Best Advice: ‘Stay focussed on quality and timely delivery,’ says Dr Lal Pathlabs' MD Om Prakash Manchanda

What was the problem you were grappling with?

Competition in medical diagnostics has increased after Covid19. Many new players, including pharma firms, large hospital chains, and e-commerce companies have entered the market. Some of these, especially PE-backed ones, are using heavy discounting and aggressive client acquisition incentives to scale swiftly. These companies don’t have any significant cost advantage but have decided to burn cash. It is not feasible for incumbents like us to participate in this price war. The challenge is how to handle it.

Whom did you approach for advice and why?

I approached one of my earlier bosses whom I worked with during my marketing stint at Hindustan Unilever Ltd (HUL). I contacted him since HUL has dealt with many such situations of low-price competition disrupting an established brand and has a lot of experience.

What was the advice you received?

Rather than participating in a race to the bottom on pricing, it is important to stay focussed on quality and timely delivery of test reports. Consumers seek value first and then look for competitive pricing.

How effective was it in resolving the problem?

We’ve been in this predicament for over two years. I have noticed the following: first, the cash burn plan
is unsustainable. Many players have raised prices to find a path to profitability. Second, many first-time
buyers who were drawn to price have returned to value. So, we split the market into two groups: value-conscious customers and price-conscious ones. This way we added a few new offerings.