Wellness in India, Comes with Diagnostics
While it is early days for the healthcare diagnostics segment in India, Dr. Shravan Subramanyam, Managing Director – India & Neighboring Markets, Roche Diagnostics India believes that the future is bright
I am yet to find anyone who does not want to either feel or become healthier with every passing day. I mean ‘healthier’ and not ‘younger’. There may be several ways in which this ‘Becoming Healthy’ drive manifests itself. Be it, squeezing in 30 minutes for workout in the gym despite a hectic work day, or allocating a weekend evening to swimming or tennis along with friends and family, or simply watching one’s diet during every celebration. They are all conscious efforts to remain healthy over the long term.
There are several types of experts in the healthcare industry. There are those that help you get better when you get ill, while there are others who work on ways to prevent you from falling ill. Diagnostics is that part of the healthcare continuum that helps you in both these instances. When ill, diagnostics helps determine the cause for illness, and measure improvement. While in good times, it equips you with knowledge of how healthy you are. The National Health Policy of 2017 has laid special emphasis on "Preventive Care", which bodes well for health and wellness all around.
‘Healthcare diagnostics’ as a concept has seen a rapid evolution in the country in the last 10-20 years due to a phenomenal growth in population, rising income and growing health awareness. Even complex tests are now being seen as ‘routine’ with most results available the same day or the next. Growing healthcare infrastructure in Tier-2 and Tier-3 cities, along with the surge in medical tourism, have been other key elements in the rapid growth of the healthcare diagnostics market in India. The outlook for the segment continues to be bullish. An RNCOS report, titled ‘Indian Diagnostic Services Market Outlook 2020’, predicts that the segment is expected to grow at 27.5% for the next five years to touch INR 860 billion by 2020 with better healthcare facilities, pathological and diagnostics labs, PPPs and improved access to healthcare insurance being the driving force that will catalyze this growth.
The diagnostics services industry can broadly be classified into pathology and radiology services. Pathology services involve the collection of samples (including blood, tissue, urine and stool) and analyzing it in laboratories to arrive at useful clinical information. This information is used by doctors to take informed medical decisions. Clinical biochemistry, that involve testing and analysis of bodily fluids, constitutes the largest segment of the pathology segment followed by Hematology, Surgical Pathology, Molecular Biology, Histopathology and Clinical Microbiology. Radiology forms the second arm of the diagnostics industry and involves imaging services to mark physiological and anatomical changes in a patient. Pathology constitutes around 70% of the diagnostics segment, as per the RNCOS report. Radiology and imaging services constitute the remaining 30%.
From a disease standpoint, the diagnostics segment covers two main areas: Infectious and Non-Communicable Diseases (NCDs). NCDs include diabetes, cardiovascular diseases (CVDs) and cancers. Pre-natal and neonatal diagnostics are other important areas.
The diagnostics market in India is highly fragmented. The lack of regulations that authorize minimum standards in terms of infrastructure, technology, quality and qualified personnel for manning a diagnostics center has resulted in a mushrooming of small standalone labs to bridge the demand-supply gap. Industry estimates state there are more than 100,000 operational laboratories in the country. Organized players hold a mere 15-18% of the market, according to PCG Research. Most of the organized players use the ‘hub-and-spoke’ model, which consists of setting up large reference labs in key locations along with smaller labs and collection centers that feed specimens into the reference lab. Automation is the hallmark of larger diagnostics labs, which have a professional and experienced managerial setup, and offer specialized tests such as drug screenings, extended lipid profiles and therapeutic drug monitoring. Of these organized players, the larger ones are Dr Lal’s Path Labs, SRL Diagnostics, Metropolis and Thyrocare, aside from several hospital-chain based labs and regional players.
With increasing demand from Tier-2 and Tier-3 cities, a few organized players have tried to build a national presence with facilities also established in these areas. Growth has been achieved through both the organic and inorganic route. From IPOs to private equity, a host of options have been used to fund this growth. In fact, Dr Lal’s was the first diagnostics company to list on the Indian bourses in end-2015 making it a milestone for the diagnostics industry.
However, I believe it’s still early days for the segment. According to a report by Frost and Sullivan, diagnostics constitutes a little over 2% of overall global spending on healthcare, but influences 70 percent of all medical decisions. What we need to bear in mind here is that a majority of these decisions are reactive. The Lancet, in a series of reports published in October 2016, cited that NCDs caused about 60 percent of deaths in India, a total of 6.3 million people. A recent study by the Registrar General of India (RGI) and the Indian Council of Medical Research (ICMR) showed similar data - about 25 percent of deaths in the age group of 25- 69 years occur because of heart diseases. India is amongst the few large economies where more than 50 percent of healthcare spending is done by patients from their own pocket. In fact, it stands at almost 66 percent in the country, according to a study by the Institute for Health Metrics and Evaluation, University of Washington. According to reports from the Health Ministry, more than 63 million people in India are forced into poverty every year due to “catastrophic” expenditure on healthcare, a simple correlation to reactive healthcare measures. In a situation like this, ‘Preventive is attractive’ should and will become the mantra for the healthcare segment as a whole.
Preventive healthcare today makes up a small fraction of the overall healthcare market. A timely diagnosis can mean the difference between life and death for a patient. It also has far reaching consequences in driving down the overall treatment costs or healthcare spend. This can occur either via early recognition of an acute, life threatening condition or preventive screening of a chronic disease. On the positive side, a higher awareness amongst educated people living in cities is leading to a rise in preventive diagnostics tests. This in turn is cutting down massive healthcare spends and giving a fillip to the overall diagnostics market.
The focus on making healthcare more patient-centered, has seen technology evolve to play a vital role in driving more informed medical outcomes. Let’s consider the example of how “ELISA” techniques were used for blood screening, which took several days, even weeks, post exposure, to determine if the person is HIV positive. Now with Nucleic Acid Testing (NAT), the window period has been reduced to 7-28 days, thus helping in early detection and medication and thus, healthier lives.
Technology is playing a vital role in driving access. There have been several innovations witnessed such as the Point-Of-Care Testing (POCT) which is a series of decentralized diagnostics tests connected to small analyzers and managed through hand-held portable devices. A number of low cost portable innovations are also being developed to cater to the diagnostic needs of the rural population. These include basic elements such as a telemedicine device paired with a simple android tablet and solar panel to power the set-up, which can run diagnostic tests with over 95 percent accuracy.
The advent of wearables, along with the penetration of smartphones and mobile apps, are other key areas that will drive the future of the healthcare diagnostics industry. mHealth is soon emerging as one of the fastest growing segments in digital healthcare with some even providing comprehensive healthcare management beyond a visit to a medical practitioner.
These are still early days for the segment. I believe the future of the industry is bright.
The opinions expressed in the article are the author’s own.