A Path To Profits

A man of great words and a disciplined life that’s the impression you get after meeting Dr. Arvind Lal. Seeing the way he grew Dr. Lal Path Labs from one centre to IPO, his is a story of taking healthcare to every home. In conversation with Entrepreneur he shares more on being the first in bringing healthcare in franchising.

When actually the journey started, which year it was?

It was started by my late father in 1949, so the organization or the lab is 67 years old. It is as old as me.

When did you get into the business?

In 1977, before that from 1949, 28 years my father ran the business. When he died, I came in. I was a lecturer in Pathology and Armed Forces Medical College in Pune. I came and took over and now from last 38 years I am running the business.

Once you took over what all changes you brought?

When I joined we were seeing 30 patients a day and we had only one lab in Delhi and there were no collection centers. So today we are running 176 labs and 1600 collection centers and in addition we pick up samples from another 5000 odd hospitals like Medanta, BL Kapoor, Batras etc. We currently test about 50,000 patients a day. Last year, we tested about 12.4 million patients.

How you brought growth and scale in the business?

I kept doing the right thing at the right time, there is no secret. I actually brought in for the first time in the world franchising in health care. We franchise out only the collection centers because in our field it is not mandatory for a patient to see me, so the samples came from all over. It gave me an idea that I could go close to the patients because the people staying in far away area, found it difficult to come to Hanuman Road (our Delhi Lab).

So it was the need of the hour, so one of the ways was to appoint franchisee, before that I haven’t heard of this word so I said can you distribute reports in the evening, pick up the call and tell the patients at what time collection center opens in the morning and if there is some money written on the back of your report will you take that and cut a receipt and give it to the patient. The person said no problem and for that I will give you a franchising fees and that is how this model was born.

How many franchisees it would be right now?

We have 1600 collection centers out of which 95-99 percent are franchised. But the labs we don’t franchise out, where the testing is done, which is done in 172 places in the world. Franchising from layman’s point of view is that they are only allowed to take blood sample of the patient and give him a receipt and tell him when the report would be ready. There is no testing done.

Have your children also joined the business?

My one child is in business, she is a pathologist. My son is running a veterinary business, a pathology centre for pets.

When was the time you realized that now is the time to take the company for IPO?

We were working on it from last 2-3 years and in fact we used to debate amongst senior management that should we do it or should we not do it and we also had private equity and people on board so we took time, it was not a spur of the moment decision, and we planned it. It was one of the most successful IPOs in the last five years.

One suggestion which you have for people like you when they get into a family business, how should they go about reaching scale?

My suggestion to such people would be they should first of all feel the journey from inside to take their grandfather’s or father’s business to a level which they can. People who are normally born in the same family they cannot think the way an entrepreneur can think.

They must finish the studies whatever they are studying and after that they should get employed in a good company at least for three years because you see how big companies are run and come back with that knowledge and experience and bring those changes inside your company. Having said that most of the Indian or multinational companies whether it is Reliance, Tatas or Birlas are all family governed. It’s not the stagnation the way people would look at that it is because the younger generation is smarter than the elder generation.

Third thing which I can add here is there is no such good company in the world which has not done some kind of complete or semi complete metamorphoses every 30 years, so it is imperative you have to change and be with time. You have to keep changing every 30 years minimum, you can do it even earlier but if you don’t change you are gone.

This article first appeared in the Indian edition of Entrepreneur magazine (September 2016 Issue).