Current Scenario , Trends & Understanding of Healthcare Diagnostics in India !!!

Being a diagnostic business development enthusiast I am pretty much surprised &excited to be finding myself writing about the Diagnostic Industry Scenario at this point of time. But its 2021 and anything can happen, so I guess it makes sense..😀

OVERVIEW 

The Indian Healthcare is garnering global attention. Be it the evolution of pharmaceutical firms, Diagnostic firms, Small chain or Low cost hospitals or disruptive start ups.

The sector is a laboratory of myriad market forces impacting innovation , choices & societal welfare. At the same time India continues to battle with an inadequate healthcare infrastructure & a rising disease burden.

BUSINESS OF DIAGNOSTICS & OPPORTUNITY FOR INDIAN START UPS..

If I say that the Pathology or Diagnostic industry is very big, large, fragmented & ready for transformation also then I am not wrong at all.

I became interested in this space around 5 years back when i have joined this fascinating industry of Diagnostics. After joining i have found, from the outside the whole business of diagnostics seemed ripe for disruption; So i wanted to learn & understand more about this.

In that process, i learned quite a lot about an exciting corner of our medical landscape.

So in order to understand the diagnostic business & the way new technological companies & start ups are trying to change this Billion Dollar Industry in India then they should be aware of below mentioned points.

a) Requirements & Economics of running Pathology labs.;

b) The Pathology Lab market landscape;

c) Market Trends;

d) New startups & products making waves in the market.

As we all know that in modern parlance, Pathology refers to the business of studying an individual health through careful examination of their body tissues, blood etc. Besides PATHOLOGY, the other main branch is RADIOLOGY that refers to the study medical images such X-RAYS, SCANS etc.

PATHOLOGY LAB. WORK UP :-

Collection of sample by Phlebotomist at Collection Centre. Then it goes to PROCESSING CENTRE (place where sample goes into the instrument for analysis). 

At this point, the sample is handled by PATHOLOGIST/TECHNICIAN.

The INSTRUMENTS are made by International Companies like ROCHE, SEIMENS, BD etc.

The job of the instruments is to use the REAGENTS to examine the sample for signs of a particular biomarker. For ex. in CBC test , the machine will count the number of different cellular bodies like RBC, WBC etc.

Most commonly these machines use the REAGENTS to dye the TARGET BIOMARKER & then utilize laser light reflections to quantify the presence of that biomarker.

after the machine is done with its job, it spits the results of the test into a computer.

At this point the PATHOLOGIST double checks the results & releases the REPORT in proper format.

This is the LIFECYCLE of a Medical SAMPLE....

THINGS I LEARNED that SURPRISED me the most are :-

1. Industry is super COMMODITIZED :- I found out that virtually no technological difference between labs, they all rely on pretty much the same machines to do the analysis; hence the results are exactly the same.

2. Industry is extremely FRAGMENTED :-

About 50% of this industry revenue come from "STAND ALONE LABS. " & Small Scale Operators.

Another 30%-35% from Large Organized Lab Chains like ( SRL, LAL, METROPOLIS etc.)

Another 15%-20% from Hospital labs.

In terms of number of Labs, the UNORGANIZED SECTOR makes up more than 90% of the approximate 1 lakh labs operational in India.

3. Negligible REGULATION :- 

Now this very SHOCKING. Only 1% of Labs are Accredited... 

4. Instruments are LEASED.

5. Most of the test are SICKNESS TEST.

6. Less services for HOME COLLECTION.

ORGANIZED & UNORGANIZED PLAYERS :-

On the Unorganized side, many of the entrepreneurs running pathology labs are people who have some medical background who understood the economics of the diagnostic business to serve the local demands.

And On the Organized side there are few major players like SRL, LAL PATH, METROPOLIS etc running the diagnostic business and bringing the latest technology for the benefit of the customers specially in SPECIALIZED side for ex. (Oncology, Cardiology etc)..

MY UNDERSTANDING of KEY STRATEGY of DIAGNOSTIC BUSINESS:-

As we all know that there is only and only ONE THING is that …..

 "The NAME of the GAME in diagnostics is VOLUMES" !!!!!!!!!!!!!!

If you have higher volumes, the cost per test comes down dramatically. This is because your main cost are Rent (for C.C, PSCs), manpower & other overheads. While the Reagents costs up to 40% of the test cost & other elements make up the majority of unit cost.

All in all if you have higher volume then your ROI is also higher,

These days most of the companies are operating on the FRANCHISE MODEL because this frees them up from the operational headache.

Franchise usually takes up 30%-35% margin from parent Lab and takes care of the Marketing services.

In addition to franchising another powerful growth driver engine is Merger & Acquisition, the funds that typically comes from Private equity firms. This makes completely sense- given the fragmented market landscape.

There is lot of scope for all players to scale up the business & enjoy economies.

I firmly believe in the fact that there are lots of gaps in terms of services focusing on the customers needs and wants. We need to understand that still we are far behind in terms of providing the top quality medical service to the customer in an economical way and it is only possible if the the high end test value comes down and too happen when the sample load gets increase.

Lets keep doing the good work in providing the best ever solution possible to the customers to meet their unmet needs and impacting the lives positively !!!!!

By:- Shivam Khare

A Diagnostic Business Development Enthusiast.