Profitable Diagnosis

A pioneer in diagnostic services since 1949, Dr Lal PathLabs has been quite a remarkable success story. In a candid conversation with Beny Sachedeva, Dr Om Manchanda, Chief Executive Officer, Dr Lal PathLabs, shares more about the company's success and expansion plans.

What is the current size of the diagnostic services industry and how organised it is?

The healthcare industry (diagnostic segment) is growing at 15 to 18 per cent per annum. The market size is about Rs 8,000 crore and it is quite unorganised. There are around 50,000 to 75,000 labs across the country. The organised market size is currently about Rs 1,000 crore.

How many laboratories and collection centres do you have and how many of them are franchised?

Presently, we have 60 labs, out of which nine are franchised. We have 935 franchised collection centres and 65 patient service centres, out of which 30 are franchised.

What are your expansion plans?

We have opened 15 labs this year and are planning to open more than 100 collection centres and patient service centres by the next year-end. We are open to franchising across India.

What are your requisites to open a franchised centre?

In terms of area, we require at least 250 sq.ft with Rs 1.5 lakh as security deposit for a collection centre. We prefer to have the collection centre at a location with right visibility and easy accessibility for patients. To open a franchised lab, the requisite in terms of area is 2,000 sq.ft and the investment is about Rs 75 lakh to Rs 1 crore.

What all qualities you seek in a potential franchisee?

We prefer to give franchise to a person who has knowledge of the local market, is ready for long-term association and has a good financial potential. Having an experience in healthcare segment is an added advantage. For opening a lab, we prefer to have a franchisee with domain knowledge and commitment to quality.

Is franchising the right option for diagnostic services to grow? Is it easy to replicate the business guidelines and carry out knowledge transfer?

To replicate and have pan-India growth, franchising is the right option. However, it is easy to replicate collection centres but there are barriers to replicating lab testing, given the significance of quality etc. But it is certainly possible if we have franchisee partner with domain knowledge and commitment to offer quality services.

As you are into a niche business concept, how do you maintain standardisation of operations at your franchised outlets?

We have standard operating manual for the franchisee with proper documentation of the process involved in the sample collection, transport and delivery of report. We have franchisee support teams to ensure that the process is properly followed with logistics, IT operational teams to look into it.

What kind of training and support do you provide to your franchisees to carry out day-to-day operations?

We provide technical training to both staff working inside the lab and outside the lab. We also offer training to our franchisees in terms of operation, logistics and IT support. The training is also offered to the phlebotomists, courier boys and sales team, who have to stay in touch with the doctors on a regular basis.

Are your international centre franchised? Any plans to open new centres internationally?

We have our franchised centres in Kuwait, Bangladesh, Nepal, Sri Lanka and Dubai. We plan to expand in Middle East and South Asian countries in future.

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