Thyrocare is asset light (only one laboratory and hence better capacity utilisation, 24 hour)
Dr Lal has several laboratories
Thyrocare concentrates on biochemistry and full blood count - analyzers are automated, interpretation of results does not depend on lab personnel
Dr Lal offers very wide variety of diagnostic tests - more capital and labour intensive, needs lab personnel for interpretation of more specialized tests and hence less amenable to automation
Quality - both are top class
Thyrocare diworcified into PET CT business which has not met the expectations and hence management has stopped further investments recently.
Dr Lal - there are some other qualitative issues (i have posted before in the same thread) - high salaries to management and board - not a strong point against but compare with thyrocare…
But they have been growing well and being a pure play in diagnostics pathology the share price has appreciated better than Thyrocare. I had investments in Dr Lal but sold thinking thyrocare will do better (I was wrong from a share price perspective). But I still strongly believe that thyrocare has a better business model and return from investments will be much higher. PET CT business has been a drag and is the main reason IMO why thyrocare has underperformed from a share price perspective
Metropolis is also good and very astute CEO. I will be happy to hold all three…but currently own only thyrocare
Growth rate - I expect 10-20% growth rate for the next 10-20 years…
Govt regulation - is welcome…there are so many small labs who don’t provide a good service and don’t adhere to quality. Govt regulation will help larger, organised labs
Add info to the 1st paragraph - thyrocare has now opened several regional labs
Thyrocare is asset light (only one laboratory and hence better capacity utilisation, 24 hour) Dr Lal has several laboratories
Not true anymore.Diagnostics is seeing a reversal in trend . There is decentralization of the centralized model. Thyrocare has also opened multiple labs now and is planning to open more. They have been clearly articulating the same in their concalls.
The asset light nature of the industry comes from the fact that equipment are available on reagent rental model ( you get equipment for free you need to buy reagent from them) + lab space on rent
Thyrocare is still very much asset light - what I mean by asset light is that they don’t need as many lab scientists and doctors for reporting their samples when compared to Dr Lal or Metropolis, most results are given out as automated result produced by the machine (biochemistry, basic haematology tests and few other molecular tests which are either positive or negative - these are all blood tests)
Regional labs are for day to day blood tests which are easy to perform and it improves the TAT (turn around time) - it does not cost a lot to build a regional lab (including buying machines) in the scheme of things. Once volumes are sufficient from a region it makes sense to open a regional lab so that all routine tests are processed locally and only specialised tests are sent to central lab via air courier.
Lab machines could either be rented or bought - Thyrocare has been buying machines of late instead of renting it…Regional labs do need phlebotomists/blood collection personnel - but they are not as expensive as a pathology doctor or lab scientist.
Histology/pathology labs are much more labour/capital intensive - tissue biopsy specimens (bowel, lung, skin et) are stained (some using more advanced special/molecular markers) and they need to be analysed by a pathologist under a microscope…this is the most capital intesive part of a lab - Thyrocare is not doing any of that…
Add - may be less human resource/capital intensive is a better word than asset light/heavy
Thanks, Agree - there has been lot to too & fro on this part of business. If I am not wrong, at one point of time Mr velumani even proposed to buy it out from thyrocare and run it in his personal capacity so that it does not harm the prospects of existing shareholders… if this is really a diworsification, then why this proposal was not accepted/gone ahead with?
Also I see that this Q, the PET business has become EBIT positive. Pls correct me if wrong here. If indeed it is EBIT positive now, how do you see this part of business for next decade now…as if shareholders need it or not, it is going to remain a part of listed entity and we need to know it’s scope ahead …now that it seem to stabilize.
You need to read from the top of this thread - all info has already been discussed about PET Ct business.
Board rejected his proposal to buy citing conflict of interest if he buys and potential to lose focus on pathology business
PET CT business is a niche business, it is not a commodity business - exactly the opposite of thyrocare’s strength…
Dr V thinks he could commoditize and disrupt by offering PET CT at cut throat prices but my view is very different - how do I know? I order lots of PET CTs for my patients!
Performing a PET scan is easy and thyrocare can do a good job, but the difficult part is reporting of it by a specialist radiologist (very expensive to get a good radiologist) with good experience in reporting PET CTs and also the service you provide to the oncologists who are the main customers/referrers of PET CT. Also, you have to have a very good relationship with the oncologists/cancer hospital and gaining their confidence is much harder (they rely on quality of the report rather than the cheapness of the test). The above cannot be automated (artificial intelligence in radiology will help but a long long way away from implementing in clinical practice)
You can’t just open a standalone PET CT shop in a city and expect oncologists (or other physicians) to refer to you - they need to have the confidence that the report will be helpful in diagnosing/managing their patients. You get the drift I hope. PET CT scanner is an integral part of most bigger cancer treating hospitals…
30 crore annual revenue after investing 194 crores - I will take 194 crores and will say thank you Dr V. Board made a bad decision for the minority shareholders…
CEO Mr. Arindam has resigned from his post for personal reasons after a short stay. Any other updates/reasons available in public domain on this resignation?
Good growth…Cant really compare Q4 PAT with previous year. But there is good QoQ growth.
Q42020 had an abnormal one off impairment of 44 crores in the nueclear business
Dividend of Rs 15 declared (total for the year Rs 25)
EPS for the year 21.37, Share price 1059, PE of 49.5
Div yield of just under 2.5%
Investing in more regional labs
Covid tail wind continues
Nueclear continues to be a drag and will be so for many years (this is my personal view)
This is actually like smartphone disrupting all kinds of business ( travel agencies, Internet cafe , news paper , messaging chat etc ) for diagnostic businesses.
They are talking about possibilities of technology in medical science in future.Ur comment is coming from traditional thinking and present scenario.They are working in MIT and Harvard worlds best universities.They regularly in touch of leading scientists.They sure know what is basic of medicine. We cannot just imagine how AI and automation will have impact in upcoming centuries. Lex Feridman AI scientist at MIT is host of podcast and have hosted world’t best minds on his podcast ranging from noble prize winners ,Founders of fortune 500,Engineers,Scientists all have came in his show.Mostly they talk about possibilities of future. U comment is based on conventional thinking
Let us assume you’re right about Lex, and he’s a complete fraud but you forget that the one doing the misleading - David Sinclair - has been cited almost 75000 times ( for comparison, Stephen Hawking was cited 115k times & Sinclair’s only 52 years old)
Please note, Bad Blood was written by a journalist who worked for WSJ and had precisely 0 research papers to his name (he did out Theranos but that does not make him an expert in Biology).
Everyone is free to choose who’s words are more authentic when it comes to the cutting edge of biology, a researcher with 75k citations or a former WSJ employee but what should be quite obvious is that till now we only knew of 1 way to diagnose. This does not mean other ways do not exist
I am a clinician primarily, I also spend considerable amount of time in the laboratory reporting blood tests and biopsies. I keep up to date with the latest in laboratory medicine. I go to international laboratory conferences every 2 years. Last conference I attended was in 2019 in Vancouver, ISLH conference. I will know when fundamental shifts happen in the laboratory medicine. Lab medicine continues to evolve and develop - we are open to new ideas.
Wearables and AI are not going to change lab medicine in the near future. These guys don’t have a clue.
I think we are wasting time here talking about AI.
