India Diagnostic Laboratories Market Outlook to 2025: Ken Research

Analyst at Ken Research in their latest publication “India Diagnostic Laboratories Market Outlook to 2025 - By Government and Private Labs, By Radiology and Pathology, By Organized and Unorganized Players, By Business Model (Standalone, Hospital Based and Diagnostic Chains), By Cities (Tier I, Tier II and Tier III cities) and By Payment Method (Out of Pocket Expenditure, Insurance based and Corporate Spending” believe that the market is highly fragmented and there is a dire need for strict regulations. These regulations would help bring about uniformity along with high quality testing standards in the industry. The report further talks about the ecosystem of the diagnostic labs present in India along with a number of segmentations such as radiology and pathology, types of models used, organized and unorganized players and many more. It also provides an investment model for a franchise lab to open up in India. There have been a number of research projects focusing on innovative and less invasive forms of testing. Some of the challenges faced by this industry include price differentiation, lack of knowledge at the consumer end and lack of regulations. Despite the COVID-19 pandemic, this industry sees a bright future. People will be more aware of their health & lifestyle choices and hence, there would definitely be a rise in wellness/preventive testing, helping the diagnostic laboratory market of India to grow further in the coming years.

Industry Overview

The market is highly fragmented with only four major PAN-India level players. It is still at its’ growing stage. However, the unorganized sector dominates the market’s revenue currently. The highest penetration of the labs is in Tier I cities, which is also the place for their reference labs. Digitalisation in the chain of diagnostics has helped remove mistakes from the time the samples have been collected to the last process of delivering the report to the customer. The major drivers for this market include the high elderly population and the shift from non-communicable to communicable diseases in India. Radiology test market has evolved over time with the advancement in the existing technology of imaging machines such as PET-scan which added more clarity in the diagnosis of the patient’s disease. Whereas for pathology, the segment has gained dominance in the market owing to the fact that it is the preferred line of diagnosis for the majority of diseases prevalent in India including infectious diseases.

Industry Segmentation

The report explores segments such as government and private diagnostic labs within the country. It is the private diagnostic labs market which is further broken down into various segments. The market is dominated by unorganized players. Medical insurance in the country is currently focused upon the clinical side and not so much towards the diagnostic sector. As of now, majority of the payment is done through out of pocket expenditure. There are a number of standalone centers in the market which hold the highest share. The diagnostic chains are further split into regional and PAN-India level labs. Within the Indian market, there are a number of doctors who have tie ups with labs and hence the customers coming from a referral hold a prominent share in the overall market. The revenue earned by a lab from a referral customer is split between the doctor and the lab. In the future, it is expected that testing for wellbeing would increase as people are now making a conscious effort to stay fit, however testing for sick care would still dominate the market.

Bottlenecks Faced in the Industry

Due to lack of regulations, there are hardly any barriers to entry. As a result there are a number of labs which have opened throughout the country. Majority of them fail to follow protocols and lack accreditations. There is also a lack of price standardization due to which there is a high level of discrepancies between diagnostic test prices of Tier I and Tier III cities. The penetration of labs in the rural parts of India is also low. When compared to a developed market like that of UK wherein 80% of the medical expense is incurred by the government, India falls behind in both aspects and is inclined towards out of pocket expenditure.

Competition Scenario in the Industry

The market structure is highly fragmented with unorganized players dominating the industry and has presence majorly in Tier-2 and Tier-3 cities. In the past few years, there have been a number of acquisitions and mergers with larger players acquiring smaller players helping the organized sector grow. It also facilitates a larger reach and more comprehensive test menus. There are majorly four PAN-India players which are well established in the market, they include Dr. Lal Pathlabs, Thyrocare Technologies, Metropolis Healthcare and SRL Diagnostics. These labs give utmost focus on research and development in order to introduce new and less invasive tests.

Future Strategies-The Way Forward

Government regulations are in focus which would help in streamlining the market in the coming years. As more companies enter the organized sector, there would be an increasing emphasis on the hub and spoke model in order to bring in volumes required for a commercial entity to survive in the market. Growth of 3D printing, which allows radiologists and clinicians to bring to life body parts and tumors which were previously available only as flat diagrams, will help revolutionize the market. India is set to increase its public health spending to 2.5% of its GDP by 2025 which would help cut down on out of pocket expenditure on healthcare services. This would be a major boost to the diagnostic sector of the industry. Consumer satisfaction would be a focus point in order to retain brand equity. Home sample collections are expected to further increase thereby bringing in convenience to the patient and facilitating further penetration of organized players in the market.

