Diagnostics servicesÂ constitute one ofÂ the most criticalÂ components of medical care. Around 70 percentÂ of treatment decisions inÂ India are based on testÂ results. Diagnostics mayÂ not be perfect for curing Â the disease, but theyÂ can be helpful to a largeÂ extent.
With more and more Indians becoming part of the middle class there is rise in healthÂ consciousness in the society, and this in turn is leading to an exponential growth inÂ the segment of diagnostic laboratories
By Dhirendra Pratap Singh, firstname.lastname@example.org
The laboratory plays a central role in healthcare. ByÂ one estimate, 70 percent of all medical decisions areÂ based on laboratory results. And now all the laboratoriesÂ strive to use latest technology. However, technologyÂ cannot be an end in itself; it is only the means to an end.Â Optimising performance means that workflow and technologyÂ are integrated to yield an operation that will meet all theÂ clinical needs and financial goals of the organisation.
The International Diabetes Federation estimates that theÂ number of diabetic patients in India has more than doubledÂ from 19 million in 1995 to over 41 million. Cardiovascular diseasesÂ (CVD), cancer and stroke account for 53 percent of allÂ deaths and 44 percent of disability-adjusted life years.
Thus, the Indian population is graduating from cheaper toÂ treat âinfectious diseasesâ to the more complex and expensive
âLifestyle diseasesâ which require greater diagnostic and therapyÂ interventions. Lifestyle diseases are set to assume a greaterÂ share of the healthcare market.
Step back in time and pose a contrast: life expectancy hasÂ shot up in India, from 23 at the turn of the 20th century toÂ 65 years, while death rates have come downâfrom 25 perÂ thousand to eight. The truth is that we used to die of dreadedÂ infections in circa 1900.
Around 70 percent of treatment decisions in the countryÂ are based on test results. Diagnostics may not be perfectÂ for curing the disease, but they can be helpful to a large extent.Â Diagnostics services constitute one of the most criticalÂ components of medical care. The Indian diagnostic market isÂ worth US$ 2 billion, and constitutes four percent of the overallÂ healthcare delivery market. It is expected to grow at a CAGRÂ of 21.2 percent, which is supported by a historical five yearÂ CAGR of 20 percent. The industry is highly competitive andÂ price-driven with kickbacks and business referral paymentsÂ in the absence of a regulatory body. Medical Lab (Pathology)Â makes up 60 percent of the diagnostics market, whereas radiologyÂ and imaging constitute 40 percent of the market.
Diagnostics is widely classified into In-vitro business and InvivoÂ business; they are equal in size in terms of turnovers and
both are growing at a 20 percent year on year. ConsolidationÂ is sensed in in-vitro segment, where 90 percent business isÂ still with unorganised laboratories. Out of the 60,000 laboratories,Â where testing is done, only 200 are accredited. OnlyÂ 1000 of them are worth calling laboratories. By the year 2020,Â at least 60 percent of in-vitro business is expected to becomeÂ organised.
As on date only 10 percent is organised and though it hasÂ taken 40 years to move to 10 percent, this is likely to grow to 50Â percent in just next 10 years. Growing awareness on quality andÂ brand puts unorganised laboratory at check and thus allowingÂ the organised sector to move faster. Though the industry is growingÂ 20 percent per year, the organized players are moving at 30Â percent and Thyrocare is moving at 40 percent which obviouslyÂ says market share of brands are growing faster.
An estimated 90 percent of such centres belong to unorganisedÂ sector. The organised sector is largely dominated by Dr Lal PathÂ Labs, Metropolis, SRL Religare and Thyrocare.
Major branded players in the Indian diagnostics marketÂ include names like Super Religare Laboratories, Dr Lal Pathlabs,Â Quest Diagnostics, Thyrocare and Metropolis. SuperÂ Religare Laboratories is servicing nearly 1550 hospitals/pathÂ labs along with its subsidiary Piramal Diagnostic Services PrivateÂ Limited. They offer a comprehensive range of over 3,300Â diagnostic tests, from the routine to the highly specialisedÂ tests.
Dr Lal Pathlabs has 65 laboratories at present in India and itÂ is looking to add another 35 this year. The company has decided to invest Rs 150 crore this year on acquisitionsÂ in India and abroad. The companyÂ is also looking to acquire assets inÂ Middle East, Bangladesh, Sri Lanka andÂ other South Asian nations.
Quest Diagnostics has operations inÂ the US, India, UK, Brazil, Puerto Rico,Â Mexico and Ireland, it is a Fortune 500Â company. In India, it has set up facilityÂ in Gurgaon, Haryana. It has recentlyÂ launched a wide array of testing for diagnosingÂ and monitoring blood cancerÂ in India.
