My Best Pick 2019

Saurabh Mukherjea

Dr Lal Pathlabs stands out for its unique hub-and-spoke business model and strong return ratios

Published 2 years ago on Apr 19, 2019 6 minutes Read
Vishal Koul

Historically, the path labs business has been dominated by mom and pop shops carrying out routine testing services such as blood tests, urine tests, and X-rays. These are typically one-room clinics rented in a local shopping complex by a pathologist who, usually, tends to be a sole practitioner. Such clinics tend to have tie-ups with local doctors who will refer patients in return for a share of the revenue, although it is illegal to do so. As the economy formalises, and as it becomes harder to operate such businesses on a cash-basis with patients themselves asking for better facilities, the path industry will continue to evolve. Over the past two decades, Dr Lal PathLabs has been at the vanguard of this change, especially in north India.

What’s The Difference?

Our channel checks suggest that there is no major difference in the quality and accuracy of diagnostic tests between one diagnostic firm and the other since all labs (both mom and pop labs as well as national chains) use diagnostic equipment provided by similar large vendors. There are only two areas of differentiation that a diagnostic lab brings forth: one, customer acquisition — which could be driven by a combination of doctor-network-connect, location of the lab / sample collection centre and brand and, two, logistics of testing — which in turn leads to difference in turnaround times, customer interface to check reports such as mobile app or digital access.

Dr Lal PathLabs has evolved its business model from being a mom and pop diagnostic lab till 15 years ago into a pan-India retailer today, with its key strength being the execution of its retail expansion rather than product differentiation. Formalisa


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