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Dr Lal Pathlabs' strong brand and network keep it in the pink of health

Dr Lal Pathlabs is Business Standard Star SME of the Year 2016

Ram Prasad Sahu & Aneesh Phadnis 

Arvind Lal
Arvind Lal, Chairman and Managing Director, Dr Lal Pathlabs

In a fragmented and highly competitive Indian diagnostics market, has held its own on the back of a growing pan-India network, a scalable hub-and-spoke model and, most importantly, a strong brand. India’s oldest private diagnostics company, however, took its time expanding its network since it first set up a clinical laboratory in Delhi in 1951.
 
Back then, private were rare and most people visited government hospitals for tests. “In the 1950s, when my father managed our laboratory, it used to get four-five patients a day and by the 1970s, the number increased to 30. Today, we get 40,000 patients a day,” says Arvind Lal, chairman and managing director of


 
After confining itself to the National Capital Region for the most part, it took an aggressive expansion path to generate higher volumes, especially after 2005. The company’s expansion could not have come at a better time, as it caught the industry shift towards diagnostics, driven by higher incomes, greater awareness about preventive healthcare and an increase in the incidence of lifestyle-related ailments. Not surprisingly, the diagnostics industry, which had revenues of Rs 37,700 crore in 2014-15, is expected to hit Rs 60,000 crore in 2017-18.
 
What is helping national players such as Dr Lal is that 85 per cent of the market is held by unorganised standalone diagnostic centres, which are losing out to the better-established lab chains. In fact, Dr Lal has used the acquisition route to consolidate its presence, and since 2008 it has bought eight small, standalone diagnostic companies.
 
One of the key areas of expansion was the rapid growth in patient service centres (PSC) which act as collection centres for its regional and national reference laboratory. doubled from 824 in 2012-13 to 1,559 in 2015-16. The growth of led to higher patient growth — from 7.7 million in 2012-13 to 12 million in 2015-16. This helped the company grow its revenues by 10 times between 2004-05 and 2014-2015, with the last four years accounting for the major chunk of growth, at an annual rate of 19 per cent. Dr Lal, which gets 96 per cent of its revenues from diagnostics, posted sales growth of 20 per cent in 2015-16, while profits grew at double that rate.
 
Given the revenue sharing arrangement with the (franchisees), the company has expanded with minimum capital investments, enhanced its brand presence, improved volumes and asset utilisation, as well as negotiated better with suppliers to lower input costs.
 
In addition to the PSCs, the National Reference Laboratory (NRL) in Delhi and 171 satellite labs across the country also play a critical role in managing the volumes generated by an India-wide network. “This helped us collect over 22 million samples from about 12 million patients,” says Lal, who is the recipient of the Padma Shri award and was also appointed honorary physician to the President in 2001. The company, which gets about 70 per cent of its revenues from the northern region, has benefited by setting up the NRL in 2010. This strengthened its presence in the market in the
 
Given its leadership and bouquet of offerings as well as its expansion in the Uttar Pradesh belt, analysts expect Dr Lal’s north India business to generate above-market growth of 18 per cent a year over the next five years, and contribute about two-thirds of the company’s top line. However, other regions should show a strong uptick, on a lower base. After the northern market, eastern India is to be the next growth driver.

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Dr Lal Pathlabs' strong brand and network keep it in the pink of health

Dr Lal Pathlabs is Business Standard Star SME of the Year 2016

Dr Lal Pathlabs is Business Standard Star SME of the Year 2016 In a fragmented and highly competitive Indian diagnostics market, has held its own on the back of a growing pan-India network, a scalable hub-and-spoke model and, most importantly, a strong brand. India’s oldest private diagnostics company, however, took its time expanding its network since it first set up a clinical laboratory in Delhi in 1951.
 
Back then, private were rare and most people visited government hospitals for tests. “In the 1950s, when my father managed our laboratory, it used to get four-five patients a day and by the 1970s, the number increased to 30. Today, we get 40,000 patients a day,” says Arvind Lal, chairman and managing director of
 
After confining itself to the National Capital Region for the most part, it took an aggressive expansion path to generate higher volumes, especially after 2005. The company’s expansion could not have come at a better time, as it caught the industry shift towards diagnostics, driven by higher incomes, greater awareness about preventive healthcare and an increase in the incidence of lifestyle-related ailments. Not surprisingly, the diagnostics industry, which had revenues of Rs 37,700 crore in 2014-15, is expected to hit Rs 60,000 crore in 2017-18.
 
What is helping national players such as Dr Lal is that 85 per cent of the market is held by unorganised standalone diagnostic centres, which are losing out to the better-established lab chains. In fact, Dr Lal has used the acquisition route to consolidate its presence, and since 2008 it has bought eight small, standalone diagnostic companies.
 
