Healthcare

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Report

Diagnostics:
Unraveling the
Future
July 2022

Confidential and proprietary © Praxian Global Pvt. Ltd

Foreword Indian diagnostic industry has emerged as a
preferred play in India’s growing healthcare
sector, driven by attractive margins and good
color doppler ultra-sound scans, etc.

This report analyzes the current state of the

headroom for growth. The domestic diagnostic diagnostic market and analyzes the key
industry in FY21 was ~US$ 10B and is expected trends that we see emerging. These include
to grow at a compounded annual growth rate a) Changing patient expectations from
(CAGR) of ~14% over the next five years. This diagnostic players, b) Newer tests addressing
growth will be primarily driven by increasing critical and precise clinical needs, c)
demographics, urbanization, penetration, and Non-traditional competitors entering the
better realizations per test. market, d) Newer patient-centric business
models working around industry challenges,
The diagnostic industry is characterized by a and e) Logistics becoming critical in the
high degree of fragmentation with over ~100K pursuit to serve customers at their
labs. Of the US$ 10B markets, standalone convenience, and f) Use of technology and
centers account for 48% market share, followed digital to improve customer experience,
by hospital-based labs with 37% share, and support clinical decisions and serve as a
national chains account for only 5% share. This backbone of the business.
fragmentation poses a challenge in terms of
capability, scalability, and quality of labs, but on Our endeavor with this report is to
the other hand, it also provides an opportunity understand, qualify and quantify the impact
to consolidate newer business models to these trends will have on the Indian
evolve. diagnostics market in short to medium term.
We hope you find the report informative and
While the pathology segment contributes look forward to continuing the discussion.
~57% to the diagnostic market share, radiology We hope that this report will give you an
is importantly extensive at ~43% of the market, insight into the underlying success factors to
comprising tests like computed tomography ride this wave of growth in the Indian
(CT) scans magnetic resonance imaging (MRI), diagnostics industry.

Madhur Singhal Aryaman Tandon

Managing Partner & CEO Managing Partner & Co-Founder
 Healthcare

Healthcare team
Anjan Bose Aryaman Tandon
Advisor and Practice Leader – Healthcare Managing Partner & Co-Founder,
Gurugram
Ex-Founder Secretary General,
NATHEALTH Ex-Bain & Co.
Ex-President, Phillips Healthcare & B.Tech. (IIT Delhi)
Consumer Lifestyle, India Subcontinent
Ex-HP, Director, Emerging Markets &
Financing Programs
MDP (Univ. of Michigan), B.Tech. (IIT KGP) Sumit Goel
Managing Partner & Head -
Healthcare and Pharma
Ex-Partner at KPMG, EY
Dr. Rajen Ghadiok MBA (S.P. Jain), B.Tech. (IIT Delhi)
Domain Leader – Healthcare Delivery
Ex-Fortis, Nova Medical Centers,
International Oncology Services
M.D. (Sechenov’s First Moscow Kumar Nirnay
Medical Institute) Manager - Healthcare Practice,
Gurugram
Ex-EY, KPMG
MBA (NMIMS Mumbai),
Prabal Chakraborty B.Tech. (JSSATE Bangalore)
Domain Leader – Medical Devices
& Consumables
Ex-Boston Scientific Company,
J&J Medical India
Bharat Bajpai
Senior Consultant -
MBA (IIM Lucknow) Healthcare Practice,
Mumbai
Ex-PwC, Capgemini
MBA (IE Spain),
B.Tech. (NIT Nagpur)

© Praxis Global Alliance | 03

 Healthcare

Executive summary
Section Key takeaways
• Market size: Estimated market size in FY21 was US$ 10B, of which 57% was pathology and 43% radiology; Biochemistry comprised ~20% of
the market, and low-end radiology another ~22%
• Market growth: Indian diagnostics market is projected to grow at a CAGR of 14% to reach US$ 20B by FY26
• Significantly under-penetrated market: Pathology tests per 1000 population in India is 1,111 versus 5,924 in Brazil, 10,000 in Australia, and
Market landscape 20,958 in the USA; Number of CT, MRI tests per 1000 population in India was 36 compared to 53 in Brazil, 144 in the UK, 192 in Australia, and
407 in the USA
• Highly fragmented and urbanized: Standalone centers and hospital-based labs (including government labs) have an 85% share of the market;
urban areas account for 74% of the market
• Reasonable penetration in Tier 2 and 3 cities in terms of number of labs: This indicates market readiness to expand and adopt more
specialized tests and technologies
• GP driven market: ~55% of the tests prescribed in out-patient settings are from General Practitioners and Gynaecologists

1 Changing patient behavior – pricing, convenience, and reliability are the top three driving factors while selecting a diagnostic service provider
• Preference for convenience:
• Home collection over walk-ins - ~75% of the customers prefer home collection over lab walk-ins and are willing to pay 75 -100 for
home sample collection services
• Easy access to reports: Test tracking, report access through email, app, and other ways; Easy to read reports for customers;
Longitudinal analysis of historical reports
Emerging trends in • Neighbourhood labs: Preference remains high for acute and doctor driven tests
diagnostics market • Customers seek reasonable pricing:
• For self-initiated or wellness tests – preference is high for online platforms with competitive discounts
• Preference for reliable service providers: Convenience driving customers towards more reliable branded chains
2 Specialized wellness tests driving growth
• Specialized tests: Comprises 15-22% by volumes and 40-45% by value; Molecular pathology poised to grow at 35-40% year on year
• Wellness tests: Currently comprises 1-3% by volume and 10-15% by revenue; Growth likely to be driven by general wellness and
condition-specific monitoring packages
• In addition, PoC and rapid tests have seen a wide acceptance during COVID and, going forward, are likely to witness wider acceptability with
advancements in technologies

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Executive summary
Section Key takeaways

3 Playfield becoming more competitive

• Due to attractive margins, players from adjacent service areas of the healthcare ecosystem have entered the diagnostics market and become
more competitive. Examples include pharmaceutical companies (e.g., Lupin), Hospitals (e.g., Max, Aster DM, Sterling), Diagnostic service
aggregators, telehealth providers
• Government is taking several initiatives to strengthen the public health infrastructure and make diagnostics more accessible and affordable
With increasing competitive intensity in Metros and Tier-1, lab chains are undertaking aggressive expansion in Tier 2+ through asset-light
models
4 New business models
• New business models around teleradiology and telepathology to improve access, quality, and efficiency of diagnostics; Newer players include
computational pathology solution providers and teleradiology service providers; Teleradiology was estimated to be a US$ 356M market in
Emerging trends in 2020 and is likely to evolve into US$ 700M market by 2025 growing at a CAGR of ~15%
diagnostics market
• Network of partnerships: Diagnostics ecosystem has expanded from comprising only core equipment and reagent providers to include
players offering lab automation, third party logistics & ones offering tech-centered business models; With the decoupling of operating layers,
models are evolving into a network of partnerships
• While still at its nascency, Insurance cover for out-patient care could propel a rapid growth
5 Supply chain innovation
• Best in class sample logistics is fast evolving into a core enabler of a successful pathology business: Supply chain innovations in sample
processing in both pre and post-analytical stages are levers of key differentiators among the service providers. The focus is on improving
sample visibility and, reliability & responsiveness of the supply chain
6 Technology and digital
• Focus on improving customer experience through digitalized journeys
• Use of AI systems, especially in image processing across radiology and pathology
• Robust IT system for fulfillment layer – collection scheduling, sample logistics, and tracking
• While the considerable focus has been on leveraging digital to become efficient and deliver customer delight, many areas of opportunity
remain unexplored

