It’s testing times for the Indian diagnostic industry, which has witnessed a 80 per cent fall in patient visits and revenue. The operating loss in the short term, is pegged at ₹600- 2,200 crore this quarter, as per a recent FICCI-EY report.
“With the first lockdown implemented on March 24, we witnessed a significant decline in our B2C business. All discretionary and elective tests, such as preventive checks, practically became zero,” Arindam Haldar, CEO of SRL Diagnostics, said. He also added that even the B2B business was equally affected, due to shutdown of OPD services and elective surgeries at hospitals and clinics, and logistics bottlenecks which hampered the intra- and inter-State movement of samples.
“Our revenue dropped by 70-80 per cent over the past two months. Footfalls have drastically reduced on account of the pandemic scare and Covid-19 taking precedence over other ailments,” said Aishwarya Vasudevan, Group COO of Chennai-based Neuberg Diagnostics, adding that “diagnosis and management of chronic diseases have been postponed to the extent possible or stalled.”
Diagnostics is a highly fragmented industry in India. While the total market size of the industry is estimated at ₹750 billion, organised players such as Dr Lal PathLabs, Thyrocare, Metropolis, SRL, Neuberg and few others constitute only 20 per cent of the market, while the remaining consists of small brick-and-mortar labs.
Home pick-ups
But there is a silver lining behind the pandemic cloud for the industry. According to a recent report by Emkay Global, diagnostic labs with a ‘home pick-up’ model are better placed to take advantage of the current situation. The report said that customers will be more inclined toward the home collection model rather than going to the centre for testing.
With the number of fresh coronavirus cases showing no signs of abetting, and a high degree of fear of contracting the virus existing among people, diagnostic labs are witnessing a spike in requests for home pick-up of samples.
“We are pioneers in home collection and we have ramped up our home collection during this period,” Ramesh Kinha, Head of Clinical Pathology, Medall Healthcare said, adding, “Home collection for routine samples will continue to grow because it is convenient. The volumes are beginning to increase.”
SRL Diagnostics, which has partnered with ‘Housejoy’ in Bengaluru to develop mobile testing vans for conducting routine pathological tests, primarily in red zones, also said it is witnessing a huge surge in demand for home pick-up of samples.
“We understand that home collection of samples may remain a preferred mode in larger metros, and we are in the process of beefing up our well-developed systems there even more,” SRL’s Haldar said.
Neuberg also said that it is witnessing a surge in interest from patients ever since the lockdown. “During this phase, we ramped up our ‘Anywhere Anytime’ services (home collection service) to offer free round the clock lab services at doorstep during the lockdown,” she added. Neuberg’s full-fledged sample collection and ECG services are offered in Chennai, Bengaluru, Cochin and Hyderabad.
Rethink business model
Even specialty labs are hit by the lockdown-led logistical issues. For instance, Bengaluru-based MedGenome, a market leader in genetic diagnostic testing in India, said there has been more than 50 per cent negative impact on its business since samples are typically shipped from various parts of the world to MedGenome’s centralised lab in Bengaluru.
While its business is coming back to normal with easing of lockdown restrictions in many parts of the country, Vedam Ramprasad, CEO, MedGenome Labs said, “The demand for home sample collection has gone up because of patients hesitating to step out of their homes to the maximum extent. We are making sure all the requests get attended to seamlessly for the betterment of the patients.”
Emkay Global’s report also said, “Assuming Covid-19 continues for a couple of more quarters, these companies will have to rethink their business strategy and adapting to a big change in the business DNA will not be easy.”
It also added that if the companies decide to move to a home pick-up or a hybrid model, many labs will become redundant and the transition will be painful for 2-3 years.