The diagnostics industry is going through a time of colossal advancement in terms of inventive abilities and credibility. Utilisation of cutting-edge and front-line technology in the analysis of infectious diseases has encouraged and reinforced evidence-based treatment by doctors. In addition, noteworthy advancements at the demographics level have prompted people to become more concerned about their health and promoted preventive healthcare drastically. In this manner, the industry has created demand for medical tests at an expansive level.
Due to these reasons, the Indian diagnostics industry has seen a CAGR of 18% while advanced markets are developing in single digits. Our belief is that the domestic market will continue this growth momentum led by its core macro factors – a large underserved patient pool and visible advancements in terms of technology and demographics.
In the diagnostics industry, franchising serves a unique purpose. In addition to branding, it helps create a network of patient-friendly services – and that is what we are doing today. Franchising allows us to be more versatile and helps monitor our resources. It also enables us to have centres in remotest of areas, making it possible for individuals to receive comprehensive facilities – laboratory, imaging investigations, and other diagnostic facilities – all under one roof. This provides access to quality healthcare to the general population in even the most remote areas.
Having said that, we also totally believe that diagnostics is a local-area concept. Metropolis has a strong presence in south and west India and dominates these territories. This has been possible because of our decades of presence, superior service, and trust that we have earned as a brand.
The industry is largely fragmented – with 88-90% dominated by unorganised players. There is considerable pricing difference for similar services. For example, an MRI can cost anywhere between Rs 1,000 and Rs 6,000, depending on the lab and its geography. However, for patients, it is a difficult choice because they are unable to assess the quality and the price. Only 1% of the total diagnostic laboratories in India are accredited to NABL and CAP – the smaller and medium ones operate more like mom-and-pop shops in the absence of any regulatory standards and norms. There is an urgent need for enactment and control to raise and maintain quality levels of labs in India. Accreditation bodies have given guidelines (international standards), but only a fraction of the industry adheres to these. Unaccredited players are upsetting quality standards. If more players from the unorganised segment become accredited, it will be a positive development for the industry – because it will raise quality standards.
Today, the customer is more aware (knows that an accurate report is the very basic requirement for proper diagnosis) – and is choosing an accredited centre over a neighbourhood lab. Regulation and awareness amongst patients is the way forward, and there will be an absolute shift towards regulated centres in the next five years.
Volume plays an important role in the profitability of a centre, but in our experience, quality directly contributes to volumes. Metropolis enjoys a good reputation for specialised and super-specialised tests and doctors and patients choose us for the quality and the accuracy we deliver. Vendors operate in a competitive market and laboratories enjoy bargaining power as vendors cater to only about 10% of the market.
The international industry is highly fragmented, aggressive, and competitive – with several independent labs, physician’s office labs, and hospital-based labs. Demand is connected to the quantity of individuals accepting medicinal treatment. Profitability of individual companies depends on efficient operations and good marketing. There are expansive economies of scale in operations of medical labs, which can receive samples from wide geographical regions. Small medical labs can compete and contend viably by effectively providing specialised investigations, or by serving geographical regions with few medical facilities.
The long-haul patterns are exceptionally good for diagnostics laboratories in international markets. All laboratories will profit from volume increases due to both population growth and ageing baby-boomers, an expansion in the quantity of tests per demand, and an increase in esoteric tests because of technological developments and the nascent trend towards customising treatments. Taken together, these trends will accelerate revenue growth beyond single digits.
The industry has enormous potential for development. There is not enough local competition in this sector due to high levels of technology integration between hardware, software, and chemistry. However, some of the challenges that the Indian industry faces includes high price of medical diagnostics equipment – most of the equipment is imported from western economies or Japan, and hence there is a high level of import taxation. Some other observations are:
• A majority of India’s population lives in villages and do not have access to sophisticated medical diagnostics and medical care
• The central and state government health departments do not have the capability to fund acquisition of large purchases and do not make adequate investments in diagnostics
• Bureaucratic and policy delays make it quite difficult to get paid for purchases that have been made by the government
• A general perception exists that a lot of imported equipment (while it addresses critical disease identification) does not focus on more common ailments in rural areas in India. So, while there is a lot of functionality and science, is this what India needs?
We need to fund indigenous technology, forge more public-private partnerships, and focus on taking diagnostics to remote areas. Accurate diagnosis is the first step in timely and correct treatment. Point-of-contact diagnostics is a solution in this area. The government should play an active role as a facilitator of medical care rather than being a provider.
Metropolis has grown from a single centre in Mumbai to over 150 labs and more than 1000 collection centres in seven countries. It is the only laboratory to have marked a presence in the emerging markets of South Asia, Africa, and the Middle East. More importantly, we have earned a reputation as a trusted and highly regarded brand among doctors, hospitals, laboratories, and patients. Metropolis will continue to expand and grow in these markets.
Subscribe to enjoy uninterrupted access