• Key challenges facing the industry are across the regulatory, fragmented market with a low focus on quality, commoditization and increasing
Key challenges competitive intensity, nonaccess to specialized resources, and value-conscious Indian customers

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Executive summary
Section Key takeaways

• While the industry is poised for healthy growth at a CAGR of 14% to reach US$ 20B by FY26, diagnostic companies have certain imperatives
laid out for them. These include:
• Growing their core: Omni-channel strategy, accretive value Tier 2, 3, and 4 city expansion, stitch network of partnerships for faster growth,
introducing new products
Future outlook • Expansion through inorganic route and in non-core: Expansion into adjacencies: e.g., Addition of capabilities for teleradiology and
telepathology; integrated health offerings – e.g., wellness services; Data monetization or value add services
• Supply chain and operations: Improving service TAT and reliability, supply chain digitization to enhance supply chain visibility and reliability;
usage of digitalization tools such as AI for process efficiencies
• Customer acquisition, experience, & retention: fine-tuning digital journeys for customers and enhancing loyalty
• Bottom line improvement: With increasing competition and tests becoming more commoditized, there is a need for super-efficient operations
to keep the bottom line healthy

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Contents

Overview of
diagnostics
market
 Healthcare

In the Indian diagnostics market, biochemistry has the largest share of pathology,
while low-end radiology is the largest in radiology
US$
10B
Diagnostics

US$ 5.8B US$ 4.4B

(57%) (43%)
Pathology Radiology

US$ 2.2B US$ 1.3B US$ 1.0B US$ 1.3B US$ 2.3B US$ 1.9B
(38%) (22%) (18%) (22%) (52%) (48%)
Biochemistry Immunology Haematology Specialized Low-end High-end
Radiology Radiology

Glucose tolerance, Immunoassays e.g. Blood counts, Renal Surgical pathology, CT-scan
Bilirubin, SGPT, SGOT, Vitamin B12, vitamin profiling, Haemoglobin histopathology, X-ray
Applications: Imaging using X-rays and
Serum creatinine, D, hormone levels testing, cholesterol molecular pathology –
cardiovascular, computer processing
Cholesterol, NaPK (e.g. thyroid), cancer testing, etc genomic, RNA and DNA
respiratory, dental,
markets sequencing, bio markets MRI
mammography
Magnetic field and
Ultrasonography computer-generated radio
Imaging technique using waves to create images of
ultrasound organs

Colour Doppler
Uses ultrasound to image
tissue & investigate blood
flow
CAGR
FY16-21 10-11% ~15% 13-14% 16-17% 11-12% ~14%

Sources: CRISIL reports, HDFC Securities report, Praxis analysis

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 Healthcare

Compared to other leading countries, diagnostics is significantly underpenetrated

in India

While closer to UK, number of tests performed per capita in India Even for imaging tests such as CT and MR, there is significant
are far lower headroom for growth when benchmarked with other countries

Diagnostics test under penetration in India CT and MR test under penetration in India
# tests per ‘000 population per year # tests per ‘000 population per year

USA 20,958 USA 407

Australia 10,000 Australia 192

Brazil 5,924 Brazil 53

UK 1,327 UK 144

India 1,111 India 36

Notes: Data for US, Australia, and India is of 2019. UK and Brazil is 2018
Sources: OECD Statistics, Praxis report – Outpatient healthcare market in India, Press releases, Secondary research, Praxis analysis; American Clinical Lab Association (www.acla.com)
© Praxis Global Alliance | 09
 Healthcare

Standalone centers and hospital-based labs (including government labs) have an 85%
share of the market; urban areas account for 74% share

Indian diagnostics market

Market size:
%
US$ 10B

Wellness and Corporates, Hospital labs

preventive , 10% 10% government, 9%

Rural, Diagnostics National

26% chain, 15% chains, 33%
Radiology, IPD, 43%
43% Self selected,
35% Hospital
labs
private*,
27%

Urban, Sickness,
74% 90% Regional
chains, 67%
Pathology, Referrals, Standalone
57% OPD, 57%
55% centers,
48%
1% is through
online
channel

Test segment Region Test type IPD vs OPD Source Institution type Chain type

Notes: *Hospital-based labs in Institution type is inclusive of Government labs. Private and Government labs split is estimated at 75:25,
and for market estimation price of tests are assumed at market prices instead of subsidized rates
Sources: CRISIL reports, HDFC Securities report, Praxis analysis
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 Healthcare

In OPD, general physicians followed by gynecologists account for the largest share of
the diagnostics test prescriptions

General physicians have 55% share of the diagnostics test General physicians have 36% share of the diagnostics test prescription market
prescription market by volume by value

OPD diagnostics test prescription market OPD diagnostics test prescription market
#tests, M US$ B
Total tests: 1,500M Total size: US$ 4,700M ASP
(In US$)
General physicians 841 General physicians 1,707
2
Dentists 221 Gynecology 690 5
Gynecology 132 Diabetoloogy 310 14
Pediatricians 54 Pediatricians 274
Dermatology 5
46
Orthopedics 257
Orthopedics 38 7
Ophthalmology Cardiology 252
26 19
Diabetology 21 Ophthamology 231 8
Psychiatry 17 Dentists 154 0.7
Cardiology 13 Psychiatry 149 9
General medicine 10 Dermatology 147 3
Gastroentology 5
Nephrology 100 25
Nephrology 4
Gastroentology 86 17
Urology 4
Pulmonolgy 3 Pulmonology 47 15
Other 43 Others 327 8

Notes: Others include General medicine, endocrinology and other specialties

Sources: Praxis report – Outpatient healthcare market in India
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 Healthcare

Standalone centers have a 48% share, followed by hospital-based labs at 37%; national
chains have a 5% share, led by Dr. Lal PathLabs
Indian diagnostics market
FY20, US$ B
5 4 1 0.5

It includes 12%
diagnostics at
public health
facilities

Hospital 23%
based*,
100%
Others, 67%

Standalone
centers,
100%
28%

Quest Diagnostics, 0.05% Elbit, 0.2% NG Industries, 0.2%

Core Laboratories, 0.4% Dr.Dang, 0.5% Lilac Insights, 1%
Healthians, 1% Diagno Labs, 1% Sterling Accuris , 1%
Hitech, 1% Pathcare 1% Oncquest, 1% Unipath, 1%
Spandan , 2%
Aarthi Scans and Labs, 2% Medgenome,1%
Suburban, 2% Shree Jaya, 2%
Suraksha, 2% 36%
Krsnaa , 2%
Medall, 3%
Neuberg, 4%
Vijay diagnostics center, 5%

