In addition Lister will use the funds for setting up collection centres and for building a 12,000 sq ft laboratory in Chennai that will house all the testing facilities, including an imaging facility. ''Patients need not climb up floors to get tests done as everything will be located on the ground floor,'' says Dr Srinivasan.

Dr Srinivasan says, ''We will consolidate and expand our activities in corporate and insurance sectors and establish a clinical research unit to support the activities in the field of medical and pharmaceutical research.'' The Metropolis strategy is to have Lister as a hub diagnostic centre for the southern region with lot of small labs set up in other places.

According to Shah the diagnostic lab sector is densely populated with small diagnostic laboratories and soon it will get organised. Driving that will be the health insurance companies.

''We are in the same situation that America was two decades ago.'' Diagnostic laboratories are of three kinds - hospital owned/managed, referral laboratories and private labs. According to Shah, it is the last type that will experience consolidation.

''Twenty years ago the US had around 20,000 diagnostic laboratories. As medicare costs went up and health insurance gained acceptance with the public, insurers perforce had to tie up with top hospitals/pathological laboratories to lure policyholders and to take control over their ultimate claim payout. This ultimately resulted in consolidation and today there are around six major pathological laboratory chains,'' he reasons. Further, for the insurers, it became easier to bill one chain rather than deal with several labs.

Declaring that he is on the lookout for good buys in other regions Shah adds, ''We don't acquire for the sake of acquisition. The strategy is to have four major laboratories in the four regions and have several tertiary labs.'' The tertiary labs will do the normal routine tests and will be franchisee owned.

''Metropolis has different franchisee modules and entrepreneurs can break even in one year.''

While this is on the retail side, Metropolis intends to expand its hospital lab market. Currently Metropolis runs pathological labs in two hospitals - Malar Hospital, Chennai and one in Dubai.

For hospitals a laboratory is a profit centre. But it is also a problem area as nearly 40 per cent of the hospital inventory is for the pathological lab and the chances of pilferage are high. It is here that patient/customer dissatisfaction can bring disrepute to the hospital. Hospitals will not establish a particular testing facility when they find it cheaper to outsource. Hence some hospitals outsource the entire or part of the diagnostic services in exchange for a share in the overall income of the lab.

The other major players in this field are Ranbaxy Laboratories and Raptakoss Brett Diagnostic Laboratories - both headquartered in Mumbai, Dr Lal's Laboratory, New Delhi, Ehrlich Laboratory and Lister, based in Chennai.

When queried about the varied rates charged by different labs and hospitals for a test given the similarity in services and test results Srinivasan responds, ''The rate difference arises due to variety of reasons like cost of the equipment, volume of tests done at the lab and the testing kits.''

However he agreed that many doctors demand kickbacks from laboratories for referring patients for tests.

Diagnostic services aside, Metropolis, according to managing director G S K Velu will actively look at the pharmaceutical companies that do clinical trials and bio-availability studies.