IVD gaining prominence

The Indian healthcare market is mainly categorized into healthcare delivery market (hospitals), pharmaceuticals industry, diagnostic sector, and healthcare insurance industry. Diagnostic services are a major sub-vertical of the Indian healthcare market. Diagnostics operate at only 4–5 percent of the total healthcare expenditure, but it influences the remaining 95 percent of the cost in a big way. Globally around 80 percent of the medical decisions regarding disease diagnosis, patient prognosis, and selection of treatment are based on laboratory diagnostic reports. These lab reports also help in monitoring the condition during the recovery phase of the patient.

The domestic diagnostic industry is estimated at USD 9.5 billion, and it is anticipated to increase at ~11 percent CAGR over the next five years. The industry is highly fragmented and under-penetrated despite the presence of over 1 lac labs. There are multiple delivery formats like hospital labs, standalone labs, national chains, and regional chains. Most of the market is dominated by the fragmented standalone centers, with the largest organized player having a market share of less than 5 percent. The industry can be divided into three categories with hospitals holding 37 percent of the share, standalone centers comprising 47 percent, and the organized diagnostic chains holding 16 percent of the market.

Also, more than 65 percent of the business comes from urban areas. So there is a huge opportunity for national players to grow organically and inorganically in highly penetrated areas like cities as well as rural areas, where penetration is low.

The perception of the diagnostic industry has been drastically altered during the pandemic. While always having remained on the sidelines, the industry came upon to be front and center of the Covid-19 emergency response. Heighted awareness of the industry along with other key growth drivers will propel the industry forward.

Lately, the organized players are focusing on individuals with sedentary lifestyles – individuals who are more susceptible to significant lifestyle diseases, such as diabetes and cardiovascular ailments. In the past, the diagnostic players had focused on illness diagnostics, which is slowly moving toward focus on preventive care. India’s diagnostics industry is highly fragmented and with the spread of Pan-India diagnostic chains, the sector has witnessed, and will continue to see, more consolidation through mergers and acquisitions. It will increase the market share of organized diagnostic chains.

Major diagnostic companies are also focusing on brand building through online marketing campaigns to differentiate their service offerings, quality, and test accuracy. This campaigning includes healthcare camps, advertising campaigns, apart from preventive and wellness test packages.

Online sellers offer a robust platform for customers to choose diagnostic packages according to their requirements. The adoption of digital methods by patients to compare services from different diagnostic players, online booking of tests, and digital reporting of those tests have also increased significantly after the Covid-19 waves. Such new avenues are bridging the gap between diagnostic testing services and customers, empowering the latter to select from several available options in no time.

The diagnostics industry plays an underappreciated, yet critical role, in the care continuum. The growing significance of evidence-based care has provided an impetus to the industry. In addition to offering diagnoses, the industry also offers other additional benefits, including employment generation, making available specialized tests and improving access to masses through technological advancements.

Consumer expectations have changed when it comes to diagnostics. Due to the pandemic, a bulk of the urban population and those residing in smaller cities and towns are now aware of accreditations and the need for reliable diagnostic reports. Consumers now also demand the convenience of testing from their homes.

By applying lessons from Covid-19 and understanding the changing customer requirements, we believe that the future of diagnostics and healthcare will be built on the following pillars – home-centered care and testing, data, auto­mation, advanced testing technologies, and efficiencies in supply chain. A sound understanding of these pillars will enable us to discover future business opportunities.

Healthcare delivery is expected to shift from “illness to wellness,” from doctor-first to diagnosis-first and from “healthcare facilities to homes of patients.” Personalized, affordable, always-on, always-connected, predictive and convenience-based diagnostics is the diagnostics of the future. We saw a glimpse of this during the pandemic and there may not be a time very far when this will become the mainstay.