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COVID-19 testing: Private labs battle staff, safety, kit supply challenges as cases mount

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Summary

Twelve private healthcare laboratories have so far been authorised by the Indian Council of Medical Research (ICMR) to test for COVID-19, and it is expected that the list will be expanded. However, the laboratories’ resources have been stretched to the limit with increasing number of test requests.

Twelve private healthcare laboratories have so far been authorised by the Indian Council of Medical Research (ICMR) to test for COVID-19, and it is expected that the list will be expanded. However, the laboratories’ resources have been stretched to the limit with increasing number of test requests.

Some of these labs say that they have been overwhelmed by the number of requests for home collection of samples, given constraints of both staff and testing kits, and concerns over safety.

Thyrocare, Metropolis (both Mumbai), Dr Lal PathLabs (Delhi), SRL Diagnostics (Gurugram, Mumbai), Apollo Hospitals (Chennai), Strand Life Science (Gurugram), CMC (Vellore), Unipath Speciality (Gujarat), Neuberg (Bengaluru), and Sir HN Reliance Foundation (Mumbai) are among those on the ICMR list, where one can test for COVID-19.

But there is a condition for testing.

It can be undertaken only if the patient has a prescription from a doctor who certifies that the patient meets the criteria for testing. All major labs have said that this rule will be enforced and that no testing will be undertaken without a prescription.

While private testing will help assess factors such as community spread of COVID-19, the diagnostic firms are facing challenges. Two of the most common challenges are logistics and safety of staff.

Thyrocare’s A Velumani said staff attendance at office is down to 20. Thyrocare has, in fact, had to close down its wellness testing in order to concentrate resources on COVID-19 testing.

Then there is the safety issue as well. A Mumbai-based lab said that out of the 20-25 technicians specifically trained for swab collections (the type of test needed for COVID-19), only a handful have agreed to undertake home collection of samples, and that too at a steep 50 percent revenue share basis.

Similarly, in the same lab around 8-10 versus a normal capacity of over 20 staff have agreed to test COVID-19 samples, but only with a 50 percent hike in salary. Despite protective gear and required safety protocols in place, the rest of the staff don’t believe COVID-19 testing is worth the risk, says an industry official.

That is not the case everywhere though. The head of another lab said that 90 percent of their network of over 150 labs are open with skeletal staff on a rotation basis.

Metropolis’ Almira Shah told CNBC-TV18 that her lab is exploring options such as opening COVID-19 dedicated centres for potential patients and also a possible drive-through system where the swab can be collected from the potential patient while in the car thereby minimising contact. Besides safety, the other key challenge is logistics.

Dr Lal PathLabs CEO OP Manchanda agreed that safety of employees due to potential exposure via home collections is a major challenge.

Manchanda points out there are challenges to keep operations running mainly due to the difficulty in commute, with major cities under lockdown. Shah, in fact, pointed to a graver example of how some private lab staff were roughed up by cops in Mumbai on their way to work, despite identity indicating they are a part of essential services, which have been exempted from curfew.

The other issues being faced by private labs include pricing as well as procurement of kits. Currently, heads of companies manufacturing kits point out that there is a global shortage of supplies due to high demand for COVID-19 tests.

While the numbers vary from company to company, the head of a diagnostic company said that about 200-300 kits are available with private labs on an average. They however expect it increase in the coming days as more testing kits get approved by the National Institute of Virology, Pune.

Pricing on the other hand is just break even at Rs 4,500 that the government has capped for COVID-19 testing. However, industry heads are quick to point out that it is a public health challenge and pricing is not the priority.

But, in a scenario where preventive wellness testing is almost nil with normal business down sharply, they cannot afford to provide tests for free. Shah in fact says they would encourage donations from companies and high-net-worth individual (HNIs) to provide free COVID-19 testing for patients who cannot afford it.

The next few days however will be crucial for the private diagnostic industry to determine the current situation. Questions on the volume of tests one can undertake, the challenges technicians face in home collections and the rate of procurement of test kits are just few of the imponderables.