Thyrocare is among the top laboratoryÂ brands in India. It is growing at 40Â percent annually. Another major playerÂ Metropolis has created an Indian AssociationÂ of Pathology Labs, under the umbrellaÂ structure of CII (Confederation ofÂ Indian Industry), in view of representingÂ the industry in front of the government.Â The company has been into the processÂ of promoting three more tests viz. He4Â (Ovarian Marker â Gynaecological), HairÂ DX (Genetic hair loss â Dermatological),Â DNA paternity test, for the IndianÂ citizens.
Accreditation and Regulations
There are a lot of hidden costs in gettingÂ accredited as you have to pick up the tabÂ of lots of global first class travels of auditors.Â Moreover, getting accredited is notÂ particularly helpful as the common man, orÂ even the fraternity of doctors, is not tunedtowards the importance of accreditation.Â Any laboratory gets even governmentÂ business and that makes accreditationÂ âunattractive for manyâ. It is just 200 versusÂ 60,000 and it would take another 10 yearsÂ to see 10,000 versus 60,000.
The Indian diagnostic industry needsÂ regulation. There are no set criteria inÂ terms of infrastructure, technology andÂ qualification for setting up a diagnosticÂ laboratory. The diagnostic sector underÂ the Indian regulatory framework has lowÂ entry barrier with the only requirementÂ being registration under the Shop andÂ Establishment Act. The National AccreditationÂ Board for Testing and CalibrationÂ Laboratories (NABL) is the sole accreditation Â body with the criteria assuring accuracy,Â reliability and conformity of theÂ tests results.
The nature of competition in the diagnosticÂ industry would undergo significantÂ change. This is because the NationalÂ Clinical Establishment Act, 2010Â would make registration and qualityÂ compliance mandatory for laboratoriesÂ and diagnostic centres. While at presentÂ accreditation of laboratories is notÂ necessary in India, it can still becomeÂ a mandatory law in times to come. This Â can potentially check the growth of smalllocal level players, while the large playersÂ such as Dr Lal Path Labs, Super Religare Â Laboratories, Metropolis and QuestÂ Diagnostics will be able to expand faster.Â This is in contrast to the present situationÂ where unorganised sector contributes toÂ major share of the industry. Absence ofÂ strict regulatory environment had led toÂ mushrooming of large number of smallÂ sized diagnostic centres providing limited Â services.
âInformation TechnologyÂ has Taken a Giant Leap inÂ the IVD Industryâ
ICT bridges the gaps by automating entire process of testingÂ from on-line patient booking to the registration of the sample andÂ then finally getting the report digitally signed-in after the analysisÂ of the sample. Going forth, ICT will play an important role in dataÂ mining of information in pathology and diagnostic industry. LabÂ automation has also taken on a new level of importance in theÂ ability to actually get instruments interfaced to various laboratory Â information systems Â LIS). Information technology has taken aÂ giant leap in the IVD industry, thereby reducing the dependenceÂ on a technically qualified individual to be present at all timesÂ during the analytical procedure without compromising on establishedÂ levels of care.
Due to increasing consolidation in the in-vitro diagnostics market,Â Indian market dynamics are expected to change the way itÂ changed in USA, where 20 years back, there were at least 30,000Â labs, and now, 4-5 major chains of organised players control 30Â percent of the total market. Clinical Labs will undergo consolidation Â in future, thereby moving from unorganised to organised (20Â percent organised market by 2020). Also, Insurance companiesÂ prefer tie ups with labs that have quality control, uniform systemsÂ of billing and services. This will further fuel the growth of organisedÂ sector within the clinical lab segment.
Ageing population and lifestyle related disorders would be theÂ future growth drivers for this market along with medical insurance.Â The sectorâs growth will be driven by the countryâs growing middle-Â class, which can afford quality healthcare Diagnostic industry Â is largely driven by Innovations. Innovations which are critical inÂ this segment are seen at following two levels:
Product innovations: Under this category, new tests are beingÂ offered. Molecular diagnostics is the most valuable one. The testingÂ will play a greater role in predictive diagnosis and will be anÂ enabler for personalised medicine. Also, several new instruments,Â which are convenient to use and are compatible with other electronic Â devices like mobile phones, have been the latest offeringsÂ in this area.
Service-level innovations: This includes value-added services likeÂ online services, collection of samples and home delivery of reports.
ISO, NABL, CAP (College of AmericanÂ Pathologists) accreditation can help developÂ structured framework for qualityÂ control and assures compliance to stringentÂ national and international quality requirements all of which are imperative inÂ a vital service sector like healthcare. TheÂ fast growing diagnostic sector opensÂ several avenues for partnership betweenÂ the Indian and International DiagnosticÂ companies. There is huge potential in theÂ Clinical Research and Trials market byÂ combining the unique strengths of IndianÂ and US companies, US companies areÂ the leader in Pharmaceuticals and BiologicsÂ Research and Development.
