Dr. Arvind Lal, executive chairman of Dr Lal PathLabs.
Medical doctor Arvind Lal, who chairs Dr Lal PathLabs, saw his fortune cross the $1 billion mark on Wednesday thanks to a boost in the shares of his India-listed diagnostics chain.
Dr Lal PathLabs provides 5,000 pathology and radiology tests, including COVID-19 tests since it received regulatory approval to do so in the last week of March—around the time when India was put under a nationwide lockdown. Before then, COVID-19 tests were done only by government labs and hospitals, but as the number of positive cases surged, the government roped in private labs as well. As of Thursday, India had reported more than 52,000 confirmed cases of the coronavirus and over 1,700 deaths.
The Dr Lal chain, which had revenues of $174 million in fiscal 2019, is one of the largest diagnostic networks in India, with more than 200 clinical labs, 2,500 patient service centers and nearly 6,500 sample pick-up points.
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Currently, it’s conducting more than 4,500 COVID-19 tests per day across its labs in New Delhi in northern India, where the company is headquartered, as well as Kolkata and Indore, in eastern and central India, respectively. Samples are collected from ten states and the labs conduct real-time reverse transcription–polymerase chain reaction (RT-PCR) tests, which require nasal and throat swabs and can produce a result in 24 hours. It is looking to operate another temporary lab for COVID-19 detection in Delhi through an agreement with the Indian government’s Council of Scientific and Industrial Research .
Mobile vans being used for COVID-19 testing in the Delhi NCR area in northern India by Dr Lal ... [+]
The company has also rolled out mobile sample collection vans, which operate in Delhi and the national capital region, helping speed up the testing process. It has trained staff for sample collection, transportation and testing to avoid any contamination. In addition to this, it sets up a kiosk on request from hospitals or the state government to meet testing requirements in COVID-19 hot spots.
“We conduct regular training drills to ensure that safety protocols are maintained,” says Vandana Lal, Dr. Lal’s wife, who is a pathologist and an executive director on the company’s board heading clinical research services and the R&D department.
Dr. Lal, 70, who owns a 57% stake in the diagnostics chain, did not make the cut for the Forbes World’s Billionaires list in March because his company's shares fell in the pandemic-induced stock market sell-off. Its shares have since rallied 8%, boosting his fortune.
While the COVID-19 tests are helping in a small way to offset the sharp revenue decline as a result of the lockdown, it’s not contributing in a big way to the bottom line, says Sriraam Rathi, a pharmaceuticals and healthcare analyst at ICICI Securities in Mumbai. “The government has fixed the price of a test at 4,500 ($60)—at this price, they will not lose but they will not gain either,” he says.
Moreover, Rathi notes that the business downturn is temporary. “Diagnostic companies will recover very fast once things come back to normal,” he says. “Dr Lal PathLabs is very well-positioned because its balance sheet is very strong and it is generating free cash flow. Plus, it is professionally managed and it has a very strong position in north India.” In the past few days, India has been slowly easing its strict lockdown restrictions, even as infections continue to rise.
The diagnostics chain is already seeing a pick-up in traffic as patients start trickling in. “All other forms of testing were affected in March and till mid-April, but now there are more tests being done,” says Vandana Lal. “We have so many cancer patients who were waiting for tests. They are all coming back.”
Dr Lal PathLabs has been growing steadily since its IPO in 2015, when it became the first pure-play diagnostics chain in the country to go public. The number of samples it collected rose to 41.8 million in fiscal 2019 from 29.3 million in 2017. The number of patients, too, increased to 17.6 million from 13.3 million over the same period.
“We are very proud of Dr. Lal, who as a doctor pathologist has led his company to the level it has reached today,” says Ameera Shah, managing director of listed peer Metropolis Healthcare.
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Dr. Lal was 28 years old when he took over the family's diagnostics lab and blood bank, which was founded by his father, S.K. Lal, also a doctor, in 1949 in Delhi. After studying medicine at the Armed Forces Medical College in Pune city, Dr. Lal returned home in 1977 and set about introducing new diagnostics equipment. After he married Vandana Lal in 1979, the two of them started introducing molecular diagnostics, cytogenetics and genetics tests.
Since taking over the business, Dr. Lal expanded the chain across the country, partly through a series of acquisitions. Today, a total of 32 labs in the Dr Lal PathLabs chain are accredited by the National Accreditation Board for Testing and Calibration Laboratories in India, while its Delhi lab also has accreditation from the prestigious College of American Pathologists. The Delhi lab spanning 85,000 square feet is touted to be the largest in Asia.
Dr. Lal, who has an honorary brigadier’s rank at the Armed Forces Medical Services, is also a published author with his 2018 book Corporate Yogi: My Journey as a Spiritual Seeker and an Accidental Entrepreneur, which has been translated into his native Hindi.
His daughter, Archana Lal Erdmann, a geneticist, is a non-executive director at the diagnostics chain. She is based in California and is opening her own cytogenetics lab there. Dr. Lal’s son, Anjaneya Lal, handles the company’s veterinary division while also freelancing as a wildlife photographer.