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Coronavirus has not hit India in a pandemic form, no cause to panic yet, says Dr Lal PathLabs

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Summary

The government has stepped-up in this case. Now the government labs are fully geared up and the government lab which is heading the testing is National Institute of Virology (NIV) in Pune and 10 more labs, said Arvind Lal of Dr Lal Pathlabs.

There was a bit of panic in India as two new cases of Coronavirus were reported on Monday, one in Telangana and the other in National Capital. The total count of affected cases went to five.

Arvind Lal, Chairman and Managing Director of Dr Lal Pathlabs apprising the current situation of Coronavirus in Delhi said, “This virus has not hit India in a pandemic form, which was there in 2009 so there is no need to panic.”

“India being a highly overly populated country, we have to be very careful and therefore we should screen anybody who is coming from the affected areas. Having said that this a droplet infection kind of a virus in which you can sneeze and cough so you have got to make sure that anybody who is having these kind of upper respiratory tract kind of symptoms – eyes watering, nose watering, coughing, sneezing etc. that you stay at a sizeable distance, say about 2 meters from that person. Also one should indulge in cleaning your hands and maintaining best possible hygiene.”

Giving details about the testing procedures he said, “The government has stepped-up in this case. Now the government labs are fully geared up and the government lab which is heading the testing is National Institute of Virology (NIV) in Pune and 10 more labs. Government has not allowed the tests to be sent out, so no private lab is authorised to do this test even though they may have the expertise to do that.”

He further added, “Warm weather is definitely insurance against this virus.  As far as the cases are concerned you will get infected only if you have an infected person around you.”

We have to be vigilant of people who have been coming from outside, people coming from infected areas, he said.

Speaking about private labs and the charges for tests he said, first the government has to give permission for private labs to test  and only then the pricing will come into factor.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

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index Price Change
nifty 50 ₹16,986.00 -72.15
sensex ₹1,882.60 +28.30
nifty IT ₹2,206.80 +30.85
nifty bank ₹1,318.95 -14.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95
index Price Change
nifty 50 ₹16,986.00 -72.15
sensex ₹1,882.60 +28.30
nifty IT ₹2,206.80 +30.85
nifty bank ₹1,318.95 -14.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95
index Price Change
nifty 50 ₹16,986.00 -7.15
sensex ₹1,882.60 +8.30
nifty IT ₹2,206.80 +3.85
nifty bank ₹1,318.95 -1.95

Currency

Company Price Chng %Chng
Dollar-Rupee 73.3500 0.0000 0.00
Euro-Rupee 89.0980 0.0100 0.01
Pound-Rupee 103.6360 -0.0750 -0.07
Rupee-100 Yen 0.6734 -0.0003 -0.05
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Star of 2019: This stock gained 60 percent this year

Dr Lal Pathlabs

Diagnostic chain Dr Lal PathLabs’ stock is up around 60 percent on a year-to-date basis and it has gained around 4 percent in the past three months.

Remember, there were media reports about Reliance Industries Ltd (RIL) entering into the diagnostics space, which has resulted in a little bit of a come off. However, the drivers in terms of performance have definitely strong earnings growth, which is increasingly in a competitive environment.

For the first half, revenue is up 15 percent, profit up around 31 percent odd and the margins at around 29.1 percent against 26 percent. So, an improvement has taken place on a year-on-year basis.

Dr Lal PathLabs’ Q2 realizations have risen to around Rs 687 against Rs 669 and overall this comes with a strong balance sheet for the company as the company has zero debt and their cash on books is at around Rs 781.7 crore.

Brokerages have been extremely optimistic about the company. For example, CLSA in their latest report has maintained a ‘Buy’ rating and raised the target price post Q2 to Rs 1,800. Also, they have raised the FY20-22 EPS estimates by 8-12 percent to reflect recent tax cuts and the benefit from that.

