Metropolis acquires four individual labs, Dr Lal PathLabs bought a proprietorship firm
Leading players in the diagnostics industry (pathology laboratories) are building on their inorganic growth strategy to enhance market presence.
While Metropolis Healthcare has acquired four individual laboratories in the Gujarat market, a subsidiary of Dr Lal PathLabs is buying control/ majority stake in a proprietorship concern with the idea of capturing additional market share there.
As per disclosures made by Metropolis, the four labs (Doctor's Clinical Laboratory, Iyer Pathology Laboratory, Nagar Pathology Laboratory and Yash Clinical Laboratory) being bought in an all cash deal, had combined revenue of Rs 7.4 crore in 2017-18. For Metropolis, the combined value of the transaction is around Rs 18 crore.
TESTING TIMES
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- Metropolis acquires four individual labs, Dr Lal PathLabs bought a proprietorship firm
- For Metropolis, the combined value of the transaction is around Rs 18 crore
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Ameera Shah, promoter and managing director, Metropolis Healthcare, said, "Consolidation is the way forward for the diagnostic industry and large national players are set to benefit from this," said Shah. The combined revenue of Metropolis increased 18% year on year at Rs 760 crore in fiscal 2018-19.
With 13 labs, Metropolis operates in the Gujarat market through its wholly-owned subsidiary Desai Laboratories that was acquired in 2007. This apart, its patient service network consists of 300 centres and is spread in key cities across the state.
Pranav Desai, chief pathologist, Desai Metropolis, said, "Post merger, Desai Laboratories got 10 times stronger in terms of infrastructure, quality and operating efficiency. We will continue to grow stronger going forward with this consolidation and network growth."
As for Dr Lal PathLabs, its subsidiary PathLabs Unifiers Pvt Ltd is acquiring 70% stake in Amins Pathology Referral Laboratory for Rs 5.25 crore. Also, an all-cash deal the transaction, to be completed in three months from now, will further strengthen its presence in the Gujarat market. The board of directors of the subsidiary firm has already approved the company's decision and a new entity will be incorporated to house the business of Amins Pathology that is expected to have a turnover of Rs 5 crore for fiscal 2019.
Om Manchanda, chief executive officer, Dr Lal PathLabs, said, "The acquisition will further strengthen our network in Gujarat and adjoining areas. Amins Pathology is capable of conducting routine testing, and we provide offsite support for more complex testing needs through our laboratory network."
The diagnostics industry in India is dominated by players like Thyrocare, Metropolis, Dr Lal PathLabs, SRL Diagnostics, Neuberg Diagnostics, etc. in addition to a large number of individual and small regional chains of pathology laboratories.
According to industry experts, the market is expected to grow at a compounded annual growth rate (CAGR) of approximately 16% accounting to approximately Rs 80,200 crore in fiscal 2020. Within the diagnostics market, the pathology segment is estimated to contribute approximately 58% of the total market, by revenue. The industry has been witnessing a lot of consolidation over the past decade wherein prominent smaller chains and individual labs were being acquired by the bigger players. Mergers and acquisitions, as a strategy, has been extensively used by market leaders to grow the network and increase market share
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