Tag: Om Manchanda

Wellness testing set to rise; targeting geographical expansion for growth: Dr Lal PathLabs

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

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COVID cases have been declining in India. The number of active cases has come down drastically from the levels seen in January when Omicron wave had hit the country.

To understand the outlook of the diagnostic laboratories as COVID no longer remains a persistent worry, CNBC-TV18 spoke to Om Manchanda, managing director, Dr Lal PathLabs.

Manchanda reiterated that there has been a decline in COVID cases. He explained that for growth, the company is focusing on two areas. First, he expects factors such as geographical expansion to bring in growth. Second, he believes that wellness testing will rise.

He said, “There are multiple areas where we are looking at, for growth. One is, of course, geographical expansion as we recently acquired a lab in Mumbai, and we are looking at expanding our footprint in the west zone and we are also expanding our organic footprint in the south of India. Second, there is a hypothesis that wellness testing will tend to go up and if things stabilize, we will tend to focus more on wellness testing.”

Manchanda explained that the company has found it difficult to grow organically in non-core markets as competitive intensity has risen and several players have entered the space. He added that the company may have to resort to inorganic growth in order to combat it.

Also Read: Dr Lal PathLabs Q3: Diagnostic biz likely to see consolidation in next few years, says Om Manchanda

Shedding light on revenue per patient, he said that it has been highly volatile in the last two years owing to the test mix being different in each quarter. He mentioned that the revenue per patient stands at around Rs 700 for non-COVID patients. He stressed that the company has always been dependent on volume growth more than pricing growth, hence expects the revenue per patient to stabilise at current levels.

He said, “It has been highly volatile in the last two years because test mix has been pretty different on a quarter-on-quarter (QoQ) basis. During wave two, we saw COVID alike tests going up where the revenue per patient was very high. Pricing of COVID also has been falling very sharply. Initially, it started with around Rs 4,500 and now it’s hovering around an average of Rs 500-600 per test. So it has all impacted the revenue per patient every quarter.”

“Our stable revenue per patient for non-COVID has been around Rs 700 for many years and as we have always said that we are dependent on volume growth and less on pricing growth. So my sense is it should stabilize at that number if there is no further COVID business,”  said Manchanda.

Watch the video for the full interview.

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COVID testing dips as home testing rises, cases plateaue: Dr Lal PathLabs

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

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Om Manchanda, MD, Dr Lal PathLabs, on Wednesday, said that as the number of COVID cases have fallen in the last 10 days, there’s been a decline in COVID testing as well that’s been seen since last week . He, however, cautioned that positivity remains on the higher side. He believes that the fall in testing numbers could be due to higher at-home testing, however there’s no way to verify it.

“I think it started rising in the last week of December, then it went up and I am seeing since last week, the trend has started falling, though the positivity is still on higher side. If you compare last 10 days trend, the number of cases that are coming now are definitely on a declining side. So I think one can safely assume that probably it is falling, “he said.

Also Read: India’s daily COVID-19 tally highest in 248 days at 2.83 lakh; active cases at 18.3 lakh

According to Manchanda, this time around the spike in COVID-19 cases has been short and mild. He added that different cities are following a different COVID curve. He explained that while cities like Delhi and Mumbai are seeing a declining trend in testing, there’s been a spike in testing in the southern cities. Manchanda highlighted that this time around, during the third wave of COVID, only RT-PCR tests saw a spike and not COVID allied tests as was the case during the COVID second wave.

“I think in Delhi and Mumbai, we are clearly seeing a falling trend. This time at-home testing is very high. But probably we don’t have a way to monitor that, at least in our case. This time, whatever little spike happened, that happened mostly on RT PCR, it really didn’t happen on COVID allied tests,” he mentioned.

“This time, I find that different cities are following a different curve while one sees a declining trend in Mumbai and in Delhi, though we are not very strong in south, one sees that in some southern cities, there was a bit of a spike last week. This time, the spike has been very short and also has been a little milder than what it was in wave two,” he explained.

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Manchanda affirmed that the company’s focus continues to be on non-COVID cases. He added that the company will have to delve deeper into its 2-year compounded annual growth rate (CAGR) on non-COVID testing. Additionally, Manchanda mentioned that the company is focused on volume growth. He believes there’s a need to be efficient and compete on the pricing front.

He said, “Our focus will continue to remain on non-COVID testing. However, non-COVID testing has been fluctuating quarter on quarter (QoQ. We are right now in the eighth quarter post pandemic. My sense is the deeper analysis would be post this quarter when we know two years CAGR on non-COVID.”

“We are focused on volume growth. So we are trying our level best to improve efficiencies so that we are able to maintain our margins and still remain competitive on pricing. I am very clear in my mind that we will have to be efficient and compete on pricing,” Manchanda said.

Also Read: Australians told to brace for more deaths amid Omicron wave

On technology, he believes that it is entering the diagnostic space as well. He expects a hybrid model of digital and offline testing model in the diagnostics space, going ahead.

“One must realize in healthcare, the core of proposition is the quality. So, you need to trust the brand. Tech is definitely invading healthcare as well and  I don’t think it’s only going to be digital or only going to be the offline model. I think it’s going to be omnichannel strategy that one will have to follow,” he said.

Watch the video for the full interview.

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Diagnostic space takes centre stage; experts discuss heating competition in sector

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

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The diagnostic sector has been in focus throughout the COVID-19 pandemic. Om Manchanda, MD, Dr Lal Pathlabs and Anmol Ganjoo, pharmaceuticals research analyst, JM Financial Institutional Securities discussed with CNBC-TV18 how the business has been for the diagnostic companies in FY21 and how the competition is heating up in the sector.

Manchanda said that the market is very large and there is space for a lot of players to come in. “I have always been saying that it is good that industry attracts some organised players so that the standards of quality and service go up so there is a level-playing field,” he said.

Pointing to the presence of a large unorganized market, he said some of the countries that are entering the market will further accelerate the shift from unorganized to organized players.

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While the pharmaceutical companies have the advantage of medical science to be successful, one needs to fire on many accounts, Manchanda noted. “While entry barriers in this space are very low, the barriers to scale are very high,” he explained. According to him, the best way to grow the business organically is to expand in continuous markets.

Manchanda believes diagnostics space has always been highly fragmented and unorganized.

“If you trace the history of some of the large global players, they have also taken the route of inorganic plus organic. Our historical trail has been more organic and we have built one single brand and that is how you will see a little bit of lopsidedness in our growth rate,” he stated.

Also Read: Merck’s oral COVD-19 drug on the anvil; Indian partners will price drug post-approval, says MSD India’s Rehan Khan

Meanwhile, Ganjoo said in the last 18 months, the diagnostic companies have moved forward in their growth journey by close to a decade. COVID-19 has pushed the growth trajectory and accelerated it meaningfully, he said, adding that as a consequence, the attractive quotient of these businesses has been noted by the market valuations as well. 

“When companies command such rich value multiples and such high return on invested capitals (ROIC), it is bound to be taken note of multiple players and that is where some form of disruption emerges,” he explained.

For the entire discussion, watch the accompanying video.

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