How Dr Lal PathLabs Stands The Test Of Time

When my father, Dr SK Lal, decided to make India his country at the time of Partition, and came to Delhi from Rawalpindi, he had 31 dependents with him,” recalls (Hony) Brigadier Dr Arvind Lal, executive chairman of Dr Lal PathLabs Ltd.

The senior Lal was a graduate of King Edward Medical College, Lahore, and was commissioned in the IMS, the erstwhile Army Medical Corps, in 1940. He was a graded specialist in pathology, having been trained at the former Army Medical Training College in Pune, which was renamed Armed Forces Medical College, post Partition. “He had briefly worked at the government-run Provincial Health Laboratory in Delhi, but had found it to be too chaotic and disorderly for his liking, given his disciplined experience in the Army,” says Lal. “So, he chose to quit and start his own lab.”

In 1949, Lal Sr set up the first private standalone lab in North India. “It was in our residence at Hanuman Road, which is just off Parliament Street,” says Lal. “The lab was set up in April 1949 and I was born in August 1949. So, the lab and I are almost like twins,” he says with a laugh.

An established pathologist, Lal Sr soon began to find clients among individuals as well as government establishments. Setting up a private pathology lab in those days was not just revolutionary, but also challenging. “There were no suppliers or established procurement chain for private labs then. Also, there were no ready-to-use reagent kits. This meant he had to manually prepare these from individually available chemicals,” says Lal.

In the 75 years since its inception, Dr Lal PathLabs has grown from a single laboratory in Delhi to one of the largest diagnostic chains in India, with a network of more than 280 labs, 5,500 collection centres and more than 11,000 pick-up points in hospitals, nursing homes and other labs. “We have developed a model in which the collection centres are run as franchisees, but the testing laboratories are all owned by us,” explains Lal. “We serve patients in more than 1,500 cities, testing nearly 1 lakh patients every day.”

Lal, who had wanted to become a fighter pilot in the Indian Navy but could not pursue his dreams because of myopia, joined his father’s business in 1977. “When I joined the lab, there were hardly any reagents; there were curbs on imports,” he says. “There were very rudimentary tests available. For example, I introduced the first thyroid test in a private lab in India. We also introduced tests for hepatitis and coined the term ‘lipid profile’ by introducing HDL, LDL and VLDL cholesterol tests.”

It was in 1995 that the company was incorporated as Dr Lal PathLabs Private Ltd. Over the next few years, three of the company’s clinical labs received NABL accreditation (2000), ISO 9001:2008 certification (2001), and international accreditation from the College of American Pathologists. In 2005, Dr Lal’s PathLabs received an investment by WestBridge Capital.

Currently, it offers more than 5,000 tests. “We have brought cutting-edge technologies into India. For example, sophisticated auto analysers that are computer-controlled; earlier there were only syringes and needles, and I introduced vacutainers in India, and now we have introduced artificial intelligence in pathology,” says Lal. The company has one reference lab in Rohini, Delhi, and three regional reference labs in Kolkata, Mumbai and Bengaluru.

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“We have one of the largest histopathology centres in the world, processing up to 1,400 biopsies a day, and one of the largest nephro-pathology centres in the world,” says Lal. “We are the only lab to have two electron microscopes in South Asia, where 99 percent of the labs don’t even have one.”

The diagnostic sector, which includes major players such as Dr Lal PathLabs and Metropolis Healthcare, had witnessed a spurt in growth during the Covid-19 pandemic. According to a January report by Antique Stock Broking Ltd, the sector, which had a pre-pandemic growth trajectory of 12 to 14 percent, is estimated to now grow at 10 to 12 percent. The financial services firm attributes this slowdown to factors such as competition from online aggregators, hospital chains, and pharmacy chains and market saturation.  

The emergence of online diagnostic players such as Tata 1mg and Healthians, along with hospitals that have ventured into diagnostics, such as Apollo Diagnostic, are also stepping up the competition. A study by BNP Paribas found that new-age players in the sector have been able to build sizeable businesses, with earnings coming in mostly from North India. According to Incred Equities, companies such as Tata 1mg and Redcliffe Labs have grown their lab and collection centre network beyond their core markets with minimal cash burn, thus gaining market share.  

Despite these market pressures, in May, for the fourth quarter of FY24, Dr Lal Pathlabs posted a profit after tax (PAT) of ₹84.5 crore, a 49.02 percent increase from the previous year; consolidated revenue from operations stood at ₹545 crore, an 11.8 percent increase. For the full year of FY24, revenue stood at ₹2,227 crore, a 10.4 percent year-on-year increase, and PAT of ₹609 crore, a 50.3 percent increase. “We served 2.76 crore patients and tested 7.82 crore samples in FY24,” says Lal.  

Speaking on the company’s expansion plans, Shankha Banerjee, CEO-designate of Dr Lal PathLabs, had said at the time of announcing the results, “In FY24, we tested 78.2 million samples, representing a growth of 8.1 percent in samples over the previous year. We’re expanding our reach in core markets by strengthening our presence in Tier III and IV towns. Simultaneously, we’re intensifying efforts in key clusters of Western and Southern India.” As of June 30, the company’s market capitalisation stood at more than ₹25,000 crore.