@ DR LAL PATHLABS 2005
In the summer of 2005, while vacationing with his family in Kashmir, Om received a call from a global headhunting agency regarding a role at the Delhi-based homegrown pathological lab.
At that time, Dr Lal PathLabs had recently secured funds from the Bangalore-based investment firm WestBridge Capital (later merged with Sequoia Capital India in 2007) and was seeking a business head to guide the company through its next phase of growth.
Despite the inherent risks of joining a small, family-run business like Dr Lal PathLabs, Om was eager to move on from Ranbaxy. He accepted the offer on August 17, 2005.
Ironically, just three weeks later, Ranbaxy’s India business head, the very position Om had aspired for, resigned from the company, and the position was offered to Om. Reflecting on this, Om remarked, “Had this happened before I had resigned, my next journey with Dr Lal PathLabs might never have begun!”
OF LPL 2005 -
Present
In any transformation, there are the knowns and a few unknowns. For Om, Dr Lal PathLabs (LPL) was more of the unknown, distinct from any organization he had worked in previously.
His earlier employers—Hindustan Lever Limited (HLL), Monsanto, and Ranbaxy—were large corporations with well-established systems and processes. In contrast, LPL was a privately-held, family-run company with under 400-500 employees, where most strategic and administrative decisions were made by the top leadership.
While the promoters, Dr Arvind Lal and his wife Vandana, along with governing board members and private equity investors, unanimously agreed that the company should embark on a growth journey, there were no structured operational or behavioural policies to support such a move.
When Om stepped into his new role, he faced several pain points.
Pain Points
The evident challenges were primarily cultural. Addressing each other by the first name was unheard of, and the concept of casual or Friday dressing was alien. Saturday was considered a working day, contrary to the standard 5-day week Om had been accustomed to in his 15-year career. He believed that corporate office jobs were not bench jobs, and a 5-day week was essential for efficient and effective employee productivity.
Apart from cultural issues, there were noticeable operational gaps. Lack of role clarity was a significant issue, with too many individuals involved in decision-making processes. Additionally, there was a shortage of space, with several heads crowded in a single testing lab, leading to inefficiencies and low productivity. Notably, there was only one signatory for all cheques in the organization, regardless of the amount.
Om brought fresh ideas, and the promoters were willing to support him in addressing these challenges.
Laying the Foundation
In the initial months, Om grappled with his own negative emotions. Realizing that LPL was significantly different from the organizations he had worked for, he was overcome with worry and uncertainty. Questions lingered: Had he made the right career move? Could he deliver the desired results in such an unstructured environment with an apparently hierarchical work culture?
Faced with these concerns, Om had two options: either maintain the status quo or initiate change. Despite the potential risks to his career, he was restless and driven to bring about transformation.
Taking it one step at a time, the bottom line was growth. Om recognized that to win the trust of both the promoters and the private equity partner, he needed to achieve some successes with a focus on medium and long-term growth.
PHASE 2005-2010
The first five years of Om’s tenure at LPL witnessed the establishment of a robust corporate culture. The complete alignment of board members and senior management with strategic decisions regarding the company’s expansion proved to be a significant advantage. Other contributing factors included the recruitment of new managers.
Over time, Om systematized LPL’s functioning by introducing a well-defined organizational structure and identifying key roles. Senior managers with strong credentials were appointed to fill these positions, bringing in fresh ideas.
While the initial recruitment process faced challenges—two key senior managers failed to show up on their joining day—it eventually led to the appointment of suitable replacements after nine months. Convincing medical professionals to take on management roles and training them for corporate responsibilities proved crucial during this phase.
Initially, the newly-appointed managers posed challenges with their operational frustrations, but Om streamlined corporate office functions and decentralized testing lab operations to ease these issues. After two years of effort, he successfully initiated a 5-day work schedule to enhance workforce productivity.
Om established a separate corporate office, introduced a culture of delegation, celebrations, and offsite meetings, and focused on operational excellence and strategic discussions. In 2010, Sequoia Capital decided to dilute 16 percent of its total LPL stake, and Om played a key role in steering the deal by facilitating the acquisition of the stake by Boston-based private equity firm TA Associates.
