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Diagnostics services in India were growing at 20% annually with billing of USD 3.4 billion. With WTO's GATS, foreign competition was arising. Dr. Lal PathLabs had formidable brand recognition and Dr. Arvind Lal was wondering whether to accept private equity and induct management professionals to keep pace with competitors through acquisitions or greenfield or sell out. He worried over loss of proprietary control. The industry practice of incentivizing doctors for referrals meant that acquisitions brought perverse incentive systems. The choice of compromising ethics or inventing another business model had to be made alongside whether to expand in India or abroad.
© 2017 by the Indian Institute of Management, Ahmedabad
2017
Indian Institute of Management, Ahmedabad
Licensed re-use rights only. Cases of the Indian Institute of Management, Ahmedabad, are prepared as a basis for classroom discussion. They are not designed to present illustrations of either correct or incorrect handling of administrative problems. This case has been prepared by Professor Ajeet Mathur with the assistance of Ankur Sumesra at the Indian Institute of Management Ahmedabad. The author thanks (Honorary) Brigadier Dr. Arvind Lal, Dr. Vandana Lal, Dr. Om Manchanda and Dr. Neelum Tripathi for their time and candid reflections over a long period of time that enabled this narrative to be constructed.
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