As I complete my eighteen years in the diagnostics industry and look back on the journey, I feel satisfied with the decision that I made and the path that the Indian economy and our industry have taken. The early years of the millennium saw India reap the benefits of the liberalization of the economy that was announced a decade earlier. The economic growth registered during the first decade of the new millennium was over 6.6 percent per annum. It was during this period that the services sector became the backbone of the economy with robust contributions from enhanced investments in banking and financial services, insurance, telecommunications, IT, tourism, retail, healthcare, education, and several professional services. In 2005, the Indian economy crossed the USD 1 trillion mark, and by 2021, it had tripled itself to become the fifth largest economy.
Diagnostics – An emerging driver of healthcare as evidence-based care takes center stage
As an important sector of the economy, healthcare has been growing at a CAGR of 22 percent since 2016, directly employing 4.7 million people, and has the potential to generate over 500,000 new jobs per year. India’s public expenditure on healthcare touched 2.1 percent of GDP in FY23 and 2.2 percent in FY22, against 1.6 percent in FY21. In the Union Budget 2023-24, the government allocated ₹89,155 crore (USD 10.76 billion) to the Ministry of Health and Family Welfare (MoHFW). These facts clearly indicate that healthcare sector will continue to be an important contributor to GDP.
The diagnostics industry plays a pivotal role in preventing diseases, by providing vital tools and services for early detection, accurate diagnosis, and monitoring of several health conditions. According to the US Centres for Disease Control and Prevention (CDC), 70 percent of medical decisions depend on laboratory test results, which shows the important role clinical laboratories play in healthcare diagnosis. Evidence-based diagnostics and personalized medicine are becoming the cornerstone of treatment.
The diagnostics industry in India is poised for a CAGR of 8–10 percent (2023–2028), and is expected to reach a market size of ₹1150–1250 billion (approximately USD 13–15 billion). The factors that will continue to contribute are rising literacy rates and disposable income, increased awareness and demand for quality diagnostics, increase in lifestyle-related diseases, and an ageing population, which will create a greater need for accurate and timely diagnostics to identify and manage these health issues effectively.
Expansion of diagnostics – Transforming into a consumer-facing industry
The diagnostics industry was quick to understand the significance of direct-to-consumer pitch as a force multiplier. The prescriptions of the doctors continue to drive the market; yet there is a perceptible change in the demand-pattern of our industry. The post-Covid consumer is moving toward preventive testing and health check-ups and needs an omni-channel presence for booking tests, getting timely and accurate reports across channels, and a shorter turnaround time.
Dr Lal Pathlabs was the first organized laboratory service in the industry to appreciate this change, much before the advent of Covid, and were willing and responsive to lead the transformation of the business model by challenging some existing paradigms. The need was to make our industry more consumer facing and the first step was to change our hiring habits and practices. We successfully experimented by hiring non-industry managers and administrators for senior leadership positions. We have since continued to hire high-potential employees who have no prior experience of the diagnostic industry. Our employees from outside of the industry continue to excel in their new roles. This has encouraged us to experiment with more services and offerings, and we continue to make investments in infrastructure including logistics, technology, skill development, and expansion.
The critical step was to bring sample collection to the consumer’s home and almost do away with the mandatory need for visiting our laboratories and collection centers. We trained our phlebotomists in both technical and safety protocols and soft skills to ensure high-quality sampling and an enhanced customer experience. Our investments in infrastructure and skill development helped us expand our services portfolio. Today our network extends to over 10,000 hospitals and clinic partners, our test menu has over 5000 tests, and we have over 4500 patient service centers.
This expansion of services, clinical partners, and our test menu dovetail into the walk-in demand, and our preventive healthcare package contributes to nearly a quarter of our total revenue.
The next decade – Expansion of menu and superior reliability of test results
India is undergoing a rapid demographic change; increasing life expectancy at birth, epidemiological transition, burgeoning middle class, and double-income nuclear families. These factors are fuelling growth in demand for diagnostics. Health will continue to be more central to daily conversations as changing lifestyle and its associated pressures are not only seeing an increase in lifestyle diseases but also an increase in preventive diagnostics. The need will be to provide prompt diagnostics so that early interventions can start.
As an extended arm of medicine, the industry will continuously evolve and keep pace with the latest developments in the field of laboratory diagnostics. Companies will deploy and continue to invest in the best digital infrastructure and highly skilled manpower and high-end and robust logistics. Preventive testing and high-end diagnostics like detection of some forms of cancer, genomics, molecular pathology, reproductive medicine, and rare or inherited diseases will fuel demand. We will see a greater use of newer technologies that reduce the total diagnostic time substantially and have integration of powerful AI and ML tools that help in better and early diagnosis.
The advent of newer cutting-edge technology and very short time gap between them being available in advanced countries and in India is ensuring the supply of such high-end diagnostics to Indians too. I expect greater penetration of point-of-care diagnostics and a proliferation of home-use devices and wearables as the first diagnostic tool for an individual or a family.
The challenge for the industry will be to build uniformity between the results of different laboratories as it enables physicians to interpret the test results with more conviction. Standardization of laboratory procedures and reference ranges is crucial for ensuring consistent and comparable results across different laboratories. More labs will have to become NABL certified.
Our hub-and-spoke model of laboratories, collection centers and pick-up points spread across India will be the backbone of our operations. Strict protocols for sample collection, transport, and storage will evolve. This helps our laboratory experts in analyzing the sample, running the required tests, and generating credible and trustworthy reports. We are constantly seeking international partners to provide high-end, hard-core technology and use very advanced computing.
Firewalls that enable the labs to monitor and filter network traffic through strict authentication and authorization controls across all stages of information flow will become the norm. Implementation of large-scale encryption as an additional safety measure protects data and makes it unreadable for unauthorized personnel.
Health is now occupying central space in daily discussions. The diagnostic industry is continuously evolving its products and adding offerings that reflect this change in current and future demand. We see an increase in preventive diagnostics across pathology, radiology, and cardiology testing. Packages are tailor-made for end-to-end preventive testing requirements across various conditions. The industry will develop specialized and super-specialized test menus: from high-end molecular diagnostics, cytogenetics, transplant immunology, transmission electron microscopy, and much more. The newer technologies have a large-scale integration and use advanced computing high-resolution imaging, artificial intelligence (AI), and machine learning tools. AI-enhanced workflows will improve the quality and efficiency of cancer diagnosis, resulting in better patient care by harnessing AI and machine learning technologies at an unprecedented scale.