Standalone Hospital
centers based Regional chains National chains
Notes: Revenue for players has been estimated based on their market share in FY20. *Hospital-based labs in Institution type is inclusive of Government labs. Private and Government labs split is
estimated at 75:25, and for market estimation price of tests are assumed at market prices instead of subsidized rates
Sources: Company filings, Annual reports, Tracxn, Press reviews, Analyst reports, Praxis analysis © Praxis Global Alliance | 12
 Healthcare

The ecosystem has expanded from only core equipment and reagent providers to
players offering lab automation, third party logistics & tech-centered business models

Diagnostic
Equipment & reagents Lab operations & logistics centers IT & MedTech

LIMS Telemedicine
Diversified players
Standalone centers

Hospital based

Category focused players DeepTech (AI and ML)

Phlebotomist Delivery management Regional chains

National chains

Transfer of material Transfer of information or service

Notes: LIMS – Laboratory information management systems

Sources: Secondary research, Praxis analysis
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 Healthcare

Tier 2 and 3 cities are reasonably penetrated with headroom for growth, indicating
market readiness to expand and adopt more specialized tests and technologies

In Tier 2 and 3 cities, while pathology labs have reasonable Tier 1 and Tier 2 cities have similar penetration of CT scanners
penetration, the offerings are more basic while MRI has higher penetration in Tier 1

Distribution of diagnostics labs in India Distribution of CT & MRI installations in India

# per M, FY 20 # per M, FY 20
Total labs: ~100,000 Total CT: 5,466
Total MRI: 3,726
450

841
370
400

14 14
350

13
300
284
254
250

226 9 9
200

6
150

100
96

50

841
CT
0 MRI
Tier 1 Tier 2 Tier 3 Tier 4 & 5 India urban Tier 1 Tier 2 Tier 3+
average

Labs by tiers 43,700 20,064 19,039 17,097 100,000 CT by tiers 1,803 1,257 2,405 5,466

Labs per city 4,370 608 241 41 185 MRI by tiers 1,602 745 1,379 3,726

1,803 Tier 1 1,257 Tier 2 Tier 3

2,405 Tier 4 & 5
Population (In M) 118 79 67 178

Notes: City tier classification criteria: Tier 1 – Population > 40 Lakhs, Tier 2 – Population 15 - 40 Lakhs, Tier 3 – Population 5 - 15 Lakhs, Tier 4&5 – Population < 5 Lakhs
Sources: Just Dial scrape, AERB database, Praxis analysis
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 Healthcare

COVID-19 shaped the market – emphasizing the need for diagnostics & treatment,
influencing consumer acceptance of PoCT & home collection

Impact of COVID

Trust on home • Home collection revenues (excluding COVID business) grew by 25-30% for most of the national chains in FY21
collection

• Astronomical growth in the number of NABL accredited molecular testing labs from 40 in March 2020 to 1,690 in
November 2021
Proliferation of
molecular testing • The additional capacity will remain in place as the pandemic subsides, which could potentially find multiple
applications for the RT-PCR assay as the dominant method for diagnosing viral infections in India

• Usage of apps (from aggregators as well as diagnostics chains) for booking tests increased multifold and is likely to increase as customers
Adoption of digital would continue to book tests online post COVID
solutions for
improving customer • Several diagnostics chain players have improved their online presence and invested in automating and expanding the customer support
experience team

Usage of tele-diagnostics • Multiple players have implemented technology to allow their technicians and pathologists to read images remotely to drive better
solutions utilization of expert resources

Sources: Secondary research, Praxis Analysis

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Contents

Emerging
trends
 Healthcare

Emerging trends in Indian diagnostics market

• Convenience: Preference for online booking of tests and

home collection A
• Reliability: Preference of customers towards branded
service providers Patient
behaviour
• Focus on preventive care: Rise in the proportion of • Personalized medicine: Incorporation of genomic testing
self-tests, wellness tests B in certain clinical areas (oncology, prenatal, etc.)
• Improving experience: Attractive economics as patient Clinical • Point of care tests for an earlier start of the right
experience is the focus needs and treatment
test types • Cancer screening: Below 20% of cases are diagnosed
• Entry of players from allied industries: pharmaceuticals, C before stage 3 and have a high survival rate
hospitals, telehealth service providers, online players
aggregating and setting up own labs Competition • Asset-light expansion in Tier-2, 3, and 4 cities
• Public investment: Government is investing significantly in • Remote diagnostics: Incorporated telemedicine services
D
strengthening diagnostics capabilities in the public health • Decoupling of operating layers: Customer-facing, fulfill-
network Business ment layer, and backend labs, e.g., online aggregators, lab
model partner networks, outsourced

• Visibility: Visibility has increased due to delivery E • Payors and financing: OPD health insurance coverage is
still at its nascency
management software (Real-time visibility of patient
samples) Supply chain • Corporate wellness: Corporates are increasingly becoming
benevolent, offering curative as well as wellness services
• Reliability and responsiveness of supply chain: With
automation of the supply chain, reliability has increased, F
and TAT has decreased • Focus on improving customer experience through
Technology digitalized journeys
and digital
• Use of AI systems, especially in image processing across
radiology and pathology
• Robust IT system for fulfillment layer: Collection
scheduling, sample logistics, and tracking

Sources: Praxis analysis

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Evolving patient behaviour

A Customers are increasingly seeking convenience, reliability and going for wellness-
related tests
Customer need
generation Registration Sample collection Processing Reporting Customer service

Booking made Sample is Report is sent to the Support for test

Processing lab or
through web processed in lab patient online or booking, addressing
hospital or
patient picks up queries
Patient journey

Collection center
• Prescribed by doc the report
• Self-generation of
tests
• Health check-ups Direct walk-in Report gets built

Feedback form is initiated

Field executive through mails or app

Booking made through app Results are validated

Seeking convenience Lab recommended Test tracking, report Easy to access and
Behavioural change

- Ease of test booking, by doctors, friends, access through email, responsive customer
home pickup, choice and family app, other ways service
of slot
Increased focus on Easy to read reports
Seeking packages preventive & wellness for customers
and discounts tests
Ease of maintaining
Preference for Corporate medical records
branded service wellness Weightage and level of preference
provider Longitudinal analysis
Low High of historical reports
Notes: Does not include the online supply chain (1mg, etc)
Sources: Primary research, Praxis analysis
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Evolving patient behaviour

A For self-initiated tests & regular check-ups, online platforms are preferred; customers
also desire additional value-added services while booking tests online

Online platforms are emerging as customer preference for self- Majority of customers believe following additional value-added
initiated and regular check-ups services can make their online diagnostic test experience better

Preferences of Self-initiated Regular Doctor prescribed Additional value-added services by customers while booking tests
online platforms tests check-ups tests via online platforms
across tests
types
Transparent and systematic slot booking
process

Online platforms

Consultation by certified medical professional

at minimal cost
Branded lab chains
(e.g., national and
regional chains)
Descriptive and user-friendly report format

