Swedish firm’s acquisition to take kidney care in Kazakhstan to the next level23 february 2015, 15:09
Three years ago the international kidney-care provider Diaverum began considering what countries it should choose for its second wave of overseas expansion.
The Swedish firm, which had already set up shop in Germany, Saudi Arabia, Romania and Chile, decided to look at 50 countries as second-wave possibilities.
The factors it weighed included a country’s economic strength, commitment to improving health care, quality of doctors and nurses and ease of doing business. In the end, Diaverum whittled the expansion possibilities to a handful of nations.
Kazakhstan was one. Diaverum managers began flying to the country to check out kidney-care providers the company might acquire and get a firsthand look at the over-all health-care system and the business climate.
It liked what it saw. On January 1 it completed an acquisition of Nefros Asia, a company that operated nine kidney-care clinics across Kazakhstan. It is one of the few times an international company has acquired a sizable Kazakhstan health-care operation.
The acquisition is Diaverum’s first in Asia. It’s already serving 26,000 chronic kidney patients at 300 clinics in 18 countries – in Europe, the Middle East, Latin America and Australia.
The company, which has 8,000 employees worldwide, recruited a Kazakhstan management team headed by Sardar Sadykov to direct the local operation.
For patients, the payoffs from the acquisition will be world-class medical technology, state-of-the-art training of staff, and over time a shift in focus to preventing kidney failure, according to Mans Olsson, head of Diaverum’s Middle East and Asia Division.Mans Olsson heads Diaverum’s Middle East and Asia Division, which will be overseeing the company’s Kazakhstan kidney-clinic operations. Photo courtesy of Mans Olsson.
The number of kidney-treatment centers in Kazakhstan is increasing, Sadykov said, but the quality of care needs to be improved. “This is where Diaverum can help,” Mans said in an interview.
Dialysis is a mainstay of kidney treatment, and Diaverum will continue to offer it at its clinics in Almaty, Aktobe, Karaganda, Kostanai, Aktobe, Uralsk, Kaskelen and Aksai.
Diaverum also offers kidney transplants, although at the moment it performs them only in Argentina. That’s because a lot of countries have transplant regulations that are so stringent they discourage private health-care providers from doing the operations. That means that in most countries transplants are done only in government-run university hospitals.
Diaverum is confident its kidney-failure-prevention care will slow the progress of the disease and hopefully head off failure in many patients. “Once kidneys deteriorate, it’s much more difficult for the patient and much more expensive for society,” Mans said. “We want to catch patients early on with outpatient services that prevent their kidneys from failing.”
Diaverum will bring an integrated health-care approach to its dealings with patients, Mans added. That means that along with treating them for kidney problems, it will treat them for diseases – such as diabetes and hypertension – that are associated with kidney failure.
Worldwide about 700 to 1,000 people out of 1 million suffer kidney failure, Mans said. The rate is lower in Kazakhstan. It has risen in recent years, however, because better diagnostics has been identifying more cases.
“Chronic kidney disease and end-stage renal disease are a growing concern in Kazakhstan,” as they are in many countries in Asia, said Diaverum President and CEO Dag Andersson. “We are committed to being a strong partner to the government of Kazakhstan in bringing world-class specialist renal care to the Kazakh people.”
One sign of the growing kidney-health problem in Kazakhstan is a surge in Kazakhs needing kidney replacements. In fact, the number almost doubled between 2013 and 2014 to 3,900 patients, Diaverum said.
Diaverum will retain Nefros Asia’s medical staff, but will train them in the cutting-edge technology and techniques the company uses, Mans said.
It has been pleased with the quality of Kazakhstan’s medical professionals, he added.
Patients receive dialysis at the Aktobe kidney-care clinic that Diaverum acquired. Photo courtesy of Diaverum.
The Nazarbayev administration has long championed technology transfer, so government officials are sure to welcome the training Diaverum will be providing its Kazakh staff – the same training it provides in all the countries where it operates.
Mans said Diaverum plans periodic meetings with health officials to discuss its care philosophy, technology and techniques. “We look forward to working closely with Kazakh officials to contribute to the further improvement of health care in the country,” he said.
A key factor in Diaverum’s decision to expand to Kazakhstan was the government’s commitment to improving health care, Mans said.
Kazakhstan has spent hundreds of millions of dollars in recent years to renovate and build treatment facilities, to buy state-of-the-art equipment and to train medical staff at home and abroad. It has also begun making medical equipment and pharmaceuticals to reduce costs and create jobs.
Another important consideration in Diaverum’s acquisition decision was Kazakhstan’s health-care reimbursement system. Private companies like Diaverum need to know how much the government will reimburse them for patient care. Kazakhstan’s reimbursement system is very transparent, Mans said.
Diaverum’s integrated approach to kidney treatment and its focus on prevention will help Kazakhstan’s government save health-care money, he said.
Nefros Asia started as company that sold dialysis machines and other kidney-treatment equipment in Kazakhstan.
It added kidney-care clinics to complement its equipment business, Mans said.
The equipment Diaverum inherited in the Nefros Asia acquisition is first-rate, Mans said, so wholesale replacement of equipment will be unnecessary. Diaverum upgrades equipment as needed, he said. “When we identify a piece of equipment that needs replaced, we do it quickly,” he noted.
Although the equipment in its new Kazakhstan operation is excellent, Mans said, Diaverum plans to overhaul the interiors of many of the clinics. The objective will be to give patients and staff a “warmer and friendlier atmosphere – something we think is important.A doctor and nurse check the readings on a dialysis machine at the kidney clinic that the Swedish company Diaverum acquired in Kostanai. Photo courtesy of Diaverum.
Mans said Diaverum’s Kazakhstan operation will not include equipment manufacturing or sales. “We are experts in operating kidney clinics, and we’ll stick with that,” he said.
Diaverum plans to add clinics to its Kazakhstan network over time, Mans said. “There is a big opportunity for us to grow here,” he said. “And the beneficiaries of an expanding operation that offers international standards of medical care will be the people of Kazakhstan.”
Diaverum started as a spin-off of the Gambro company in the southern Swedish city of Lund in 2007.
Gambro produced kidney equipment and disposable materials, and operated kidney-care clinics. Deciding it would make better sense to split the operations into two companies, Gambro kept the equipment business but spun off the clinic operation.
In its eight years of existence, Diaverum has doubled the 150 clinics it started with. It decided to relocate some of its headquarters functions to Munich to capitalize on Germany’s international economic and trade prowess.