true Centre of Excellence like MD Anderson. We have nearly 100 doctors now. And they created spokes within a few years. We brought in the partner model with Nashik, Vijayawada. That model worked very well.
With this came the second round of private equity. Then came (Wipro Chairman Azim) Premji. When Premji called me, I thought he wanted to discuss business. So, I went to him. I made a presentation thinking he wanted to see what I was doing. He said, “No, I wanted to check you out for your ethics and transparency. You are highly recommended and I am impressed with your background. I want to invest with you.”
At that time, I did not need investment. I was trying to finish the first $10 million dollars. He insisted so I agreed. For a year they did their due diligence, and after that, they invested. That propelled me higher, and with all that, we grew to almost 14-15 centers and two or three multi-specialty ones by 2016.
That was when investors got exits, good exits. And others came in - there was Milestone Religare. With that, I felt we were ready to go public. It had been Satish’s idea. The board was also supportive. I thought it was a great journey – an oncologist center, and an entrepreneur doctor taking a company public. Coming with no help from anybody, only our group of doctors; I felt very proud of it.
So in March 2016, we went public. By that time, we also had Dr. Kamini Rao, who is our partner for IVF fertility. She is also an entrepreneur who wanted to do something similar like HCG – hub and spoke across India – and she loved our model. I said, why not encourage entrepreneurship. That was always a plan of my game-plan – encourage other doctor-entrepreneurs. Because doctors have to become entrepreneurs.
In the end, businesspeople – and this my personal statement – should not run health-care institutions because they are running it for the wrong reasons. The most successful healthcare models are run by doctors. I don’t think anywhere in the world you will see a tyre manufacturer or liquor barons going into the hospital business, or an industrialist, or a steel magnate.
We have to look at what is the right thing for the patient. We have to be patient-centric, and I feel very clearly that it’s the doctor’s vision that knows how to do healthcare at the ground level and improve. We focus on quality, outcome, and cost – everything combined. So that is why there has been a lot of publicity. I’ll come to the cost of that in a minute.
But having gone public, now we have executed and completed 21 oncology, (soon to be 26) centers. Four to five is multi-specialty, and about 10 IVF. So globally, we are the largest in oncology. Except for parts of Uttar Pradesh, Kashmir and maybe Bihar, patients can go to an HCG cancer center get their treatment, come back and sleep in their own beds. And these are high-end centers. You take Ranchi, Nashik, Vijayawada, Vizag or Shimoga – everywhere we have dedicated oncology centers. Nobody like us exists globally. This is, in a nutshell, my journey in healthcare in India.
Shradha: It’s very impressive and very inspiring. When you were talking, what really comes across is that you are very passionate. You wear two hats - one of an entrepreneur who’s got private equity money and has to show returns, and one is that you are dealing with India, with its own reality where most people come without money and you’re doing a lot of charity and free treatments. How do you combine both roles?
Dr Ajaikumar: See, when private equity (offers) came to me, I was very clear that I couldn’t give them the moon. I remember having breakfast with a private equity firm in New York. They said, “Doctor, we expect a 25 percent higher return.” I said, “Thank you for the breakfast,” and got up and left because there was no way I could have met those requirements. It’s because we have to promise what we can deliver. My bank loan is 10 or 12 percent. I can maybe, give it for 15 or 16 percent. That’s all.
But if things work out okay, you will get better returns. Fortunately, most of them have got a better return. They’re happy. But I always keep our expectations realistic. That can be achieved by simple measures like centralization, making bulk purchases, etc. All of that gives you a little bit of margin. Also, we work with manufacturers. Whatever equipment we get, we try to get a certain period where we don’t have to pay interest and in that period, we expect the center to grow.
So, we have created a model where we don’t stress the system that much. I always value private equity money more than my own. I have to make sure that their money is preserved, their money is returned properly with what their expectation is, as long as their expectation is something both of us have agreed upon and is realistic.
I think that our model has been very clear. You know, being straightforward, honest, transparent and the community likes that. When we had our IPO, people liked our integrity and honesty. Marquee investors have come to us because of that and hopefully, they’ll stay with us. I think the future looks very good.
You know, if you look at the future globally in an under-served market, we are in a very good position with our model to really dominate this. We’re just putting our bandwidth, a model using IT and everything. We can capture that and data management is important and data - how do we create that? What do we learn from that? And, what is the research - that’s also very valuable… I think India is in a very good position to be a leader, provided certain calamities don’t happen!
Shradha: One question I wanted to ask you is that are you engaging with startups because in India, there are so many amazing young people but they say that they don't get access.