Key Segments Covered:-

India Diagnostic Laboratories Market

Revenue Segmentation by Government and Private Labs

Government Labs

Private Labs

India Private Diagnostic Laboratories Market

Revenue Segmentation by Pathology and Radiology

Pathology Sector

Radiology Sector

Revenue Segmentation by Pathology

Clinical Biology

Hematology

Surgical Pathology

Histopathology

Clinical Microbiology

Molecular Biology

Others

Revenue Segmentation by Radiology

X-rays

Sonography

MRI

CT Scans

Mammography

PET

Others

Revenue Segmentation by Business Model

Standalone

Diagnostic Chains

Hospital Based Labs

Revenue Segmentation by Diagnostic Chains

Regional Chains

Large PAN-India Chains

Revenue Segmentation by Tier I, II and III Cities

Tier I cities

Tier II cities

Tier III cities

Revenue Segmentation by Organized and Unorganized Players

Revenue Segmentation by Type of Customers

Referrals

Walk Ins

Corporate Client

Revenue Segmentation by Payment Method

Out of Pocket Expenditure

Corporate Spending

Insurance

Key Target Audience:-

Government Diagnostic Labs

Private Diagnostic Labs

Research Labs

Medical Insurance Companies

Medical Device Manufacturers

Industry Associations

Government Bodies

Investors/VC’s

Time Period Captured in the Report:-

Historical Period: FY’2015-FY’2020

Forecast Period: FY’2020-FY’2025

Companies Mentioned:-

Dr. Lal Pathlabs

SRL Diagnostics

Metropolis Healthcare

Thyrocare Technologies

Medall Healthcare Pvt Ltd

Suraksha Diagnostics Pvt Ltd

Suburban Diagnostics

Neuberg Diagnostics

Key Topics Covered in the Report:-

Spread of Communicable and Non-Communicable Diseases in India

Market Sizing Analysis of Diagnostic Labs in India

Ecosystem of Diagnostic Labs in India

Operating Models in India Diagnostic Labs

Pricing Analysis in India Diagnostic Labs Market

Value Chain Analysis of India Diagnostic Labs Market

Decision Making Parameters for a Diagnostic Lab

Issues and Challenges in the Industry

Government Regulations in the Industry

Segmentation by Radiology and Pathology

Segmentation by Type of Business Model (Standalone, Hospital Based Labs and Diagnostic Chains)

Upcoming Trends and Technologies in the Market

Competition Scenario and Market Share

Investment Model for a Franchise Lab in India

Success Stories of Diagnostic Labs in India

For More Information on the research report, refer to below link:-

India Diagnostic Laboratories Market

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Contact Us:-

Ken Research

Ankur Gupta, Head Marketing & Communications

Ankur@kenresearch.com

+91-9015378249

Diagnostic Laboratory Market in India - From Preventive Testing to a Wellness Approach: Ken Research

A gradual shift of consumer behavior from preventive testing to a wellness approach has changed the diagnostics sector drastically. A number of government initiatives such as Ayushman Bharat hopes to penetrate within rural India, in order to bridge the gap between the rural and urban areas.

In conversation with Mr. Indranil Roy Choudhury, Chief Operating Officer at Diagno Labs Pvt Ltd, we attempted to seek his opinion and understand his side of story to ‘India Diagnostic Laboratory Market’. He suggested that the diagnostics market of the country has a great potential. Regulations in the future can help channelize the growth of the sector.

Here are some excerpts of the interview:

1. How long have you been associated with this industry? Has there been any major trend shift witnessed in the market?

If we speak about the diagnostic industry specifically I’ve been associated for 5.5 years and in the healthcare sector for around 25 years.

Firstly, in the past, diagnostic landscape in our country was mainly pertaining to the ill patients. However, now the wellness is gaining focus as preventive health check-ups are gaining popularity. Initially it was only Thyrocare focusing on wellness however now all the major players are focusing on it.

The second shift, even though it’s happening extremely slowly, is related to organizations and doctors. Initially organizations were dependent on doctors’ endorsement to drive their business. Their marketing strategies were highly dependent on the doctors involved. While all that continues now with the help of increasing awareness among the population, the patient/consumer has started making an informed choice with regard to the labs and the testing done. This is mainly prevalent in metros & tier 1 cities.

Thirdly there is a major shift towards molecular and genetic testing, which will continue to grow in future.

2. If we divide the Indian diagnostic market into pathology and radiology, we found out that majority of the revenue (~60%) comes from the pathology department. What would be your views on the same?

Be it radiology or pathology, in India none of the segments / revenues from them are tracked by any government body or agency so it is difficult to quote an exact percentage but majority would be from pathology, roughly about 55-60%. Within the country, there are no entry barriers for pathology which continues to be highly decomposed and fragmented and region specific. In radiology, the initial investment is much higher than pathology, where many instruments are available from the global vendors on reagent rental. Along with this, limited number of qualified radiologist across the country is also a limitation. This has resulted in comparatively more number of pathology labs all over the country as compared to truly high end complete radiology facility. Basic radiology is still in abundance.

