Om Prakash Manchanda, Whole-time Director and CEO, Dr Lal Pathlabs, talks about the expanding network on his company and the future strategies for growth, in an interaction with Prathiba Raju
How did turning into a public-listed company help your brand?
Turning into a public-listed company for a year now has made our brand more visible. So, trade partners and the employees associated are happy. It has also helped us attract talent. Certainly, it has given more focus to the business. Overall, it has done good to the healthcare industry because people have realised that diagnostics is also mainstream in the healthcare division. Diagnostics has taken its claim and will definitely help the healthcare industry.
Is the share of unorganised players a cause for concern?
Unorganised players have always been there. Hence, the competitive intensity of the unorganised sector will always have a role to play. We can’t see any barrier in the opening up of a lab. Unorganised players will remain, they do compete with us on one level but at the same time they partner with us too. That partnership exists because they cannot do all the tests. Hence, they outsource these tests to us. That relationship does exist between these labs and us. You will always require offline collection points. I look at these kind of labs and feel that someday they would come and partner with us to outsource tests in a larger proportion than what they are doing now.
What are the challenges you face during expansion?
On an yearly basis, we put up about 15 to 25 satellite labs. These are smaller labs surrounded by one big central lab. One such big central lab is located in Rohini (Delhi). Similarly, we will be setting up a huge lab in Kolkata which will be operational by September 2017 and another one in Lucknow will be operational by December 2018. These large central labs will be surrounded by smaller ones. As of now, we have 175 operational labs. On an yearly basis, we put up 20 smaller labs, and this plan will be revisited or revised once the bigger labs are opened. Each of the big labs will cost us Rs 40-50 crores.
How is the cluster zone approach of Dr Lal Path Lab helping your business?
Cluster zone approach is like a hub-and-spoke model, we have an ecosystem in which one lab is surrounded by collection points. If you are in a big city, it is easier to grow in the contiguous market, rather than starting afresh into the nearby market. We had introduced a central lab in Delhi to make sure that we grow in and around other areas geographically like Uttar Pradesh, Haryana, Rajasthan and Punjab. We are creating two more big clusters in Kolkata; it will be the epicentre for us in the East, so that it will proliferate our network like satellite labs and collection points.
How do you manage your samples in the international market?
We procure samples from Gulf, South Asia and African countries. Usually, there is a demand for high-end tests where the turn-around time is not that critically important, but the quality and price matters. The charge varies from country to country. It depends on the prevailing price points. Right now, we get samples from our collection points as we don’t have a ground testing lab.
How technology enabled is your diagnostic chain? What are the new innovations that you have introduced?
Technology is a very important part of our business. There is no need for patients to visit a lab and there is home collection and online collection of the patients’ report. We have launched an app through which they can book an appointment, make payments online and download their current and previous reports. Currently, the model is the same but we are trying to augment our infrastructure of labs and collection centres. We tend to penetrate those in the tier II and tier III towns. Though, it all depends on what phase the market is in.