How to make wealthy returns in diagnostics sector

Increase in disposable income, growing literacy and heightened awareness among people about health and medical issues has resulted in higher per capita expenditures on healthcare. Lifestyle diseases and alarming growth in ailments like diabetes, asthma and hypertension are already emerging as the key drivers for greater acceptability of preventive health check-ups and also more frequent tests for disease management. Increasing corporatisation of the healthcare business, thrust on quality standards and the ambitious growth objectives of leading brands in diagnostics sector are boosting up the consolidation phase in the industry at an aggressive pace.According to KPMG Report, diagnostics sector is projected to contribute US$ 3.5 billion by 2015.

Dr Lal PathLabs, established in 1949 is one of the largest diagnostic services providers in the country. It offers a wide test menu and has a pan India presence in all important cities and towns in the form of state-of-the-art laboratories and collection centers. Today, it is an INR 5.3 billion company.

Apollo Clinic is a comprehensive model under Apollo Health & Lifestyle Ltd (AHLL) offering diagnostics services including pathology and imaging; laboratory services – Biochemistry, Haemato, Microbiology; X-Ray and ultrasound; pulmonary function tests; Echocardiography; Electrocardiogram; Endoscopy and Opthalmology. “We serve over two lakh patients in India each year through a preventive health check. Apollo Hospitals pioneered this concept 30 years ago,” says Neeraj Garg, Chief Executive Officer, AHLL.

Metropolis pathology labs process over 15 million tests annually. Equipped with cutting edge technology, innovative work equipment, expansive logistics network and rigorous processes, it aims to deliver precision and accuracy in all the tests conducted. The brand has an experience of over 33 years and provides over 4,500 tests under one roof.

SRL Diagnostics is a leading and reputed pathology lab network. It is a trusted name in the field of pathology services providing quality diagnostic, prognostic and monitoring services to other path labs, hospitals and patients. Through its network of laboratories, SRL offers an all-inclusive collection of diagnostic facilities including an extensive range of specialties in pathology services.

Thyrocare Technologies Limited is a highly advanced and totally automated laboratory having its strong presence in India and international market. The Central Processing Laboratory of Thyrocare is situated in Navi Mumbai, is a state-of-art, fully automated diagnostic laboratory equipped with advanced instrumentation from leading international brands.

Serving the society via franchising

The diagnostic lab business is traditionally considered a high margin, asset-intensive business. Thus in an effort to match the increasing demand, large players have endeavoured to increase pan-India presence by following franchise route. Dr Om Manchanda, Chief Executive Officer, Dr Lal PathLabs says, “Franchising has helped us in scaling up across the country. We will continue to improve business models and reach wide spread geography.” Explaining their motive of opting for franchise model, Garg of AHLL says, “Apollo Clinic started franchising in 2002. We have adopted franchising as a business model primarily with the objective to encourage professionals from medical and non-medical background to be able to establish high quality primary healthcare facilities.” Experiencing the desire for acquiring business professionals, Ameera Shah, Chief Executive Officer and Managing Director, Metropolis Healthcare Ltd says, “We are seeking entrepreneurs capable of successfully replicating our business model. We provide complete training to our franchisees.”

Training for perfection

AHLL assists the franchisees in space planning, layout and design of the clinic. It even assists them in screening and recruitment of medical and paramedical staff, human resource management, purchase of medical equipments and software installation in development phase. It shares standard operating procedures (SOPs) for clinical and non clinical processes. Whereas, Metropolis franchisees are offered complete set up support with equipment, operations and manual training apart from sales assistance and advertising and promotions support.

Targeted expansion

Dr Lal PathLabs has a pan-India presence in all important cities and towns, having over 2,000 collection centres and more than 5,000 pick-up points. It is looking forward to add 2,500 franchisees by the end of 2014. Apollo Clinic is looking forward to set up 175 clinics in the next three years across India, Africa and the Middle East. Presently it has around 100 outlets spread all over India. Among them 50 are franchisee run. Metropolis has over 700 collection centres in Maharashtra and plans to expand further in Mumbai and Ahmedabad.

The way forward

No doubt the diagnostics market in India is fragmented. But due to diversity of diagnostic services being carefully addressed and the adoption of innovative business models by brands for deeper penetration and covering a greater geography across the country in a shorter span of time has indeed opened up immense opportunities for the investors.

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