Impact of COVID-19 on Indian diagnostic laboratories market

Laboratories in India are constantly accelerating the production and supply of diagnostic tests to keep pace with the increasing need for COVID containment.

Government initiatives and regional insights. Initially, only the government labs were allowed to test within India. However due to high demand, the government gave permission to accredited private labs, to also test for COVID-19. As the pandemic grew, regional governments created high awareness among people about the spread, diagnosis, and effective management of coronavirus infection. This ultimately accelerated the diagnostic product approvals and testing process across the Asian countries.

Private laboratories increased their focus on home collection services and witnessed a significant growth in home collection for routine samples across all regions. Anywhere anytime services (home collection service) to offer free round-the-clock lab services at the doorstep including ECG services were started by certain laboratories. Mobile testing vans and drive-through sites/centers for conducting routine pathological tests and COVID tests also led to huge surge in demand for testing. A few large players acquired smaller, unorganized players during this time, as they saw this as an opportunity to expand their operations and reach customers by acquiring existing business, post an evaluation of their customer catchment area, technology and quality controls.

Demands from corporate sectors. Major players also witnessed an increase in demand from corporate sector requesting them to test their employees so that they can resume work. Airlines and air travelers also added to the rush.

Current situation. At present, months after pandemic started; major players in diagnostic industry have seen a sharp up-tick in their revenue, benefiting from increased demand for COVID-19 testing. The non-COVID services have achieved normalcy, while COVID-19 testing possibly contributed 40 percent or so incremental revenue. Anticipating more workloads in quarters to come, more COVID testing facilities are being created all over India, to meet demand that may arise due to prolonged pandemic. With non COVID tests coming back to track, laboratories anticipate a need for more capacity and facilities.

Challenges. The laboratories had to face many blocks in the business by many government authorities and municipal commissioners over the complaints of false positives and false negatives test results. This was due to inadequate understanding of characteristics of virus.

Expectations from the government. Laboratories need to sustain operations at full scale to support testing for COVID-19, which is increasing on a daily basis. The government should release timely payments (usually within a week) as per the agreements signed with private laboratories. Rationalization of goods and services tax (GST) for healthcare services is also expected.

Diagnostic’s future-post COVID pandemic. Post-COVID pandemic, testing for wellbeing would increase as people will now be making a conscious effort to stay fit, however testing for sick care would still dominate the market. It is expected that preventive care/wellbeing testing segment will now grow at a CAGR of approximately 20 percent over the next three financial years. Higher literacy levels and increasing awareness about the diseases are expected to boost the demand for diagnostic services. Health tracking mobile applications, government initiatives, public interests, and online services such as booking appointments online for preventive healthcare checkups, obtaining reports online will further augment growth in this industry in future.