Other private
standalone labs
Home sample collection facility

Hospitals
Booking experience

Emerging preference
Low High
Sources: Customer conversations, Secondary research, Praxis analysis
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Evolving patient behaviour

A Price, quicker access to reports & home collection facility are the primary reasons for
the selection of diagnostic service provider

Reasons for preferring online platforms as diagnostics service provider

Price competitiveness

Quicker access to reports

Convenience of at-home sample collection facility

Quality of service being provided

Accuracy of the reports

Prominent brand name of the provider

Hygiene factors

Availability of tests within the hospital

Safety procedures and practices of the facility

Emerging preference
Low High
Sources: Customer conversations, Secondary research, Praxis analysis © Praxis Global Alliance | 20
 Healthcare
Evolving patient behaviour

A
~75% of the customers prefer home collection over lab walk-ins and are willing to
pay rupee 75 - 100 extra for the same

Preference for customers among home collection versus lab walk-ins

In %

25%
• Convenient & hassle-free
• Already satisfied with services 75% • No wait time
• Proximity of test center nearby • Ease of booking slots
• Prefer walk-ins as its convenient • Free home sample collection facility
• Better accuracy of tests data • Lack of proximity to labs
• Trusted labs don’t have home collection
facility
Willingness to pay
• Concerns on sample getting affected
• Better prices • Customers are willing to pay rupee 75
-100 for the home sample collection
facility

Preference factors
Low High

Sources: Customer conversations, Secondary research, Praxis analysis © Praxis Global Alliance | 21
 Healthcare
Evolving patient behaviour

A
Consumers are increasingly adopting preventive and wellness related tests

Share of such tests is estimated to increase from ~10% to ~12% by FY26 at a CAGR of 18%

Preventative tests are projected to grow at a CAGR of 18% to increase Growth drivers for preventative tests
their share in all diagnostics tests to ~12%

Distribution of pathology tests by type

US$ B, FY16-26P CAGR CAGR • Increasing awareness for personal immunity and
FY16-21 FY21-26P
preventive healthcare post COVID-19
3.1 5.8 11.7 13% 14% • Rise in disposable income among the Indian population
8% 10% 12% 18% 18% (Section 80D of Income Tax Act allows income deduction
of rupee 5-7K for preventive health check-ups)
• Government’s push towards developing new models for
health and wellness as part of the National Health
Mission
• Corporate sectors are now encouraging employees to
92% 90% 88% 12% 14%
undergo preventive healthcare testing in order to boost
workplace productivity
• Focus of online aggregators is moving towards the
preventive and wellness segment of diagnostics
• Advances in the medical field such as preventive genetic
FY16 FY21 FY26P testing will also push more people towards preventive
healthcare
Sickness related Preventive and wellness

Sources: CRISIL, Secondary research, Praxis analysis © Praxis Global Alliance | 22

 Healthcare
Evolving patient behaviour

A While radiology has many pain points being addressed, the attractive economics of
this segment offers growth opportunities

Several key challenges exist to be solved across the value chain of imaging With attractive economics and these challenges remaining,
(e.g., CT scan), such as shortage of advanced labs, shortage of transparency in radiology is emerging as an attractive segment (illustrative
procedure charges, etc. economics for CT scan unit at the large hospital)

Need and Selection of Preparation & Report & Monthly economics

discovery the lab scanning analysis In rupee K
3,492
88
297 180 600
559 400
Insufficient Not enough Uncomfortable Could not 594 633
175
information labs for preparation for understand or 802 316 13 1,356154 1,203
about advanced CT scanning delay in report
process
973

Radiologist salary
Personnel salary
First-timers Shortage of Radiologists Delay in

Marketing cost
Total revenue

Depreciation
Supplies cost
Abdomen CT

Rent, Main
and are female did not brief report

Cardio CT

Misc. cost
& utilities
Angio CT

Limbs CT

Spine CT
Head CT

EBIDTA
scared of radiologists about the

Chest CT

PBT
CT scan and technicians process

Fidgeting and Price charged

movement more than
expected
Return on CT scanner
Contrast dye
Total investment ~₹ 18 M
being
uncomfortable RoI* ~56%
Simple payback ~2 years
EBIDTA ~ 39%
PBT ~ 34%

Notes: US$ 1 = rupee 75; *Calculated on PAT = 0.7*PBT (30% tax assumed)
Sources: Primary conversations, Secondary research, Praxis analysis
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Clinical needs and test types

B Specialized and wellness tests are the key segments projected to be growth drivers
for the Indian clinical testing market

Growth
Segments by clinical area Test Mix Rationale
outlook

Routine tests • In volume mix, this category is the major • Routine + semi-specialized tests that are
contributor to the volume, i.e., 40-45% of total primarily biochemistry pathology, immunology,
Such as CBC, lipid profile, urine clinical tests; however, in value terms, it’s just and microbiology constitutes 75-85% of the
culture, etc. 12-17% total clinical tests volume

• Year on year growth in these segments is

projected to grow at 10-15% year on year
Semi specialized tests • In volume mix, this category is the second major
contributor to volume i.e., 35-40% of total
Such as diabetes, thyroid, liver profile, clinical tests however in value terms it’s 25-35%
etc.

• Molecular pathology testing, which is more of

Specialized tests • In volume mix, this category is the second least genomics, genetic-based DNA, and RNA segment
contributor to volume, i.e., 15-22% of total sequencing, is poised to grow at 35-40% year on year
Such as molecular diagnostics clinical tests; however, in value terms, it’s already
the highest, i.e., 40-45% • Some of the key factors driving the growth are
for colorectal cancer tests, lung
finding alternative utilization of the rapidly installed
cancer tests, somatic panel tests, etc.
base for PCR & rapid test products during the
pandemic, growth in lifestyle diseases, etc.

Wellness tests • In volume mix, this category is the least • Wellness testing will grow to double that of
contributor to the volume, i.e., only 1-3% of sickness testing for the next 20-25 years – till
Such as cholesterol, BP, mammogram, total clinical tests; however, in value terms, it’s wellness is 60-70% of the total, which is just 10%
etc. under annual health check plans already a healthy 10-11% currently
such as from corporates and individuals • This is dues to increased offerings, awareness, and
adoption of bundled tests profiles and wellness
packages

Diagnostics market outlook

Sources: Metropolis investor presentation, Industry reports, At par market growth Above market growth
Press reviews, Praxis analysis
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Clinical needs and test types

B Infrastructure for molecular testing expanded multi-fold during COVID, which in a

post COVID world could be used to create a market for new viral tests

Indian molecular diagnostics market grew exponentially in 2020

with COVID19 creating additional sales of ~US$ 934M (est.) Evolution of market

Indian Molecular diagnostics market • Niche segment in India with only a few active players due
US$ M, CY19-20 to low volume requirements
Pre-COVID19 • The largest sub-segments, including HIV, HBV, and HCV
market reagents (US$ 14M) and TB reagents (US$ 13M),
constituted ~80% of the market

