India's Leading Healthcare & Pharma Companies 2023

India’s Leading Healthcare & Pharma Companies 2023 | 43 [ OVERVIEW OF INDIA DIAGNOSTICS SECTOR ] quality, accuracy, and test menu. Besides, their accreditation with NABL and CAP have helped them to establish their brand in their core market of operations. Patients gradually preferring organised chain diagnostics: In recent times, patients arepreferring organised chain diagnostics over standalone centres due to strong branding by organised players based on complex test offerings and quality of services. Companies wi th widespread network of labs generally get benefits like comparatively lower raw material costs due to procurement in larger quantity, cost efficiencies brought by bulk testing and abi l ity to leverage digital technologies. KEY CHALLENGES Local referral ecosystem: Doctor’s referral play an important role in gaining steady st ream of patients to diagnostic centres. In case of organised players, this local referral ecosystem is a key impediment for their business expansion. Enhanced branding and upsell of complex tests by organised players however can help them enlarge their footprint. High out of pocket expenditure: Very few diagnostic tests are coveredby theprevailing insurance schemes in the country. Moreover, with insurance penetration at 3.2% for life insurance, diagnostic testing largely remains an out-of-pocket expense. This has further affected the penetration of diagnostic services. Besides, high out-of- pocket spending on diagnostics results in poor and vulnerable sections of population opting for cheaper alternatives offered by standalone players. Most of the times, these alternatives lack quality of service and accuracy. The enhanced coverage of diagnostic tests under government insurance schemes like Ayushman Bharat PradhanMantri JanArogya Yojana, will help in reduce out-of-pocket expenses on diagnostics, thereby improving their penetration. Absence of stringent regulatory framework: The existing CE Act does not prescribe for any checks or scrutiny of service quality after registration of diagnostic facilities. Moreover, it does not provide for grievance redressal by patients. It also does not cover regulation of costs as done in Drugs Price Control Order, resulting in large discrepancy in price charged for same test by different diagnostic facilities. In addition, diagnostic facilities are regulated by ancillary regulations like Drugs &Cosmetics Act, 1940, Biomedical Waste Management Rules 2016 and Shops and Establishments Act. Thus, there is no uniform and comprehensive regulat ion to govern diagnostic industry in India. Due to this regulatory vacuum, lab accreditation likeNABLwhich is not a legally mandated requirement has gained signi f icance as i t assures quality and standardised service to customers. GROWTH OUTLOOK Robust growth: The diagnostic industry is expected to register robust growth in the coming yea r s on accoun t of r i s i ng healthcare spending, increased life-style related diseases, rising income level, growing awareness for preventive testing, and the government initiative to improve the heal thcare infrastructure including diagnostic services at all levels. Moreover, expansion in diagnostic tests under insurance coverage will also provide major boost to the sector. Under-penetrated market poses significant growth opportunity: Despite the presence of large number of diagnostic centres, Indian diagnost ics market is under-penetrated with only over 1.1 thousand pathology tests for per 1,000 population as against other developed and developing markets (5.9 thousand tests in Brazil, 10 thousand in Australia and 20.9 thousand in the US). T h e i ma g i n g d i a g n o s t i c s performed per 1,000 population in India is ~36 as compared to 53 in Brazil, 144 in the UK, 192 in Australia and 407 in the US. This under-penetration of diagnostic testswill providedemand longevity to players. Dun & Br dstreet