Sucheta Dalal :Piramal Healthcare closes down diagnostics operations in Delhi
Sucheta Dalal

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Piramal Healthcare closes down diagnostics operations in Delhi   

May 6, 2010

 Piramal Diagnostic Services Private Ltd (PDSL), the diagnostics service unit of Piramal Healthcare Ltd, has shut down its diagnostics operations in Delhi. A few company officials say that this step is being taken due to losses the company has incurred over two to three years. Apparently, 60 people have also been retrenched with a compensation of three months’ salary at the Delhi unit. PDSL’s operations are estimated to be around Rs200 crore.

Moneylife had reported earlier ( that the company’s strategy of buying a large number of smaller players (called ‘roll-ups’ in the US) might not be successful. PDSL had plans of acquiring 10 pathology labs across the country, from which it was targeting a minimum turnover of Rs5 crore each from these units.

Dr Swati Piramal, director, Piramal Healthcare, informed Moneylife, “The Delhi unit was located out of the way, which made it difficult for customers to access it. So we decided to close it.” However, she denied that the company had plans to exit the diagnostics space altogether. “We would like to clarify that the news appearing in certain sections of the media about the Piramal Group planning to close its diagnostics operations is completely baseless and untrue. We have expanded rapidly till 2009 and will continue to expand after consolidating and strengthening business processes.” 

Metropolis Healthcare and Piramal Healthcare are among the most competent players in the pharmaceutical space. Metropolis started its operations in 1981 and has 50 plus state-of-the-art laboratories across the globe. Ameera Patel, CEO and executive director, Metropolis Healthcare Ltd said that Piramal’s unit in Delhi was a greenfield project, which could be the reason for the closure.

“Greenfield projects in general are difficult as trust and credibility have to be established from scratch in that location,” Ms Patel told Moneylife.

Piramal Healthcare had recently acquired ‘I-Pill’, an emergency contraceptive pill brand from Cipla and the anesthetic product operations of Bharat Serums, a plasma derivatives manufacturer.

Sapna Jhawar, a pharmaceutical analyst from ShareKhan explained, “A lot of news has been on and off in the media about Piramal’s selling plans. Piramal has not been that aggressive with acquisitions lately—especially after their plans to acquire 5-10 path labs earlier. It (the diagnostics business) has been a steady source of income for Piramal; it could have made about Rs250-Rs300 crore by 2012. It doesn’t really make sense for Piramal to shut down its diagnostics operations until and unless it has got a good value for the business from a private player. Plus, even if this is the case, it will not affect Piramal’s business to a great extent, considering that it (the diagnostics business) is a small part of its (overall) business.


The Delhi unit contributed around less than 1% to Piramal Diagnostics’ revenues, and its closure is not expected to impact its overall operation in a significant way.— Ashpreet Sethi


-- Sucheta Dalal