One of the key areas of expansion was the rapid growth in patient service centres (PSC) which act as collection centres for its regional and national reference laboratory. doubled from 824 in 2012-13 to 1,559 in 2015-16. The growth of led to higher patient growth — from 7.7 million in 2012-13 to 12 million in 2015-16. This helped the company grow its revenues by 10 times between 2004-05 and 2014-2015, with the last four years accounting for the major chunk of growth, at an annual rate of 19 per cent. Dr Lal, which gets 96 per cent of its revenues from diagnostics, posted sales growth of 20 per cent in 2015-16, while profits grew at double that rate.
 
Given the revenue sharing arrangement with the (franchisees), the company has expanded with minimum capital investments, enhanced its brand presence, improved volumes and asset utilisation, as well as negotiated better with suppliers to lower input costs.
 
In addition to the PSCs, the National Reference Laboratory (NRL) in Delhi and 171 satellite labs across the country also play a critical role in managing the volumes generated by an India-wide network. “This helped us collect over 22 million samples from about 12 million patients,” says Lal, who is the recipient of the Padma Shri award and was also appointed honorary physician to the President in 2001. The company, which gets about 70 per cent of its revenues from the northern region, has benefited by setting up the NRL in 2010. This strengthened its presence in the market in the
 
Given its leadership and bouquet of offerings as well as its expansion in the Uttar Pradesh belt, analysts expect Dr Lal’s north India business to generate above-market growth of 18 per cent a year over the next five years, and contribute about two-thirds of the company’s top line. However, other regions should show a strong uptick, on a lower base. After the northern market, eastern India is to be the next growth driver.
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Business Standard
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Dr Lal Pathlabs' strong brand and network keep it in the pink of health

Dr Lal Pathlabs is Business Standard Star SME of the Year 2016

In a fragmented and highly competitive Indian diagnostics market, has held its own on the back of a growing pan-India network, a scalable hub-and-spoke model and, most importantly, a strong brand. India’s oldest private diagnostics company, however, took its time expanding its network since it first set up a clinical laboratory in Delhi in 1951.
 
Back then, private were rare and most people visited government hospitals for tests. “In the 1950s, when my father managed our laboratory, it used to get four-five patients a day and by the 1970s, the number increased to 30. Today, we get 40,000 patients a day,” says Arvind Lal, chairman and managing director of
 
After confining itself to the National Capital Region for the most part, it took an aggressive expansion path to generate higher volumes, especially after 2005. The company’s expansion could not have come at a better time, as it caught the industry shift towards diagnostics, driven by higher incomes, greater awareness about preventive healthcare and an increase in the incidence of lifestyle-related ailments. Not surprisingly, the diagnostics industry, which had revenues of Rs 37,700 crore in 2014-15, is expected to hit Rs 60,000 crore in 2017-18.
 
What is helping national players such as Dr Lal is that 85 per cent of the market is held by unorganised standalone diagnostic centres, which are losing out to the better-established lab chains. In fact, Dr Lal has used the acquisition route to consolidate its presence, and since 2008 it has bought eight small, standalone diagnostic companies.
 
One of the key areas of expansion was the rapid growth in patient service centres (PSC) which act as collection centres for its regional and national reference laboratory. doubled from 824 in 2012-13 to 1,559 in 2015-16. The growth of led to higher patient growth — from 7.7 million in 2012-13 to 12 million in 2015-16. This helped the company grow its revenues by 10 times between 2004-05 and 2014-2015, with the last four years accounting for the major chunk of growth, at an annual rate of 19 per cent. Dr Lal, which gets 96 per cent of its revenues from diagnostics, posted sales growth of 20 per cent in 2015-16, while profits grew at double that rate.
 
Given the revenue sharing arrangement with the (franchisees), the company has expanded with minimum capital investments, enhanced its brand presence, improved volumes and asset utilisation, as well as negotiated better with suppliers to lower input costs.
 
In addition to the PSCs, the National Reference Laboratory (NRL) in Delhi and 171 satellite labs across the country also play a critical role in managing the volumes generated by an India-wide network. “This helped us collect over 22 million samples from about 12 million patients,” says Lal, who is the recipient of the Padma Shri award and was also appointed honorary physician to the President in 2001. The company, which gets about 70 per cent of its revenues from the northern region, has benefited by setting up the NRL in 2010. This strengthened its presence in the market in the
 
Given its leadership and bouquet of offerings as well as its expansion in the Uttar Pradesh belt, analysts expect Dr Lal’s north India business to generate above-market growth of 18 per cent a year over the next five years, and contribute about two-thirds of the company’s top line. However, other regions should show a strong uptick, on a lower base. After the northern market, eastern India is to be the next growth driver.

image
Business Standard
177 22