Diagnostics industry – Prediction and way forward

Post Covid, the IVD industry has been shifting gears and accelerating toward creating a patient-centric eco-system. Due to Covid-19 spread, the industry has gradually realized the true potential of labs.

Diagnostic industry is approximately ₹675 billion; 37 percent labs are hospital based; 47 percent labs are standalone labs; and only 16 percent are diagnostic chains that drive the organized market, and out of this 16 percent only 6 percent are pan-India players. These statistics tell everything and the kind of work that needs to be done in the industry.

Moreover, the Covid-19 pandemic and the market downturn conditions have led to a surge in consolidation, mergers and acquisitions (M&A), like the telecom industry and the airlines industry.

2021 saw limited primary capital infusion by private equity investors in pharma and healthcare services sectors. The maximum primary capital was brought in the health tech space by VCs. Some of the CapEx done in the hospital space 5–7 years back has now matured and there will be a need for fresh capital, which would mainly be driven by PE/IPO capital this year.

3 large M&As (Pharmeasy/Thyrocare, Dr Lal’s/Suburban and Metropolis – Dr Ganeshan’s Hi-Tech) and select fund raising (Tata cap/Atulaya Healthcare, Morgan Stanley/Sterling Accuris, Accel invested in Orange Diagnostics) witnessed max action after a long time. While there will be select consolidation opportunities this year, there will be more fund raising as select PEs will continue to back regional players.

The competitiveness in the sector has increased significantly, with several hospital chains focusing on diagnostics (viz., Sahyadri Hospital, Manipal, Max, Medicover) along with several deep-pocket corporate houses investing heavily in Diagnostics PathKind (Mankind), Unipath (Intas), Lupin Diagnostic, Rivaara Lab Bharat Serums Promoters, etc.

The new-age healthtech platforms have not been able to significantly dent the market. M&A of pathology testing companies in India is likely to become a dominant trend in the coming year. We as the fastest-growing laboratory chain in Maharashtra will look for such opportunities in the year 2022-23.

SSL (Sahyadri Speciality Labs) is aiming to be the largest pathology laboratory chain in Maharashtra. With a dedicated central reference laboratory and numerous full-fledged centers, it offers more than 1000 different kinds of tests, using most advanced state-of-the-art technology, supported by highly skilled professionals. SSL offers test menu across all subspecialties like genetics, molecular, histopathology, cytopathology, immunohistochemistry, autoimmune disorders, microbiology, and other routine tests. In FY 22 we have expanded our network in Pune by opening 55 touch points. The idea is to become the largest network chain in the city by 23. FY Having spread thick in the city, we will target markets like Nashik, Karad, Kolhapur, Aurangabad, and Ahmednagar in the coming years.

SSL provides 24×7 services and SAHI preventive health check-up packages with competitive rates. We are an ICMR-approved lab for SARS COV2/COVID testing RTPCR, CBNAAT, and antigen test (ICMR No. SAHSL001).

SSL is also focusing on adding newer technology and tests in the menu in coming FY 23 so that we provide better and faster TAT. FY 23 for us and for the entire Industry will be very crucial as growth over last two years, when Covid was very much dominated, will be tough. Organic growth will not be more than 5 to 6 percent; hence, keeping right strategy in place will be crucial for all. We are very positive and have a strategy in place and hence moving as per plan.