Strategic Management - IPiramal Diagnostics
Company Background (1/2)Subsidy of Piramal GroupFounded in 1999 with the acquisition of
Tribedi & Roy Diagnostic centre in Calcutta
Grew exponentially between 03 to 08 through acquisitions
CAGR 35% for last decade compared to industry CAGR of 20%
Estimated to reach Rs 2000m in revenues by Mar 2009
Company Background (2/2)By 2008, Piramal was the largest chain
of diagnostic centers in India104 test centers across 48 cities
supported by 300 collection and pick-up centers
Centers of excellence in Mumbai for specialized tests
Performed close to 4m pathology and radiology tests in a year
Total manpower strength of 2200
Porter’s Five Forces Model
Threat of New Entrants (1/2)Routine Tests (HIGH)
Tests ranging from Rs 30 to Rs 800Low product differentiationLow initial capital requirementAbsence of effective government policies for
restricting new entrantsLow possibility of getting cost advantage as
generating volumes is a problemAverage cost of opening at a rented place Rs 1
to 5 Lacs
Threat of New Entrants (2/2)Specialized Tests (LOW)
Tests ranging from Rs 1000 to 15,000High initial capital requirementHigh brand equityHigh expenses due to the ever changing
technologySignificant economies of scale benefitting the
current players
Threat of Substitutes (LOW)With the invent of new technology the accuracy
of diagnostic tests was increasing Self diagnostic tests for sugar, blood counts for
leukocytes, hemoglobin and urine analysisCalibration and standardization is difficult and
complexHigh initial and running costUsers also need education and training to use
the equipmentsMost tests require interpretation by expertsGlucometer for estimating blood sugar has been
the only one to gain some popularity
Bargaining Power of BuyersRoutine Tests (HIGH)
Low product differentiationPatients visit labs recommended by doctors,
thus doctors enjoyed high bargaining powerMany players in the market
Specialized Tests (LOW)Less number of players in the marketDoctors had to refer patients to high end labs
Bargaining Power of SuppliersRoutine Tests (LOW)
Large number of suppliers and reagent suppliers
Labs often played one supplier against the other
Specialized Tests (HIGH)Low number of suppliersQuality of after sales service played an
important roleSome suppliers enjoyed monopolistic powers in
areas like molecular biology
Rivalry Amongst Existing Competitors (1/2)Local level (HIGH)
For routine testsDiagnostic industry remains mostly
unorganized with 40,000 independent labs across the country
Hardly any factors to distinguish between them
Low initial investment and variable costs Price war and high incentives for doctors
Rivalry Amongst Existing Competitors (2/2)National level (LOW)
Firms owned by corporate players focusing on specialized tests
Current major players are SRL Ranbaxy, Piramal, Lal Pathlab, Thyrocare, Vimta Lab and Metropolis
Huge untapped profitable market Leading to new entrants like Metropolis and
Quest Diagnostics
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