Extraction Other Reagents, 35 • Many companies entered the market, with 30+ companies
getting manufacturing licenses and 119+ companies
machines, 67
getting import licenses
Extraction kits,
200 Impact of • Multi fold capacity expansion undertaken
Capital investment on
Amplification equipment COVID19 – Anywhere between 2x-10x by RT – PCR & raw material
and extraction machines suppliers of enzymes and reagents such as Thermo
will provide necessary Amplification Fisher Scientific, Promega Corporation, NEB, Bio-Rad,
platform for other tests Equipment, 267 Qiagen, and Takara Bio
(except COVID19) to be
performed • Alternative applications for ramped up capacity of
molecular testing equipment

RT-PCR kits, 400 – The additional capacity will remain in place as the
Expected evolution pandemic subsides, which could potentially find multiple
Analyzers
35 Post-COVID19 applications for the RT-PCR assay as the dominant
Reagents method for diagnosing viral infections in India such as
TB (3 M cases in FY20), septicemia (11 M cases in FY20),
2019 2020
meningitis (15K cases in FY19 and other CNS (central
nervous system) infections

Notes: 1 US$ = rupee 75

Sources: MCA filings, primary conversations (N = 46), Secondary research, Praxis analysis
© Praxis Global Alliance | 25
 Healthcare
Clinical needs and test types

B Less than 20% of breast cancer cases get diagnosed early (before Stage III)

Breast cancer 5-year survival rate across stages

Early detection of breast cancer increases

the survival chances of patients by ~4x

99% 99%
86%
72%
~80% drop in
survival rate

22%

Stage 0 Stage 1 Stage 2 Stage 3 Stage 4

Diagnosis
rate 0-1% 10-15% 10-20% 50-60% 20%

• There may not be a • Earliest stage of invasive • Tumor between 2-5 cm • Locally advanced breast • Metastatic breast cancer
lump that can be breast cancer cancer
• Spreads to the lymph • Spreads beyond the
Description felt during a • Tumor is <2 cm, and no nodes under the arm • The tumor is >2 inches breast, underarm, and
self-examination lymph nodes are and extensive in the mammary lymph nodes to
• There may be no involved lymph nodes or has other parts of the body
other symptoms spread to other tissues

Notes: For ovarian cancer - the TNM staging, subsequent treatments and 5- year survival rates remain similar; and FIGO and AJCC stage ovarian cancer into
I, IA, IB, IC, II , IIA, IIB, IIIA1, IIIA2, IIIB, IIIC, IVA, and IVB; diagnosis rates imply what % of people get detected with cancer across stages
Sources: Oncology research papers; Praxis analysis
© Praxis Global Alliance | 26
 Healthcare
Clinical needs and test types

B Global genomic testing market is expected to grow at ~20% CAGR; In India too, tests
are being increasingly used for oncology, reproductive health, and predictive testing

The global genomic market is expected to grow from US$ 28B in

Growth drivers for Indian genomic market
2021 to US$ 95 in FY 2028 at CAGR of 19%

Global genomics market size

US$ B • Increased use in the management of cancer and rare diseases:
With an increase in incidence and early detection of cancer,
CAGR- clinicians are relying on these tests to decide the best line of
19% treatment

95
94.7 • Pre-symptomatic testing: Increased use to confirm or rule out
a suspected genetic condition and the probability of the
23
23.1 28
27.8 development of a genetic disorder or the same being passed on
to the next generation
FY20 FY21 FY28P

• Government initiatives: Projects like “Genome India Project”

Number of tests done by MedGenome* has shown exponential and “IndiGen” to further drive the genomic diagnostics market in
growth from FY17-19 India

Genomic tests in India

#tests • Entry of new players in the market: Involvement of private
sector laboratories in genome sequencing tests during the
1,20,000 COVID period to increase the genome sequencing capacity of
85,000 India
Increase
in FY20
supported • Increased awareness about the genomic industry: Will increase
500 by COVID the number of people willing to pay for DTC as well as B2B2C
genomic testing
FY17 FY18 FY20

Notes: India's leading genomic solutions company into oncology, reproductive health, inherited diseases and infectious diseases. It started in 2013 in the US and India.
Sources: Industry reports, Secondary research, Praxis analysis
© Praxis Global Alliance | 27
 Healthcare
Clinical needs and test types

B PoC and rapid tests have seen a wide acceptance during COVID and in future are
likely to witness wider acceptability with the advancement in technologies
PoC & rapid tests market scaled to
City tier TAT Awareness Relevance Accuracy Testing urgency
U$ 482M in 2021
PoC & rapid tests market • Enables • Awareness • Medium to high • Satisfactory accuracy • Establishing a set of
US$ M instant or amongst patients in clinical levels achieved as per basic PoCT devices
482 quick in metros is on the decisions taken doctors w.r.t. the time helps GPs or specialists,
Description diagnosis rise by doctors taken or hospitals in getting
CAGR and better first-hand
17%
• Doctors or • Acts as the • Trade-off between
administrati hospitals want to biggest driver in speed and accuracy information and is quite
on of become a tier 2 cities favorable for PoC test helpful in times of
94.7treatment one-stop solution for many use cases emergency where time
plan for aware patients is of essence
303
Metro

Tier 2

2018 2021 Tier 3

Barriers to adoption of PoCT

City tier Low accuracy Absence of trust High cost
• Accuracy achieved via PoCT is not 100% • Trust is a major factor with PoCT as sometimes • Zero willingness amongst patients to pay rupee
satisfactory. Doctors want highly accurate the patients are skeptical about the results and 500 for a test when the consultation fee itself is
Description readings (>90% accuracy) as sometimes a sometimes even doctors are not 100% confident not more than rupee 200
second verification test from a traditional about the PoCT outputs • In case of specialists in tier-3 cities, PoCT isn’t as
laboratory has to be done, and it defeats the feasible due to high initial costs
purpose of PoCT
Metro

Tier 2
Tier 3
Intensity level
Notes: Sophisticated PoCT devices: POC devices other than glucometer, sphygmomanometer, oximeter and infrared thermometer
Low High
Sources: GP & specialists IDIs (N = 45), Hospital IDIs (N = 5), Expert interviews (N = 3), PoCT player interviews (N = 8), Tracxn, BIRAC, PGA Labs analysis
© Praxis Global Alliance | 28
 Healthcare
Competition

C Due to attractive margins, players from adjacent service areas of the healthcare
ecosystem have entered the diagnostics market and made it more competitive

Player type Market actions

• One of the major pharma companies plans to set up its National Reference Laboratory in Navi Mumbai, and plans to open 100 labs and
1000 collection centers pan India in the next 3 years
• Another Pharma giant commercialized its RT-PCR test kit 'ViraGen' for COVID-19
Pharma companies • And launched a portable wireless spirometer for diagnosis of chronic obstructive pulmonary disorder (COPD) and asthma

• Whereas another player launched diagnostic center chain in 2017, and is currently expanding in Maharashtra and other western &
central states of India

Hospital chains • One of the national chains formulated a wholly-owned subsidiary focused on diagnostics

• An online pharmacy player acquired 66% stake in Thyrocare, the fourth largest diagnostics chain in India

Comprehensive
telehealth service • Whereas the other competitor in this space acquired Droplet, a logistics company specializing in home sample collection for diagnostics
providers labs

• And another player in this space launched phlebotomist services for consumers to avail lab tests from the comfort of their homes

• An online platform for health services, launched health testing at home in 100 new cities in the country by recruiting 1,500 support staff,
including pathologists, phlebotomists, lab technicians, etc.
Diagnostics service
aggregators
• Whereas another provider expanded its diagnostic solutions to 3500+ routine and specialized tests for hormone testing, genomic testing,
routing pathology investigations, etc.

