Dr Lal Pathlabs

Dr Lal Path Labs (LPL) a chain of pathological laboratories headquartered in New Delhi, with labs in Mumbai, Gurgaon, Noida, Kanpur, Chandigarh, Ludhiana and Jammu, has a countrywide network of collection centres. LPL was established in 1949 by the late Dr S K Lal, one of the pioneers in the field of pathology. This is a chain of 35 labs and 600 collection centres all across India. The lab today offers a comprehensive test menu covering the entire diagnostics range with 1650 tests.

Growth Path

The annual turnover of the company for this year is Rs 150 crore. LPL carries the highest number of tests in the areas of pathology, cardiology and radiology. The company has been managing the lab activities for Vishesh Hospital, Indore from the past one year and it would soon be looking after the lab activities for Jindal Hospital in Isar, Punjab by November, 2008. The lab is planning to expand their test menu, so the new HIV tests and new TB tests are some of the tests that will be conducted at LPL by end of October 2008. "The company follows a Plan-Do-Check-Act (PDCA) cycle to continuously improve and better customer service which is the guiding principle," informs Dr OP Manchanda, CEO, Dr Lal PathLabs. The company also has its collections centres in Nepal and Bangladesh.

Acquired Accreditations

"We are concentrating on both Greenfield ventures as well as taking over pathology labs through the acquisition route" - Dr OP Manchanda CEO Dr Lal Pathlabs

Being one of the oldest players in the lab industry, LPL has significant accreditations and recognition to its credit. These include accreditation by 'College of American Pathologists (CAP)', 'National Accreditation Board for Testing and Calibration Laboratories (NABL)' and 'Ministry of Science and Technology, Government of India'. The company is therefore poised to take its quality services into different parts of India. "We have the honor of being the first company in India to be selected to form a Public Private Partnership (PPP) programme at Agartala," says Dr Manchanda.

IT Insight

The company has adopted a Laboratory Information Management Systems (LIMS) in all its diagnostic centres since 10 years. "This system gives 100 per cent accuracy in test results for diagnosis of any disease or ailment," says Dr OP Manchanda, CEO, Dr Lal Pathlabs. LIMS is software which handles receiving, processing and storing information generated by medical laboratory processes. LIS is a highly configurable application which is customised to facilitate a wide variety of laboratory workflow model. Enterprise Resource Planning (ERP) is another IT solution which will be implemented by the end of October, 2008. This system will be utilised for managing commerical data within the company. An ERP system is based on a common database and a modular software design. The estimated amount spent on these IT soutions is $ 2 million.

Challenges to Tackle

The laboratory industry is one of the unorganised sectors and the lack of Governmental regulations and accreditations have resulted in proliferation of approximately 50,000 unorganised labs all over the country. Quality is mostly compromised in such labs, thus resulting in poor patient care and management. A comparison between the US and Indian data shows that the top three players in the US market contribute about 50 per cent while in India, the top five players contribute 8-10 per cent, therefore meeting this margin becomes challenging.

Challenges are also pertaining to the clinical trials because according to experts the US continues to be the most favoured destination for clinical trials. Over 57 per cent of all global trials are being conducted in US. China has again overtaken India in the number of trials conducted in the country. There are currently 419 clinical trials ongoing in China against 376 in India. “LPL has to be prepared to give quality leadership and come up to global standards in the clinical trials space. This can happen only when it has good infrastructure like world-class laboratories for doing safety testing to find out for any toxicity in the drugs under development,” says Dr Manchanda.

Future Ventures

LPL aims at reaching every nook and corner of India with its wide range of diagnostics services. Keeping sight of its mission, LPL has few expansion plans in the pipeline. The company is soon to set up 15 more labs, thus making it a figure of 50 labs in the country. Further it has plans to expand the 600 collection centres to 1000 in the next six months. "Collection centres have also proven to be effective in creating reach, however, their effectiveness is significantly less compared to the physical presence of a lab," says Dr Manchanda.

The company cannot bank upon just one means of growth; it should be by both organic and inorganic means. "We are concentrating on both Greenfield ventures as well as taking over pathology labs through the acquisition routes. Much of the growth can be attributed to acquisitions rather than Greenfield ventures," shares Dr Manchanda. The expansion strategy will be powered by a mix of acquisitions and setting up their own laboratories. The acquisitions will be funded through internal accruals, venture fund Sequoia Capital and debentures. The company is building Asia's biggest laboratory (85,000 sq ft) in New Delhi, to be commissioned by May 2009. Out of the entire expansion plans, Rs 25 crore is estimated for Greenfield ventures whereas Rs 75 crore for acquisitions. The company foresees an organised growth for the Indian diagnostic industry with multiple acquisitions and tie-ups among Indian and global players.

India has emerged as a global R&D hub for the pharmaceutical industry and as a result, is a strong market for clinical trials and central lab services. "LPL has set for itself the goal of leading the process of consolidation and garner a market share of 10 per cent in the next two-three years," says Dr Manchanda.

priti.pathak@expressindia.com