3. Currently the regulations pertaining to the industry are not up to standards. How do you think, this has affected the diagnostics market?

The lack of regulations is definitely not healthy. The government needs to have standardized regulatory norms individualized for both radiology and pathology. There have been speculations in the past in relation to different regulations; however it is yet to become a reality. Its impact surely would be different for the organized and unorganized sectors. The organized sector already maintains a certain level of check & balances for Quality Assurance due to which standardizations will not impact them much. But this isn’t the same for the smaller players. Significant part of their cost cutting is dependent on the lack of regulations leading to compromised Quality and hence the results. With new rules, they would need to undergo regular controls & QA procedures, which would again cost them more, and as a result bring down their profits.

4. Apart from regulations, what would be the other challenges faced by the industry?

There is a lack of knowledge and awareness amongst the people about non-regulated labs. Along with that, the nexus that is present between the pathology labs and the doctors is definitely a concern for the industry. Many doctors are provided incentives by the labs in order to prescribe certain tests.

5. Majority of the market is dominated by the unorganized players. What are your view points on the same?

In my view, the unorganized players definitely hold large majority of the share. When we talk about the organized sector, the main players include Dr. Lal Pathlabs, SRL, Metropolis Healthcare and Thyrocare, all of whom are more than INR 500 Crores basis their annual revenue turnover with Thyrocare reporting the most healthy EBITDA. Even if we include the next group of Chain Pathology Labs like Medall, Neuberg, Vijaya, Ampath, Vimta, Core, Strand and many other players in the organized sector all put together the maximum annual revenue turnover would be around INR 10,000 crore. Whereas, the pathology industry in the country would stand at a minimum of INR 40,000 crore. So according to me the organized sector holds merely a 20-25% share and about 75-80% for the unorganized sector.

6. How do you think the industry performs in Tier 1, Tier 2 and Tier 3 cities?

Majority of the organized chain labs are focused in Metros along with the tier 1 and tier 2 cities. The tier 3 cities mainly are used as collection points and have their own local players (who are actually omnipresent) However, what we must also keep in mind is that with Ayushman Bharat coming up and the government trying to penetrate into the tier 3 cities, there exists a huge growth potential for all in these geographies .

7. If we divide the entire market on the basis of models such as hospital based labs, independent/standalone labs and polyclinics, according to us the hospital based labs have the majority share in the market. Would you agree to it?

The hospital based labs would hold significant share but at the same time the independent/standalone labs are very close simply because their volumes are extremely large. Especially the reference labs have the whole country as their drainage area for the esoteric tests.

8. How do you think insurance is affecting the industry?

Insurance is seen as a blue sky scenario in the diagnostic industry of the country. The test to accession ratio in India is relatively low. This basically refers to the number of tests that can be conducted with a given sample. Currently in India, that ratio stands at approximately 3. The same in USA is about 8 to 9 and in Scandinavian countries it stands at 10. Which means the number of tests performed in those countries with one sample is much more. One of the reasons why it’s so less in our country is due to the cost associated with it. With insurance coming in, the medical fraternity would have a chance to look at the larger picture and get more relevant tests done from the same sample as per the need of the clinician to finalize the treatment protocol. It can be a game changer in the diagnostic industry however we are not sure how & when the government plans to launch the same. A small indicator of how it can impact and propel growth of the industry is the increase in wellness revenue and preventive health checkups recorded in Jan – March period every year as there is a provision of income tax benefits available on the same as introduced by the government.

9. According to you, who are the major players in the industry?

It’s a tough race for the apex position between SRL and Dr. Lal Pathlabs. They definitely take the first two positions. Following them would be Metropolis Healthcare and Thyrocare. The companies which have a potential to grow would include Neuberg Diagnostics, Medall Healthcare, Vijaya, Suburban, Core, and Dr Dang’s Lab. There are a number of new entrants including Reliance, and Pharma majors like Dr. Reddy’s and Lupin Labs all these surely makes this one of the most interesting and attractive space in the healthcare universe.

10. Do you think COVID-19 would have a major impact on the industry?

Our mindset in the last 45 days has changed drastically. We have realized that we can live without a number of activities and expenditures which are not essential. In the post COVID era, people will concentrate more on what they need, especially healthcare. We all would be more careful with respect to how we lead our lives and as a result, would have regular checkups. People will be more conscious with related to lifestyle related disorders such as hypertension, diabetes, dyslipidemia, thyroid and many others which needs regular monitoring.

For any queries or feedback, reach out at namit@kenresearch.com

For More Information, Click on the Link Below:-

India Diagnostic Laboratories Market

Contact Us:-

Ken Research

Ankur Gupta, Head Marketing & Communications

ankur@kenresearch.com

+91-9015378249