Sources: CRISIL, Secondary sources, Praxis analysis

© Praxis Global Alliance | 29
 Healthcare
Competition

C Government is taking initiatives to strengthen the public health infrastructure and

make diagnostics more accessible and affordable

Free diagnostics service under NHM National Program for Prevention & Control of Cancer,
• Timeline: FY18 – ongoing Diabetes, Cardiovascular Diseases & Strokes

• Free radiology and pathology services at SHCs, PHC, CHCs, District & • Timeline: FY19 – ongoing
sub-district hospitals to reduce high out-of-pocket expenditure • Free treatment to poor people at SCIs or TCCCs
• Tests include hematology, serology, biochemistry, clinical pathology, • Preventive screening for ~7 Cr; 67K cancer, 99K strokes, 42 lakh
Recent policies

microbiology, radiology, and cardiology. However, States are free to Hypertension, 33 lakh Diabetes and 2 lakh cardiovascular diseases cases
add to the list based on their priorities diagnosed

National Essential Diagnostics List Pradhan Mantri Atma Nirbhar Swasth Bharat Yojana
• Timeline: FY19 – ongoing • Timeline: FY22 – 26
• 105 general lab tests, 30 disease-specific tests, and 24 radiology tests • Support for 17,788 rural HWCs, and 11,024 urban HWCs
to address a critical gap in the standardization of medical devices through the establishment of integrated public health labs in all districts
and IVD devices

Procurement of imaging equipment by State govts Diagnostics centers under PPP model
Ongoing initiatives

• Procurement of equipment such as CT and MR by state govts for • 1,797 centers under the PPP model operated by Krsnaa Diagnostics
in-house public facilities across 14 states
• For CT: States such as Maharashtra, Karnataka, Gujarat & Kerala • Expansion of hub & spoke centers as 1,127 centers added in the last three
floated ~ 122 tenders between 2020 – 21 years
• For MR: States such as Maharashtra, Telangana, Uttarakhand &
Kerala floated ~ 48 tenders between 2020 - 21

Notes: SCI: State Cancer Institutes; TCCC: Tertiary Cancer Care centers
Sources: MoHFW website, Secondary sources, Praxis analysis
© Praxis Global Alliance | 30
 Healthcare
Competition

C Despite competition, organized labs are expected to have better revenue growth than
others due to their wider test portfolio, better customer experience, and deeper reach

Pan-India chains are witnessing faster revenue growth since the Rationale for shift towards organized labs
beginning of the pandemic

Revenue growth
% • NABL accredited labs increased from 347 in 2012 to
1,880 in Mar-21, which have mostly been from the
Customer
organized chains segment
preference for
18-23% accredited labs • Organized lab chains have been able to capitalize on the
COVID testing market due to their existing capabilities
for molecular diagnostics
14-18%
14% 14%
12% 12% • Organized segment has a lower price for the tests primarily
Lower costs and due to lower costs enabled by a hub and spoke operating
better customer model
8% experience • Organized labs provide a better customer experience by
having online portals for test booking, home collection,
5% tracking, and report generation

• Vijaya Diagnostics & Krsnaa Diagnostics raised rupee

Increase in lab 1,895 Cr and rupee 1,213 Cr through IPOs for increasing
FY19 FY20 FY21 FY22P penetration due to their network labs and testing capabilities
investments an
M&A • National chains are acquiring regional chains to expanding
Pan-India chains Overall sector footprint

Sources: CRISIL, Secondary sources, Praxis analysis

© Praxis Global Alliance | 31
 Healthcare
Business models

D Due to increased competition in Metros and Tier-1, lab chains are undertaking
aggressive expansion in Tier 2+ cities through asset-light models

Route for business

Details
expansion

• Online players betting big on diagnostics, e.g., Pharmeasy’s acquisition of Thyrocare

• Acquisition of larger stand-alone facilities, and regional chains for geographic expansion and establishing pan-India presence
Acquisition and consolidation
of labs

• Lab chains are fast expanding through organic and inorganic routes in Tier 2+ cities
• Diagnostic chains going for IPO seek aggressive growth across city tiers
New labs in T2+ cities

• Lab chains are further deepening their presence in multiple cities across the country through collection centers, patient
service centers, pick-up points, etc. e.g., some of the key national chains have a strong network of over 14K collection centers
and over 55K patient touchpoints
Collection centers

Sources: Analyst presentations, IPO reports, Secondary Analysis, Praxis analysis

© Praxis Global Alliance | 32
 Healthcare
Business models

D To cater to the latent demand, teleradiology is seeing wider adoption and is likely to
expand in T2, T3, and T4 cities

Teleradiology market in India is projected to grow at a CAGR of 15% to Drivers of

reach US$ 611 M in 2024 Description Benefits
adoption

Growth in tele-radiology market CAGR CAGR • In case of low scan • Teleradiologist paid on a
US$ M CY17-20 CY20-24P volume, in-house per scan or % scan price
Cost benefits
radiologist salary basis resulting in
of teleradiology
611 18% 15% can become an cost-effectiveness
unrecovered fixed • ~40% cost saving in the
cost radiologists cost*

284 17% 17% • Availability of a • Distribution of scans

Lower reporting single or smaller among the larger panel
X-ray market TAT team of 2 – 3 of tele-radiologist
356
radiologist increases making it possible to
remained agnostic
the reporting TAT report multiple scans all
to COVID impact
at once
153
217 158 25% 13% • Unavailability of • Wider panel of radiologist
Shortage of in-house radiologist with varying skills and
96 92 radiologists experience
• Unexpected increased
47 15% 13% scan volume
179
111
73
• Occasionally in-house • Wider panel of radiologist
Shortage of or associated with varying skills and
2017 2020 2024
experienced radiologist do not have expertise to solve
staff expertise to interpret complex cases
CT scan MRI X-ray complex cases

Notes: Teleradiology market size (TAM) = (# Installed base of radiology equipment) X (# Radiology scan) X (Teleradiologist fees per scan) ; Installed base and number of scans are sourced from secondary research,
while teleradiologist fees is sourced through conversations with industry experts
Sources: Secondary research, Praxis analysis © Praxis Global Alliance | 33
 Healthcare
Business models

D Even in pathology, wherever images are involved, players are investing to make business
plans around remote diagnosis and improve quality and efficiency of diagnostics

Plays Offering Players (illustrative)

• Digitization of tissue slides

Service providers
• Access to a large pool of histopathologists to analyze images for domestic and international
markets

In-house use of • Hospitals and diagnostic chains adopting solutions esp. for cancer diagnostic
Technology

