December 2011

The Indian Diagnostic Industry Needs Regulation

Ameera Shah, Managing Director and CEO of Metropolis Healthcare Limited is a successful young entrepreneur and highly admired in the diagnostic industry. She is the Co-chairman of FICCI Healthcare Committee. In conversation with Dhirendra Pratap Singh, she shares her perspectives on the clinical laboratory business in India and Metropolis stint in this very dynamic market

 Metropolis is one of the leading corporate chains of diagnostic centres in India and has conceptualised on growing as an institution while standardising the norms in the growth trajectory. The company is present in every state of India either through its own branch laboratories, collection centers or its referral network. It is now also present in South Africa, Sri Lanka, Seychelles, UAE, Nepal, Bangladesh, Mauritius and Nigeria. Metropolis has 62 labs operational in India and 13 in overseas markets. Our innovations like Home Health Services enable us to reach you so that going for a checkup is no longer an inconvenience.

What is your outlook on the diagnostic industry in India and particularly in Gujarat? What are the key opportunities and challenges?

We have laid out an expansion plan of ` 15-20 crore for Gujarat. Recently, we have acquired a brownfield project in Mehsana in north Gujarat for an undisclosed amount. The strategy behind acquiring Mehsana laboratory was to establish a hub in that region to cater the surrounding areas of Northern parts of the state. We are looking to open 10 more laboratories in Gujarat over the next two years, besides the existing five labs in the state. The company has joined hands with 18 private hospitals across country to provide laboratory services.

However, we are also looking to partner with government-run hospitals in Gujarat as well as in Mumbai to provide lab facility on a public-private partnership model.

Which are the major areas that Metropolis Healthcare is focusing on in the diagnostics segment?

Our services include Clinical Laboratory Medicine, Radiology and Imaging Services, Hospital Laboratory Management, Central Laboratory Services for Clinical Trials, Site Management Services, Home Health Services, Preventive Health Checkups and Remote Pathology Testing Services.

What is the level and nature of IT applications in your laboratories? How is it adding value to your business efficiency?

ICT bridges the gaps by automating entire process of testing started from the on-line patient booking to the registration of the sample and then finally getting the report digitally signed in after the analysis of the sample. Had the entire process done manually, the possibilities of human error would have been higher in risk of errors. In Metropolis, we try and avoid as much as manual intervention in the testing process. In the future, ICT will play an important role in data mining of information in pathology and diagnostic industry which is already growing leaps and bounds.

What is the share of organised and unorganised laboratories in the diagnostic sector? What is the market share that Metropolis Healthcare plans to garner in the coming years?

Diagnostic laboratory industry, which is estimated to be about ` 10,000 crore in India is largely fragmented and unorganised. According to estimates, there are about 100,000 pathology laboratories in India of which hardly 200 should be accredited. But ten years from now we see this industry consolidating and health insurance industry would drive the growth. About 75 percent of our revenue comes from the Indian market while the remaining 25 percent revenue comes from the international market.

What is the role of accreditation and regulations in the diagnostic sector in India? Please share your perspective on the role of information and communication technologies in these services.

The Indian diagnostic industry needs regulation. There are no set criteria in terms of infrastructure, technology and qualification for setting up a diagnostic laboratory. The fact that anyone with money can open a diagnostic laboratory is dangerous. Diagnostics is an important part of healthcare and thus proper regulations needs to be in place, be it regulations for opening a laboratory or mandatory accreditations. ISO, NABL, CAP (College of American Pathologists) accreditation (Mumbai) reiterate that Metropolis meets stringent national and international quality requirements – imperative in a vital service sector like healthcare.

What is the average technology spends in your company and which areas would you prioritise for future technology investments?

Metropolis invests approx ` 5-10 crore on R&D, cutting edge equipment and introducing new tests. This financial year, Metropolis has firmed up plans to add 100 new tests to its existing range of 4,500 tests. These high-quality tests with accurate results would be at an affordable cost.

What is the future growth model of the company? What are the new test facilities Metropolis Healthcare is bringing in?

We are planning to invest ` 200-300mn for adding 15 new laboratories and another ` 50-100mn investment for new equipment. This investment will be funded by internal accruals. We are also planning an Initial Public Offering (IPO) over the next three years. We are currently in talks with a few hospitals for laboratory management. By the year 2020, the vision of the organisation is to have a multibillion dollar market capitalisation. In the current financial year, the company aims to open about 18 laboratories in India with a total investment outlay of about ` 60 crore. We plan to open at least 10 greenfield labs and eight acquisitions during this fiscal and reach a turnover of ` 330 crore this year. Over the next 3-4 years we should be able to reach a turnover of ` 600 “ 700 crore.

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