SRL close to acquiring Piramal Diagnostics

After the deal, SRL to have 1,200 collection centres, 100 labs

Super Religare Laboratories (SRL), the country’s largest diagnostic lab network, promoted by the Singh brothers, Malvinder and Shivinder, is close to acquiring Piramal Healthcare’s diagnostic chain, Piramal Diagnostics, for about Rs 600 crore. An official announcement is expected in a day or two.

While people close to the development confirmed it, Piramal executives denied any knowledge.

Post acquisition, SRL, formerly SRL Ranbaxy, will have a network of 1,200 collection centres and about 100 laboratories of varying size across 460 cities. While SRL is a strong brand in North India, Piramal Diagnostics has built up its operations in the other parts of the country, thereby making this an attractive acquisition target for SRL.

Piramal Diagnostic Services, formerly Wellspring, is a wholly owned subsidary of Piramal Healthcare and had revenue of Rs 194 crore for the year ended March 31 this year. The company is among the top five players – along with SRL, Metropolis and Dr Lal Pathlabs – that service the highly fragmented Rs 10,000-crore domestic diagnostic and radiology sector.

The deal, once confirmed, will prove to be the second business sale for Piramal Healthcare, which had sold its domestic formulation wing to US-based Abbott Laboratories for Rs 17,000 crore last month. Post the SRL deal, Piramal will be left with its drug research facility, its contract research and manufacturing operations and its over the counter drug business.

In a recent interaction, Ajay Piramal, chairman, Piramal Healthcare, had strongly denied the market buzz about plans to sell the diagnostic business.

The deal is happening when the Singh brothers, who also own majority share in the country’s leading healthcare chain, Fortis Healthcare, and financial services provider Religare Enterprises, are waging a bidding war with the Malaysian government fund, Khazanah, for a controlling stake in Singapore’s Parkway Hospitals.

The brothers had also made several acquisitions in the healthcare and financial services space during the past two years, after they sold their 35 per cent stake in India’s largest pharmaceutical company for about Rs 10,000 crore.