India’s Diagnostic Industry Expected To Grow At 14%, To Touch $20 Bn By FY26: Report

Gurugram : The Indian medical diagnostic industry is expected to grow at around 14 per cent touching $20 billion by 2026 from $10 billion in 2021, estimated a report released by Praxis Global Alliance, a global management consulting and advisory services firm, on Tuesday.

The report highlighted that non-traditional competitors are entering the market due to attractive margins. “Players from adjacent service areas of the healthcare ecosystem have entered the diagnostics market and become more competitive. Examples include pharmaceutical companies (e.g., Lupin), Hospitals (e.g., Max, Aster DM, Sterling), Diagnostic service aggregators, and telehealth providers,” said the report.

The report said that the Indian medical diagnostic industry has emerged as a preferred play in India’s growing healthcare sector, driven by attractive margins and good headroom for growth.  The report also caught some trends such as newer tests addressing critical and precise clinical needs. The industry is seeing growth in specialised tests which comprises 15-22 per cent by volumes and 40-45 per cent by value, the report said, adding that molecular is pathology poised to grow at 35-40 per cent year-on-year.

The diagnostic industry is characterised by a high degree of fragmentation with over 100,000 labs. This fragmentation challenges the capability, scalability, and quality of labs. On the other hand, it also provides an opportunity to consolidate newer business models to evolve.

The report highlighted the phenomenal rise in the use of technology, and has become an integral part of the sector’s efforts to improve customer experience, and to support clinical decisions. It has also become a backbone of the business.

“With attractive economics in the industry, the diagnostics market, which is still largely under-penetrated, is expected to consolidate further. Growth in Tier 2+ cities is likely to be driven by asset-light expansion, the use of remote diagnostics tools, and AI for image processing,” explained Nirnay Kumar, Manager, Healthcare, Praxis Global Alliance.

The report also noted that there has been a change in patient expectations from diagnostic players such as pricing, convenience, and reliability are the top three driving factors while selecting a diagnostic service provider.

The report noted that there are newer patient-centric business models working around industry challenges. New business models around tele-radiology and tele-pathology are being explored to improve access, quality, and efficiency of diagnostics. The newer players include computational pathology solution providers and tele-radiology service providers. The report further said that logistics is becoming critical in the pursuit of serving customers at their convenience.

“The pandemic brought in a paradigm shift in the diagnostic market regarding its scope and capacity while emphasizing the need for diagnostics and treatment. There was an increased consumer acceptance of point of care (PoCT) and home collection where several diagnostics chain players improved their online presence and invested in technology and automation,” Aryaman Tandon, Managing Partner and Practice Leader, Healthcare, Praxis Global Alliance, said.

“The government is taking several initiatives to strengthen the public health infrastructure and make diagnostics more accessible and affordable. We also see new business models emerge as the competitive intensity increases,” Tandon added.

“As the diagnostic market grows further, there is a need for the players to build a robust omnichannel strategy. They will need to add more capabilities and provide more value-added services. With increasing competition and tests becoming more commoditised, there is also a need for super-efficient operations using digitalisation tools such as AI for process efficiencies, thus, keeping the bottom line healthy,” said Sumit Goel, Managing Partner, Healthcare, Praxis Global Alliance.

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