As major conglomerates are gradually penetrating the diagnostics market, dominant players such as Dr Lal Pathlabs and Metropolis Healthcare are charting out plans to retain their leadership position in the game.
The diagnostics majors are looking at inorganic growth for their network expansion which is further heightening the competition. For instance, Dr Lal PathLabs acquired Suburban Diagnostics in 2021 for Rs 925 crore in West India. It is also planning expansion in South India with a reference laboratory in Bangalore which is a major market for Metropolis Healthcare.
In the same year, Metropolis Healthcare acquired Dr Ganesan's Hitech Diagnostic Centre (Hitech) and its subsidiary Centralab Healthcare Services (Centralab) for Rs 636 crore. SRL completed the DDRC- SRL JV acquisition in April 2021 enabling it to consolidate its market share in Kerala and strengthens its B2C presence.
Hyderabad-based Vijaya Diagnostics has also indicated that it has plans to expand in Andhra Pradesh and Telangana, and it is interested in acquiring lucrative diagnostic firms in Eastern India for exploring business opportunities in the region.
Diagnostics companies are focusing on new segments and trying to enter new geographies which have become all the more important after the pandemic. Dr Lal PathLabs is focusing on tier II and Tier III towns especially in North and Eastern Parts of India and Metros and Tier I towns in Sothern and Western parts of India. As covid testing is no more a profitable area, Dr Lal PathLabs aims to invest in IT and Digital and focus on wellness packages. The noted diagnostic chain is also focusing on bundled and preventive health checkup packages. “We are identifying and focusing clinical segments like allergy, auto-immune disorders etc. We also now want to strengthen the online retail segment. As far as our expansion plans are concerned, we want to look at South and Western Markets,” says Dr Om Manchanda, Managing Director, Dr Lal Pathlabs. “India is a highly underpenetrated market. Post-Covid, the diagnostics penetration will grow as the practice of medicine becomes more evidence-based, especially in tier II and tier III towns,” he says. Similarly, for SRL Diagnostics, another major diagnostic player, test menu expansion to offer more diagnostic solutions, network expansion to acquire market share and new customers, and consistently delivering high-quality diagnostic services remain the growth drivers. Strategizing its growth, in FY22, SRL added more than 1000 centres to its network and in Q1 FY23, it added about 250 more. “These new touchpoints are part of our strategic growth plan. We are investing in our capabilities to offer services through digital touchpoints as well as reinforcing our home collection units to fulfill changing customer behaviour post-pandemic,” says Anand K. CEO, SRL Diagnostics.
According to market analysts, the Indian Diagnostics industry is estimated at Rs 675 billion with the industry growing at an annual rate of 8-9%. National players hold about 15% of the market share and therefore there is ample opportunity for growth. Recent acquisitions by large laboratory chains and the entry of new players will see the industry consolidate at a faster rate. Metropolis Healthcare Ltd has also made it clear that it aims to nurture and expand the scope for Oncology, Pre-natal testing, transplant Immunology, and Infectious and Chronic diseases through next-generation sequencing and artificial intelligence. “To realize this goal and to catalyse optimal patient management, we have established Innovation Cell for Molecular Genomics, Super Specialty Pathology, and Companion Diagnostics Expansion. We will continue to build our capabilities in different areas and will look out for more opportunities to offer ‘affordable’ testing to patients as we penetrate further into tier 2- and tier 3 cities,” says Ameera Shah, Promoter & Managing Director, Metropolis Healthcare Ltd. Shah is mindful that in the past 2-3 years due to the Covid-19 pandemic, the industry has gone through several structural changes and consumer behaviour towards health has changed to a larger extent. Shah has noted that new players have forayed into diagnostics and are majorly focusing on the larger pie of the ‘Chronic and Wellness’ segment. “People have become more health conscious and have proactively started investing in health packages and want to keep a check on their health. Therefore, our goal will now be to focus on 100% of the population which includes chronic and wellness patients. We aim to target them through wellness packages at good price points, loyalty programmes etc,” says Shah.