The Indian diagnostics and path labs industry is expected to witness mergers and acquisitions (M&As) in the near term, according to industry experts. In India, diagnostics and path labs industry is pegged at around INR45 billion and is growing at an annual rate of 10-12%.
Fidelity International managing director Jasmin Patel said: “Consolidation is going to go up in the path labs space.” Lal Path Labs chief executive officer OP Manchanda said: “There has been no national player till now. Regional players are trying to go national, which requires a lot of time and investment. There is a pressure to decentralise and go closer to the patient, but economics doesn’t allow that. The other option is to tie-up with like-minded players.”
Nishith Desai Associates’ Milind Antani, a legal consultant, added: “Companies will be looking to capture markets, expand geographies and reduce costs by consolidating. It will be consolidation with the aim of expanding the business and there is going to be stronger emphasis on tier-II and tier-III cities.”
Piramal Healthcare executive director and chief operating officer N Santhanam said: “Independent people have limited means to grow their reach. Smaller clinics are likely to get consolidated with bigger brands. In 2009, we plan on increasing the number of diagnostic labs by 20-30%. If the strategic fit is right, we won’t be constrained by budgets.”
“We are open to acquiring labs and also partnerships. Ideally, we are looking at expanding in west and south. But valuations have to be right and there has to be synergies between the two labs,” said Manchanda. He added that there is a trend of small players approaching bigger lab chains in search of partnerships.