PHASE 2010-2015
How the vision became reality
The promoters of LPL had acquired the land in Rohini in 2005, signalling their long-term vision for the company. This visionary approach had attracted Om to join LPL. Five years later, the former FMCG specialist led the construction of an incredible clinical laboratory—a fully automated, state-of-the-art facility spanning six floors.
This world-class structure, one of the largest in Asia, revolutionized the quality of testing in India and elevated customer service to unprecedented levels in the country’s fragmented and unorganized diagnostics industry. The key differentiator for LPL became its focus on the patient as a customer.
The construction project received widespread media coverage, creating excitement within the organization and resonating with smaller diagnostic laboratories and hospitals. Om reflects, “Unlike the challenge of creating large-scale awareness about consumer products, it was easier to spread awareness in the medical field, especially of an activity that was undertaken at a scale.”
By the end of 2010, LPL had received several recognitions, including the Brand Innovator Award, Best Customer Service Award, and the Best ICT-enabled diagnostic services provider CNBC TV-18 SME award in London.
Today, the facility serves 19 countries, including those in the Middle East, Africa, and Southeast Asia.
Infrastructure Expansion
After establishing the central testing lab, Om devised a pyramidal model to expand LPL footprint across India. This scalable format, in addition to providing economies of scale, ensured the sustained growth of the business.
The initial phase of expansion focused on the northern region, where the LPL brand already had a strong presence. The expansion strategy was primarily organic, involving the establishment of multiple satellite labs in different cities. Local collection centres and pick-up points were identified to facilitate the collection of blood samples from individuals and healthcare service providers. These samples were then transported to the nearest LPL satellite lab. While routine tests were conducted at these local labs, specialized tests were referred to the centralized hub at Rohini.
This successful model was subsequently extended to the eastern and central parts of India. In 2017, a second centralized testing hub was established in Kolkata’s New Town, further strengthening LPL’s infrastructure and operational capabilities.
Logistics
Simultaneously, a centralized IT platform was implemented to fully integrate LPL’s expanding network. This integration aimed to establish common logistics and payments systems, as well as to track operations and internal performance metrics across the organization.
The period from 2010 marked a pivotal phase for Om’s vision of change at LPL. With streamlined management processes and key managers in place, Om believed that the diagnostics company was ready for expansion.
Over the next five years, LPL based in Delhi focused on penetrating regional markets and expanding its network of clinical laboratories, collection centres, and pick-up points.
A significant moment during this phase was the establishment of the Central Testing Laboratory – the National Reference Laboratory – in Rohini, west Delhi. This move aimed at achieving economies of scale, resulting in cost benefits and enhancing the efficiency and accuracy of the testing process. The laboratory, spanning over 80,000 square feet, replaced the modest space of approximately 10,000 square feet where the company was initially founded on Hanuman Road in New Delhi in 1949.
The expansion marked a momentous step in LPL’s history, solidifying its position as a one-stop shop for diagnostic solutions across India.
Business Regions
With the expansion of the regional footprint, Om recognized the need to shift from remote-control management from the corporate office to a more decentralized approach. The local nature of the business necessitated decision-making processes to be closer to the operational areas.
To facilitate this, the country was divided into two business regions. The north and east were combined into one region, to be managed from New Delhi, while the south and west constituted the second region, to be handled from Mumbai. This marked the establishment of an office in Mumbai for the first time in the company’s history. Additionally, a chief operating officer was hired to oversee the operations in the newly formed south and west region.
IPO Listing
Om was confident that LPL had a winning formula—a robust brand with a strong recall in the Indian diagnostics industry, coupled with financial strength marked by attractive numbers and no debt on the books. Between 2012 and 2015, LPL demonstrated impressive financial performance, managing all organic expansion through internal accruals.
Encouraged by this success, the promoters and private equity investors decided to offload a little over 9 percent stake in the company through an initial public offering (IPO). The funds raised from the IPO were intended for the next phase of growth, which involved strategic acquisitions. The IPO opened on December 8, 2015, and closed two days later, oversubscribed 32 times.
CRISIS 2020 onward
Covid came like a bolt from the blue.
