Growth of the Indian Diagnostic Market

The billion dollar industry of global healthcare is experiencing a huge expansion across almost all of its segments. The exponential growth of the sector and its sub-segments have been stirred by various factors and government initiatives over time, given the right resources.

Amid all the impressive progress, several segments of the industry are emerging as a prominent game changer. At present, the Indian healthcare sector is becoming the leading destination for high-end diagnostic services and medical tourism in catering to the needs of the greater population. The stakeholders are laboratory market players, laboratory equipments, companies involved in research and development and the new entrants and venture capitalists who wish to invest in diagnostic markets in future.

Today’s increasing technological advancements and growing need for preventive treatments have facilitated the demand for advanced diagnostics and pathology. As a result, the Indian diagnostic market today is probably getting off the ground to ensure consistent and quality healthcare services to its consumers and attracting new investors.

The Rise of the Diagnostic Industry

The current spike in the pace of development of the Indian healthcare industry can be attributed to increased public expenditure, health awareness, strengthened coverage, and demand for improved quality of services. Moreover, the rising threat of lifestyle diseases is demanding a diagnostic approach in healthcare rather than generic treatment of patients with reactive therapy. This increasing demand for diagnosis of diseases to make treatment decisions has led to the emergence of the diagnostic segment.

The diagnostic market comprises of laboratories and businesses offering analytical or diagnostic services, such as body fluid analysis, imaging, pathology labs, etc. The current diagnostic market is dominated by pathology services (comprising of molecular, clinical microbiology, histopathology, hematology, surgical pathology clinical biochemistry etc), accounting for approximately 70 percent of the market, while the imaging services (comprising of x-ray, sonography , MRI, CT scan, mammography, PET/ SPECT etc) account to remaining 30 percent. However, the pathological centers and diagnostic laboratories, rising across the country, consist of both organized and unorganized players, rigorously expanding everywhere. With the entry of organized brands and franchises, the industry is focused towards providing high-end diagnostic facilities to far and wide.

However, there are a lot of barriers and challenges to the rise of diagnostic industry. Today, the fragmented diagnostics market is filled with increasing number of standalone players because of lack of proper governmental regulations. Despite all the challenges, the diagnostic industry is steadily moving towards growth with an estimated rate of 20.4% in the next five years. As of now, the strong market growth of the diagnostic segment has expanded its reach far and wide across the population of the country.

Growth Drivers

The immense growth of the Indian diagnostic market is driven by so many economic, social, and political factors. The increasing consumer’s health awareness, rising income, raised health insurance coverage, the burden of chronic lifestyle diseases, and the demand for quality healthcare services has swelled the diagnostic market in the recent years into a billion dollar industry.

Penetration of Health insurance:

Apart from the government allocation of funds for health insurance, there is a rise in private medical insurance schemes. Rising pattern of medical insurance in India has been one of the major drivers for India Diagnostic laboratories as for financial constraints as the financial constraints being faced by the people are taken care of, as claimed by 55% of rural and 60% of urban population. When the insurance companies offer health coverage to cater the increasing healthcare cost and burden at nominal amounts, consumers are inclined to seek for best services. As of 2015, the total healthcare spending through health insurance has raised to 8.4 %, even though only less than 20 % of the Indian population has been covered with health insurance benefits.

High-class Technology:

The evolving technology and healthcare IT has benefited the pathology industry with its technology-driven innovations such as health tracking applications, e-health, and online services. Use of modern technology in pathology testing and diagnosis as well as for obtaining of reports online is shaping the diagnostic market into the path of growth. Moreover, the high-class services combined with high differential costs of the Indian market has allowed the segment to exert a dominant position in the global market with various international hospital chains outsourcing their pathology and laboratory tests to India.

Health Awareness:

The rise of non-communicable diseases due to modern lifestyle and urban settings has increased the demand for specialized healthcare. Moreover, the increased chances for severe lifestyle diseases across the masses have resulted in the need for efficient and timely diagnostic services. This purported rise of non-communicable diseases has created mass awareness, increasing demand for preventive healthcare and the need for early detection of health problems. All of these have contributed greatly to the overall revenue of the diagnostic market making it a dominant player in the healthcare industry.

The reliability and versatility of Indian diagnostic segment today has transformed the traditional healthcare infrastructure of reactive medical care into an integrated comprehensive service with evidence-based medical care. However, there exists a poor involvement of government regulations and accreditations in standardizing the practices and protocols of the sector. While the growth of Indian diagnostic market is gleaming with cutthroat competition and promising opportunities, it is high time governing laws and standardization are introduced to ensure consistent, high-class quality of services.

Needless to say, the Indian diagnostic market is playing a significant role in shaping the growth of the entire healthcare industry of India. In the present scenario, the rising healthcare spending, awareness about lifestyle diseases and preventive treatments have contributed a lot to the spurring demand for the advanced diagnostics services in the country.

Moreover, today’s diagnostic market is expecting heavy investments and integration of technology from industry’s big players to aggregate the fragmented diagnostic sector. With technological advancements and tremendous capital investment, no doubt, the Indian diagnostic market will gain momentum to tap the future demand.

The perspective investors looking for a better share in diagnostic market should invest in Tier II and Tier III cities in India. They can expand their network by having tie ups with health institutions. There is also a need for expanding collection centres network for wide spread and ease of access to the masses. The investors also need to look into affordable price for the diagnostics.

Author:
Dr. Sanjiv Kumar, 
Director,
IIHMR Delhi