Dr Ajaikumar: We're very much into it. My daughter Anjali, who has come back from the US, is very interested in this accelerator programme. We've tied up with a Hyderabad-based group where we are trying to incubate about 25 healthcare startups. We have also invested in a few early-stage companies.
We are also getting into certain areas like apps for home care. We also mentor startup groups. I am very interested in the technology, in some of the newer ideas in healthcare including some nutraceuticals. You know we need to do some randomized trials. When somebody comes and says this is good for cancer - this protein is good, how do you prove it, and how do you know? So we say, let us do a trial and based on the trial we can show whether this particular nutrient what you have is good.
We have opened the door for that. We want to kind of compete with the West on doing a proper scientific analysis. You know people always talk about Ayurveda and homeopathy. None of them do trials. You can't go by anecdotal cases. You have to do trials to see and that is what the West has done really well. And we are also doing a lot of trials. Follow-up is a problem in India. We are putting together some IT systems to see that the follow-up of patients is done properly.
But eventually, we want to be leaders in research. See, India lacks in research. India - we are very good copycats. Any drug comes out of the West, we can copy in no time. But are we original inventors? We are not. Research is not happening in India, which is very sad. Medical / non-medical / IT - no research. We need to really spend.
Shradha: But people like you are hope, right! What you have done is an example, and it should spread to many people because they should know the impact you are creating at your micro level - if people at your position do that – and do that genuinely -– I think we will see a change…
Dr. Ajaikumar: But we have to look at the larger picture. Because small groups doing this is not going to help. In the last few 15-20 years, it’s only the upper middle class has moved up the ladder. The purchasing power of this 800-900 million has gone up but is no comparison to what is happening. And that is why we see farmers suicides.
Shradha: You know the general narrative in India is that you know especially in the class which can afford is like, “Oh, if you have money for treatment, you will have to go outside.” Today what you have done is given world-class cancer care here!
Dr. Ajaikumar: And also, we get people from Africa, Middle East, and South Africa. Because they see us as the center of excellence. It’s not just the cost difference. We just treated a lady from South Africa - she got her eyeball removed because she had a tumor that had grown. She was so thankful because she said this kind of care she would never get there. She wanted to take pictures with us!
The Harvard Business Review showed that people who get treated by Indian doctors live longer in the US. But we still suffer from this colonization effect.. and we need to get rid of it. Don’t we have any pride? Somebody came to me and said, ‘I am having a conference and I am having these international speakers’. In that case, I am not supporting you. We can be good by ourselves. Let it be painful, let us go through hardship…I have been a marathon runner. Each marathon is painful, but I do it because, at the end of the day I know, I have completed it. I like it and I feel good about the challenge.
So, when somebody tells me to let us go the easy way, I say that’s a low-hanging fruit, and I don’t want it. Let’s do it the right way. The right way is the hard way. The path is more important than the goal – the goal is a moving target.
Shradha: There is a lot of fear in the minds of people because cancer is spreading and we all know someone who has been diagnosed with cancer. What do you have to tell people about this (fear)?
Dr. Ajaikumar: I think my usual mantra is very clear - fear is our worst enemy! Cancer is not our worst enemy. It’s fear! If you don’t have fear, and if you say. “I will conquer this disease,” you can! It is a question of having a positive mind. I have multiple examples of patients who are positive.-There is this lady who is in Dubai now, married to a big businessman. Ten years ago, she came with an extensive disease. One thing she had was a positive attitude. We treated her for breast cancer. She didn’t want surgery, so we did CyberKnife and she did very well. And she is also one of our spokespersons for our Pink Hope support group.
Pink Hope is about a positive approach and if you don’t have fear and you believe it can be conquered, then you can conquer it. There are so many diseases we don’t cure – diabetes, asthma, so why is cancer always associated with the cure? This is because we have used the cancer name illegitimately.
If somebody is corrupt, we say he is the cancer of the society. If somebody has committed robbery, we say he is a cancer among us. We cannot use the word that way. We have to be very clear that cancer has a different definition, and it should be used properly. As doctors too, we should stop using terms like ‘Stage 4’, ‘palliative care’ - that causes fear!
Part of the reason there is so much fear is we as health care providers - oncologist or related staff - have not done a good job in explaining to the community. To the patient how cancer is dealt, how it should be treated, and we have not created ambassadors, champions – like we have so many patients who talk about it in our clinic.
We have to create these people who were not willing to talk earlier, but now they are. We have to create people who can talk positively, and not have people watching movies that are very negative. We have to overcome fear – we have to face it. And family support is important. Finances are next. We have to create a model where financially they can tolerate the cost of treatment, without going and borrowing money or selling land.
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