Out of the 60,000 laboratories in India, only 200 are accredited and only 1000 ofÂ them are worth calling as laboratories.
Unorganised laboratories are growing at the rate of 10 â 15 percent, while theÂ organised corporate chains having less than 10 percent share of the total marketÂ are growing in a much faster rate at 25 â 30 percent, annually.Â By the year 2020, at least 60 percent of in-vitro business will become organisedÂ since, though slow, things are moving in right direction.
Life expectancy has shot up in India, from 23 at the turn of the 20th century toÂ 65 years, while death rates have come downâfrom 25 per thousand to eight.
As of now only 10 percent is organised. Even though it has taken 40 years toÂ move to 10 percent, this is likely to grow to 50 percent in just next 10 years.Â The Indian healthcare market is growing on an unprecedented high rate of 16Â percent year on year. From Rs 1, 02,600 crore in 2005, it now clocks Rs 2, 00,000Â crore and is projected to reach Rs 3, 00,000 crore by 2012.
Source: Indian Diagnostic Industry and Market Report 2011
Indian companies can leverage theirÂ extensive expertise in Life sciences, theÂ large number of CAP accredited labs inÂ India and the huge patient base, to collaborateÂ with US companies in organisingÂ large scale and complex clinical trialsÂ at low costs. There is good potentialÂ to develop training and accreditationÂ programmes for the Indian market.Â There is a need to design cheap, highÂ quality equipment for Indian markets Â and device creative financing optionsÂ and low cost, effective IT solutions forÂ the Indian market.
Diagnostic laboratory industry, which isÂ estimated to be about Rs 10,000 croreÂ in India, is largely fragmented and unorganised.Â According to estimates, thereÂ are about 100,000 pathology laboratoriesÂ in India of which only 200 should beÂ accredited. But ten years from now weÂ see this industry consolidating and theÂ health insurance industry will drive theÂ growth. About 75 percent of our revenueÂ comes from the Indian market, while theÂ remaining 25 percent revenue comesÂ from the international market.
ICT bridges the gaps by automatingÂ entire process of testing, starting fromÂ the on-line patient booking to the registrationÂ of the sample and then finallyÂ getting the report digitally signed after Â analysis of the sample. Had the entireÂ process been done manually, the possibilitiesÂ of human error would have beenÂ higher.
In future, ICT will play an important roleÂ in data mining in pathology and diagnosticÂ industries, which are growing leapsÂ and bounds. Diagnostics is an importantÂ part of healthcare and thus proper regulationsÂ needs to be in place, be it Â termsÂ of regulations for opening a laboratory orÂ mandatory accreditations. Some privateÂ companies, especially those Â that are engagedÂ in the health business are strivingÂ to increase the health awareness amongÂ the common man, not only in metro cities Â but in the Tier-II, Tier-III and smallerÂ towns.
In recent years, the workload on laboratoryÂ personnel has increased two toÂ two-and-a-half times. An increase in theÂ capacity and directions of laboratory investigationsÂ should be reflected in the Â quality of the work, or in the accuracyÂ and reliability of the acquired data. ButÂ this is possible only when laboratories Â are equipped with modern technology,Â permitting a sharp rise in productionÂ and in the reliability of investigation Â results. Delivering the right data in aÂ timely and cost effective manner whileÂ improving the sensitivity and specificityÂ of the test is the need of the hour andÂ the industry needs to gear up for singleÂ workstations that can carry multipleÂ workloads.
Experience has confirmed that fullÂ automation is a very gradual step towardsÂ efficiency in laboratory workÂ and lab automation still continues toÂ evolve. The drive or thrust for smaller,Â faster, and more-accessible devicesÂ is increasing. Â Emerging markets haveÂ different needs with respect to the testÂ menus, technologies used and operatingÂ procedures. Thus, made-to-orderÂ solutions need to be developed for these markets.
To survive and succeed in theseÂ challenging conditions, it is imperativeÂ for laboratories to look for ways toÂ adapt and implement new strategiesÂ that can help them in saving costs. InÂ todayâs competitive environment, revenuesÂ per test are Â seeing a continuous Â owntrend. So the testing centres haveÂ to increase their productivity in orderÂ to survive. The paradigm shift towardsÂ improved quality, error-free services,Â and the need to ensure patientsâ satisfactionÂ has prompted laboratories toÂ adopt novel technologies such as automationÂ and point-of-care systems.Â Advances in nanotechnology andÂ genomics have enhanced the role ofÂ diagnostics in the healthcare market,Â thereby facilitating the shift towards Â personalised medicine.