Citi has ‘Buy’ rating with target price raised to Rs 1,700 from Rs 1,475. They raised the FY20 EBITDA and EPS estimates by 1-3 percent and 13-20 percent respectively. So that too is a positive outlook coming in from Citi.

However, the valuations are expensive for all the diagnostic companies. For Dr Lal 50 times, Metropolis 50 times and Thyrocare a little lower at around 27 times. So it seems to be neck to neck in terms of valuations for both those companies and one of the things to keep in mind is a big boy such as RIL probably looking to enter diagnostics which has shaken up the market a little bit.

Top brokerage calls for November 11: CLSA maintains ‘sell’ on IPCA Labs; Credit Suisse raises target price for M&M

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Credit Suisse on Bank of Baroda:
Credit Suisse on Bank of Baroda: The brokerage was ‘neutral’ on the stock but cut its target to Rs 105 per share from Rs 115 earlier. Two quarters into the merger, the company was yet to see synergy benefits, said the brokerage, adding that core cost-to-income remained high at 50 percent.
Credit Suisse on M&M:
Credit Suisse on M&M: The brokerage maintained ‘outperform’ rating on the stock and raised its target to Rs 740 per share from Rs 720 earlier. Momentum seen in tractors could sustain over the next 6-12 months, said the brokerage, adding that transition to BS-VI could create some jitters.
CLSA on IPCA Labs:
CLSA on IPCA Labs: The brokerage maintained ‘sell’ call on the stock but raised its target to Rs 950 per share from Rs 810 earlier. Operating leverage benefit should continue in FY20, said the brokerage, adding that it remained concerned on delays in US resolution.
CLSA on Dr Lal Pathlabs:
CLSA on Dr Lal Pathlabs: The brokerage maintained ‘buy’ rating on the stock and raised its target to Rs 1,800 per share from Rs 1,330 earlier. Q2 results were ahead of estimates with another quarter of strong volume growth, said the brokerage, adding that volume remained the point of focus.
Jefferies on Nestle:
Jefferies on Nestle: The brokerage had a ‘hold’ rating on the stock with a target at Rs 13,400 per share. It said that it didn’t find risk-reward attractive enough and added that absolute upside looks limited over the 12-18 month horizon.
Nomura on Bharat Forge:
Nomura on Bharat Forge: The brokerage maintained a ‘neutral’ call on the stock but raised its target to Rs 458 per share from Rs 408 earlier. Key upside risk for the company was winning a defence gun order, while key downside risk was a prolonged CV downcycle in the US and India, noted the brokerage.

August 2: Buy BPCL, NCC, & BEL, says Ashwani Gujral

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The latest analysis and commentary by stock market guru Ashwani Gujral on what is moving the markets today. Check out his top stock recommendations. He also answered viewer stock queries.

He spoke at length about BPCL, NCC, BEL, and Dr. Lal PathLabs.

Follow stock recommendations by Ashwani Gujral here: https://www.cnbctv18.com/author/ashwani-gujral-115/

Disclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.

Dr Lal Pathlabs expects 25-27% margin for FY19

Modicare

“I expect the margin for FY19 to be around 25-27% and for FY18, the company clocked 26% margin,” said Dilip Bidani, Chief Financial Officer, Dr Lal PathLabs.

“The margins came under pressure because of headwinds like Goods and Service Tax (GST)etc. but the company managed to hold margins through cost effective measures, productivity measures,” he said.

Expansions has been through infrastructure and franchise network, said Bidani, adding that the focus will be on continuing to grow the infrastructure, particularly in the eastern region.

Diagnostic chain Dr Lal Pathlabs posted a good set of fourth quarter earnings with the margin improving on a year-on-year as well as sequential basis.

The year-on-year revenue was up 21.3% at Rs 266.8 crore against Rs 220 crore. EBITDA was up 28.3% to Rs 64 crore as against Rs 50 crore.

Similarly, the year-on-year margin in Q4 was also up 24% against 22.7% and profits were up 27.2%.