• AI-powered digital pathology solution for cancer diagnostics

Computational • Philips – Ibex Medical tie-up
pathology
solution providers • Significant improvements in diagnostic efficiency, with a 25-30%
reduction in time-to-diagnosis compared to conventional microscope viewing, • Roche – Ibex tie-up for workflow
and AI analysis for cancer
• 1 - to 2 - day reductions in total turnaround time

Sources: Secondary research, Praxis analysis

© Praxis Global Alliance | 34
 Healthcare
Business models

D With the decoupling of operating layers, models are evolving into a network
of partnerships

Customer facing layer Backend sample

Logistics Reporting
processing

• COCO collection centers • Own logistics • Own labs • Report preparation by the
Conventional
labs themselves
diagnostic • Hospital labs • Home grown LIMS
operations • B2B pickup points

Modern
diagnostic • Online aggregators • Third party logistics • Partner labs • Teleradiology
operations • Robust LIMS providers • Telepathology

Examples

Acquired
by 1mg

Sources: Secondary research, Praxis analysis

© Praxis Global Alliance | 35
 Healthcare
Business models

D Business models are evolving fast to align with customer preferences

Key partners Channel Customer Segments

Value proposition and relationship

• Decoupling of layers: Home • Convenience: At home collection • Franchising of labs, partner labs • Affordable and value services (e.g.,
pickup businesses and • Pricing: bundling of tests, pricing • Proximity to the customer: value radiology)
third-party phlebo networks discounts collection centers, pick-up points • Condition specific segments: Onco,
• Technology partnerships: • Accuracy and reliability: COVID has • Online channels: digital customer elderly, chronic ailments
sample movement & tracking, prompted the shift towards branded acquisition, online test booking • Owning the customer: Growth of
LIMS players online models
• Readability of report: 80% of patients • Loyalty: Increasing criticality of
cannot understand their report loyalty with increasing competition

Cost structure Revenue streams

• Asset light models - Deepening presence in multiple cities across the country • Newer tests: Molecular diagnostics, genomics, health, and wellness tests
through collection centers, patient service centers, pick-up points, etc. • Remote diagnostics: Telepathology and teleradiology services
• Reagent rental models: Pay per use to reduce upfront CAPEX
• Centralization of resources: Tele-models – radiologists, histopathologists,
lab-work
• Computational pathology: Better accuracy, higher productivity

Sources: Praxis analysis

© Praxis Global Alliance | 36
 Healthcare
Financing and payers

While still in nascency, insurance cover for out-patient care could propel a Launched in June
2020 and currently
rapid growth only serving B’lore

# network hospitals 5,900 6,500 6,700 8,250 11

Claim settlement ratio % ~94% ~91% ~96% ~93% 11

• 5-10% of retail health • 5-10% of retail • 5-10% of retail health • 5-10% of retail health • All plans cover OPD
% penetration of OPD
policies sold include health policies sold policies sold include policies sold include consultations and
policies
OPD cover include OPD cover OPD cover OPD cover diagnostics

Policy name • Smart + OPD • ProHealth Plus • GoActive • Comprehensive • Even Plus

Hospitalization • 5L • 6L • 5L • 5L • 50L a year per family

cover member

• 5,000 (25% copayment • 2,000 (no co-payment) • 2,400 (no co-payment) • 5,000 (no co-payment) • Unlimited doctor
OPD cover in year 1) consultations
• Net OPD cover: 2,000 • Net OPD cover: 2,400 • Net OPD cover: 5,000
(rupee) • Unlimited diagnostic
• Net OPD cover: 3,750
tests
• Without OPD cover: • Without OPD cover: • Without OPD cover: • Without OPD cover: • With OPD cover: Starts
Policies 4,300 7,093 7,697 6,621 at 1,050 per month
Premium
with
(rupee) • With OPD cover: 6,300 • With OPD cover: • With OPD cover: • With OPD cover:
OPD
cover 8,170 8,874 10,535
• Premium for OPD
cover: 2,000 • Premium for OPD • Premium for OPD • Premium for OPD
cover: 1,077 cover: 1,177 cover: 3,914

Premium (rupee) • 53% • 72% • 49% • 78%

• Bills reimbursed in 3 • Bills reimbursed in • Bills reimbursed in • Bills reimbursed in 7-10 • Procedures are already
Claim process
working days (cashless maximum 7 working maximum 7 working working days (cashless paid for, no need to file
(OPD expenses
through Godigit app) days (cashless through days (through Max through their app) claims (cashless)
Medibuddy app) Bupa website or app)

Diagnostics • All necessary and • Diagnostics test are •• All

Allnecessary
necessaryand
and • Unlimited coverage of
• All necessary and prescribed diagnostics diagnostics test
Coverage prescribed diagnostics allowed in lieu of prescribed diagnostics
prescribed diagnostics upto
tothe
theextent
extentof
of prescribed by partner
up to the extent of permissible annual up
up to the extent of sum insured doctor and carried out at
sum insured health check-up sum insured
sum insured partner hospital or lab
expenses
Notes: OPD cover here refers to expenses that do not require hospitalization; All policy prices based on More favorable Less favorable
27 year old male living in Metro
Sources: Company websites, Agent interviews, Insurance aggregator websites, Praxis analysis © Praxis Global Alliance | 37
 Healthcare
Supply chain

E Supply chain innovations in sample processing pre and post-analytical stages are
levers of key differentiators among the service providers

Sample pre-analytical stage Analytical stage Sample post analytical stage

• Search for a • Book an • Sample is • Scanning, • Processing • Report is • Service

testing facility online or collected sorting of and validation mailed, stored feedback,
based on offline or given at the samples of generated in app or portal, query
requirement appoint- lab reports WhatsApp resolution
ment
Booking and sample collection Sample processing Reporting and customer service

Order entry, patient, and specimen Sorting and routing of samples Transcription errors & improper data entry
misidentification
Pain points

Sample collected from infusion route Time and or speed of centrifugation Incorrect interpretation of ranges

Inappropriate container while handling sample Pipetting and labeling of the samples Excessive turnaround time (TAT) in reporting

Storage and transportation issues Equipment malfunctions, QC loss Failure or delay in reporting critical values

Adoption of software to coordinate and track Tracking of key quality metrics such as Adoption of wider TAT i.e., from request to report
phlebotomists such as SLA buckets while blood culture contamination rate, generation instead of the sample received to
collection (home or in-lab) specimen labeling error rates, etc reporting
Innovation

Develop and track sample acceptance and

Leveraging tools of information technology such as
trends

rejection criteria which are linked to the

electronic medical records, clinician order entry,
monitoring of the collection and transport
electronic handbooks and embedded hyperlinks in
processes
reports, etc.
Adopting tools and monitor guidelines for
container usage, transport temperature or time
and safety, within-laboratory pre-analytical
temperature or time or safety criteria

Pain points
Low High
Sources: Industry reports, Press reviews, Praxis analysis © Praxis Global Alliance | 38
 Healthcare
F Digital transformation is happening across areas in diagnostics