On one hand, Om had to firefight issues that arose within the organization. On the other, he had to face the brunt of an anxious external environment that included the media, government officials, patients, and the general public. Aligning the LPL management teams with the industry response was undoubtedly challenging.
“I can write volumes on this phase of my career.”
First wave
The Covid crisis unfolded in three stages, with the second phase, the infamous Delta Wave, proving to be the toughest for Om.
The first stage occurred in early 2020 when the Prime Minister announced a lockdown to battle Covid. LPL, being one of the largest testing labs, was among the first to be authorized for RT-PCR testing. Quickly, LPL increased its testing capacity, although there was little information on the extent of demand for such a testing procedure.
Om worked overtime to gain clarity from the government. Meeting with authorities and patients at district levels was challenging, as every positive case reported became big news and invited lab scrutiny.
Labs faced criticism for charging high fees, leading the government to control the prices of tests. Om found it tough to manage the commercial expectations of shareholders.The Covid crisis unfolded in three stages, with the second phase, the infamous Delta Wave, proving to be the toughest for Om.
The first stage occurred in early 2020 when the Prime Minister announced a lockdown to battle Covid. LPL, being one of the largest testing labs, was among the first to be authorized for RT-PCR testing. Quickly, LPL increased its testing capacity, although there was little information on the extent of demand for such a testing procedure.
Om worked overtime to gain clarity from the government. Meeting with authorities and patients at district levels was challenging, as every positive case reported became big news and invited lab scrutiny.
Labs faced criticism for charging high fees, leading the government to control the prices of tests. Om found it tough to manage the commercial expectations
The Delta Wave
The second wave swept the country between April 2021 and June 2021. Unlike the first phase, this time the number of cases rose exponentially due to the nature of the new variant. Testing demand surged 15-20 times within days, with a shift towards home visits. Infections among LPL staff exacerbated supply-side challenges, and a higher rate of hospitalizations led to the prescription of new kinds of tests for which LPL lacked sufficient chemical reagents. “It felt like we were sitting on a ticking time bomb, with no end in sight to this crisis.”
Given the essential nature of diagnostic services, LPL lab operations had to continue round the clock. However, the disease soon spread among the corporate and field staff, creating considerable challenges. While field operations couldn’t be halted, Om decided to move corporate operations remote.
This transition to remote work did not ease the pressure entirely. A continuous stream of phone calls and emails flooded in from customers, bureaucrats, media, friends, and relatives. As if these challenges were not enough, both Om and his wife tested positive for Covid.
Anxiety levels peaked as Om could not hand over charge to anyone else in the company, with many LPL senior executives, including the CEO, also affected by the virus. The impact was widespread, with almost everyone in the organization having lost someone during this wave. These trying times put immense personal and professional strain on Om and the entire LPL team.
A Leader’s Mind Notes from Covid
Acknowledge other’s fears. However, don’t let them know yours.
Communication is key. Regularly connect with your staff and drive them toward a goal that brings purpose and fulfilment.
Be mindful of your stakeholders. In Covid, they were the employees, customers and society.
Post-Delta Wave
By the time the Delta Wave subsided, LPL had notably expanded its testing capacity. The stock markets had reassessed diagnostics stocks positively, and the RT-PCR tests had given way to the more advanced Rapid Antigen Tests.
The evolving dynamics in diagnostic testing, coupled with changing patient behaviour and smaller number of Covid cases presented a new set of challenges for the company to navigate.
LEARNINGS FROM LPL
As Om continues to steer LPL as its managing director, his journey so far in transforming the company provides valuable lessons, emphasizing perseverance and resilience as keys to long-term success. In his own words:
- Once at the top of the corporate pyramid, one has to think long-term for oneself and the business.
- Break long-term goals into manageable time frames. At any point during his 19 years at LPL, Om did not think beyond a 3–5-year span.
- There is no such place as an ideal workplace; one’s perspective helps make it that way.
- What makes one successful in the early part of one’s career may not hold in the latter part.
RECOGNITIONS
Achiever of the year 2014 by CEO India
EOY of the year 2019 in Life Sciences Category by EY India
Corporate Beginnings