/We have grown in high teens in our markets: Om Manchanda, Dr Lal PathLabs

We have grown in high teens in our markets: Om Manchanda, Dr Lal PathLabs

Om Manchanda, CEO, Dr Lal PathLabs, makes it clear that there is no decision yet on price increase. The healthcare firm will play it by the year as “we go along”, he told ETNow.

Edited excerpts:
What has been your growth in volumes? Can you tell us a little bit about the volume growth in your matured markets as well as new regions like the east?

Our volume growth at the company level has been about 12 per cent odd and in terms of value, we have grown about 11.3 per cent. Our growth rate varies from geography to geography. Of course, Delhi NCR is a large base and east is a growing market and the rest of north also is a growing market. We have actually grown in high teens in these markets. In our mature markets, growth rate is around 9-10 per cent.

As we understand, you have also not taken a price hike for almost about two years. Is the competitive intensity still high or are you looking at a price hike very soon?

Competitive intensity in this space has always been very high because it is a highly fragmented unorganised space. The market leader does not enjoy like us not more than 4-5 per cent national market share. So, competitive intensity in this space has always been very high.

In the recent past, the pressure has been there on growth and some of the listed companies. It’s also on companies which are funded by private equity. So, it has been a conscious decision on our part to see if we can hold on to price increase and maintain our margins by improving our operative efficiencies. I am glad to share that our teams have been able to manage it.

There is no such decision yet whether we will not take price increase, we will play it by the year as we go along. But yes, you are right. For the last two and a half years, we have not taken a price increase.

Do you think that your cost optimisation initiatives at the company could help improve overall prospects? We have seen a lot of players in the industry that are funded by PEs. Are there still a lot of players in the markets impacting the overall market share?

Not really. I do not think we are giving any guidance in terms of improvement of margins, but we definitely will try to hold on to these margins which are about 25-26 per cent. Yes, it used to be a very high sort of a fight for market share in the past, but I think for the last one or two years, the competitive intensity is somewhat stable.

I really would not say either it has gone down and gone up, but it has been a status quo. But we are trying on our side to reach out to more and more markets by opening collection centres and through the franchisee route. This would help manage our fixed cost better.

Overall, our efforts will actually be to improve our volume growth by expanding reach into tier-2, tier-3 towns, the rest of north and some other markets like south and west. We will maintain our margins. On PE funded players, I have been maintaining that for the last couple of years, there has been no fresh investment in the space. It has been a status quo as of now.

What is the NCR dependence now for the company? Has it come down sharply because the east region has been growing?

Yes, that has been a constant effort from our side. In fact, I have been saying over the investor call for last ten years that our dependence actually has come down from 90 per cent or 85 per cent to now 43 per cent. Continuously, we are reducing our dependence on Delhi NCR. Delhi NCR continues to be very important market for us.

But rest of India also has grown very sharply so that we are not standing on one leg now. We are a little more balanced than what we used to be in the past. That growth actually is coming from not only just from east, but even other northern states like UP, Punjab, Haryana, Bihar and Odisha. Our dependence on Delhi NCR is gradually in decline.

Going forward, can you tell us whether or not you think India preventive care is growing, what kind of moves is it going to see, are you seeing some sort of volume of preventive care for test and diagnostics?

Yes, that certainly will keep on increasing because as healthcare awareness goes up, people are becoming more conscious about their health. We continue to believe that in addition to illness or sick care market, preventive health market will continue to grow and I am pretty bullish about that segment as well. We will continue to focus on corporate segment as well.

You are probably right. So, health check up market will continue to rise in times to come.

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