Hyderabad based Vijaya Diagnostics, Dr Lal Pathlabs, SRL are trying to hold fort: Diagnostics is the new battleground

As major conglomerates are gradually penetrating the diagnostics market, dominant players such as Dr Lal Pathlabs and Metropolis Healthcare are charting out plans to retain their leadership position in the game.

The diagnostics majors are looking at inorganic growth for their network expansion which is further heightening the competition. For instance, Dr Lal PathLabs acquired Suburban Diagnostics in 2021 for Rs 925 crore in West India. It is also planning expansion in South India with a reference laboratory in Bangalore which is a major market for Metropolis Healthcare.

In the same year, Metropolis Healthcare acquired Dr Ganesan's Hitech Diagnostic Centre (Hitech) and its subsidiary Centralab Healthcare Services (Centralab) for Rs 636 crore. SRL completed the DDRC- SRL JV acquisition in April 2021 enabling it to consolidate its market share in Kerala and strengthens its B2C presence.

Hyderabad-based Vijaya Diagnostics has also indicated that it has plans to expand in Andhra Pradesh and Telangana, and it is interested in acquiring lucrative diagnostic firms in Eastern India for exploring business opportunities in the region.

Diagnostics companies are focusing on new segments and trying to enter new geographies which have become all the more important after the pandemic. Dr Lal PathLabs is focusing on tier II and Tier III towns especially in North and Eastern Parts of India and Metros and Tier I towns in Sothern and Western parts of India. As covid testing is no more a profitable area, Dr Lal PathLabs aims to invest in IT and Digital and focus on wellness packages. The noted diagnostic chain is also focusing on bundled and preventive health checkup packages.

"We are identifying and focusing clinical segments like allergy, auto-immune disorders etc. We also now want to strengthen the online retail segment. As far as our expansion plans are concerned, we want to look at South and Western Markets," says Dr Om Manchanda, Managing Director, Dr Lal Pathlabs. "India is a highly underpenetrated market. Post-Covid, the diagnostics penetration will grow as the practice of medicine becomes more evidence-based, especially in tier II and tier III towns," he says.

Similarly, for SRL Diagnostics, another major diagnostic player, test menu expansion to offer more diagnostic solutions, network expansion to acquire market share and new customers, and consistently delivering high-quality diagnostic services remain the growth drivers. Strategizing its growth, in FY22, SRL added more than 1000 centres to its network and in Q1 FY23, it added about 250 more.

According to market analysts, the Indian Diagnostics industry is estimated at Rs 675 billion with the industry growing at an annual rate of 8-9%. National players hold about 15% of the market share and therefore there is ample opportunity for growth. Recent acquisitions by large laboratory chains and the entry of new players will see the industry consolidate at a faster rate.