Diagnostics firms say top 50 laboratory health tests could become 30% cheaper

Stocks of diagnostic companies have corrected sharply over the past few months, with falling around 40-50 percent from their 52-week highs. This is reflected in their valuations, which have halved from their peaks over the past year.

Some reasons for this selling is the fear of disruptive pricing. For example, Tata 1mg advertisements indicate they offer popular lab tests at just Rs 100 versus the Rs 500 to 650 earlier.

Additionally, we are also seeing rapidly rising competition. Several pharma companies have entered the space, while hospital chains have increased investments.

Read Here: Why diagnostic stocks have corrected around 50% from their 52-week highs

Speaking to CNBC-TV18, Gaurav Agarwal, co-founder of Tata 1mg, said as the firm continues to innovate, it can drive the prices down further. “Today, we can offer 30-40 percent cheaper prices than what exists in the market,” he said.

Devendra Rajput, National Head & Director at Apollo Diagnostics, said, “With the competition as well as the pricing pressure, there will be a definite price correction in a top 50 or 30 tests where the utilisation is more, there we will be able to pass on the additional margins to the consumer. Definitely, it will be competitive going forward.”