Sample collection Sample arrival and Preparation of

Clinical analysis Diagnostic reading Reporting
integration digital samples

Patient wants Barcode scanned at Digital macro camera Digital microscopy On digital worksta- Automated report
blood test lab and sample captures image for leverages tion, images are generation by LIMS
uploaded in the LIMS slides eliminating need machine-learning compared against
of physical samples algorithms old or stored images
from the same
patient

At-home Use kiosks Visit lab for

test via for test test
app Patient’s medical history With AI, images could Report read on Report picked up
is downloaded using Modern scanners elimi- be compared with mobile app from lab
EMRs nate the need to refocus specimens from across Viewing and
the image health systems sharing images
using Whole
Slide Imaging
Remote pick-up
(WSI)
of diagnostic Appointment Appointment
sample Prioritize supplies booked on booked via
required using digital mobile app physical visit
supply networks Image stored on cloud Using cloud computing,
server integrated with digital samples are
LIMS shared with remote
experts to get second
Sample taken and opinion
marked with
barcode sticker

Very Low Very High

Adoption level
Sources: Praxis analysis © Praxis Global Alliance | 39
 Healthcare
Technology and digital

F While considerable focus has been on leveraging digital to become efficient and
deliver customer delight; many areas of opportunity remain unexplored

Customer Experience Operational processes Business model

Digital strategy aligned with business strategy Business model driven by digital

Customer understanding Process digitization Digitally modified business

• Analytics based segmentation • Automation • Product and service augmentation

• Knowledge from social engagement • Performance improvement • Transitioning physical to digital
• New features • Digital wrappers

Top line growth Employee enablement Digitally enabled offerings

• Digitally enhanced selling • Working anywhere anytime • Digital products

• Predictive marketing • Knowledge sharing • Reshaping organization boundaries
• Streamlined customer processes • Better and faster communication

Customer touch points Performance management

• Customer service • Management insight systems

• Cross-channel coherence • Data driven decision making
• Self-service

• Unified data and processes • Ecosystem – partnerships

• Business & IT integration
• Analytics capability • Portfolio – new incubation

Low adoption High adoption

Sources: Primary research, Praxis analysis © Praxis Global Alliance | 40
Contents

Future
outlook
 Healthcare
Future outlook

Indian diagnostics market is projected to grow at a CAGR of 14% & reach US$ 20B
by FY26

Expected
Diagnostics market grew at a CAGR of 13% to reach US$ 10B in Growth growth Rationale
FY21 drivers rate
Size of diagnostics market in India Population 1.0% • India population expected to grow annually at ~1% from
FY21-FY26
US$ B, FY16-26P
Urbanization 2.5% • With increasing urbanization, diagnostics market is
expected to grow
CAGR 20
14% Penetration 5.0% • Penetration expected to improve by 5% driven by access
(home collections), affordability and focus of state
governments on establishing labs under PPP model in
under-served locations

Tests or 2.0% • Higher awareness about preventive care, test mix moving
CAGR patient towards specialized tests
13%

Realization 2-4% • Pathology: Growth in realization per test has been ~4%
10 10 per tests from FY17-FY20
8 • Radiology: Realization is lower due to the dependence on
7 referrals (Channel margins), but growth in teleradiology is
6 driving growth in realization per test
6
• Effect of cost controls on the essential test could be
balanced out with increased volumes (as witnessed
historically in the case of Malaria and Dengue) and a shift in
test mix towards specialized tests

Diagnostics ~14% • Pathology: The growth rate is expected to be ~15%

FY19 CAGR FY21 • Radiology: Growth rate is expected to be in the range of
FY16 FY17 FY18 FY20 FY21 FY26P – 26 11-13%

Notes: US$ 1 = rupee 75

Sources: CRISIL report, Praxis analysis
© Praxis Global Alliance | 42
 Healthcare
Future outlook

Challenges facing the industry

Challenges Likely impact

Price control, especially on tests covered under NEDL – Low likelihood

• Focus likely to be on ensuring the tests are provided to patients who need it
• Barring exceptional situations, Government will allow markets to operate

Regulatory
High margin, high volume ‘routine tests’ may face pricing pressure.
• Government is likely to invest in augmenting diagnostics infrastructure, which, if utilized well, may impact unorganized labs more
• Could lead to the growth of the industry as ‘evidence-based treatment’ would find higher acceptance

Fragmented NABL is not mandatory and not likely to be made mandatory in medium terms
market, low focus • Industry is highly fragmented, and enforcing accreditation may not be feasible
on quality
• Consolidation would drive focus on quality in medium to long term

Commoditization • Pricing pressure could be there on semi-specialized and specialized tests; however, with scale, margins can still be maintained
and increasing • Will require Companies to work on increasing ticket size through bundling of tests, promote health and wellness tests, and introduce
competitive specialized tests
intensity

Access to • Emerging models like teleradiology and telepathology could address this issue
specialized
resources

Value conscious • Could witness value products from leading OEM to address the value segment across Tiers of cities
market

Sources: Praxis analysis

© Praxis Global Alliance | 43
 Healthcare

Imperatives for diagnostic companies

Growth in non-core Customer acquisition,

Growth in core Supply & ops Bottom line improvement
and inorganic experience, & retention

• Channels: Omni-channel • Evaluation of M&A • Service TAT and reliabil- • Customer Loyalty: • Super efficient network:
strategy opportunities to grow ity: Optimize service Institutionalize With the growth in
• New Products: geographically delivery in new cities to touchpoint and footprint, changing
ensure consistent integrated NPS capability; demand patterns,
• Bundling of tests: Design coverage integrate NPS 3.0 economics, and
and bundling of tests into • Adjacencies: e.g., Addition technology, redesign the
packages, a greater of capabilities for telera- network to balance TAT
number of specialized diology and telepatholo- • Supply chain digitiza- • Digital journeys for and cost to serve
tests gy; integrated health tion: Implement a customers: Robust
Opportunities

• Leadership in emerging offerings – e.g., wellness control tower set up to best-in-class digital
test categories: Emerg services enhance supply chain journeys. Improve UI/UX • Improved tech
ing tests such as genom visibility and reliability through personalization, integration and
ics, molecular diagnotics, booking and reduction of cancellation,
• Data monetization or appointments, medical the efficiency of own
etc. value add services: • Tech for process profiles, family profiles, Phlebo team
• T2 and 3 expansion: Provide value added efficiencies: Usage of recommendations, etc.
Network expansion in T2 services through the digitalization tools such
and T3 cities in-align with analysis of longitudinal as AI for process
an increase in penetration data for disease risk efficiencies
of healthcare services assessment and chronic
• Network of partnerships: care management
e.g., Franchising of labs to
increase reach

Sources: Secondary research, Praxis analysis © Praxis Global Alliance | 44

Contents

Praxis
offerings
 Healthcare
Praxis offerings

How can we add value to diagnostics? – Praxis Global Alliance

Growth and Cost and Performance Customer Loyalty

Excellence Investment Advisory
Scale-Up and Experience

Business expansion Reduction in cost per

reportable test: • Customer loyalty: • Commercial due
• Domestic market
Strategy and Patients, Doctors, diligence Enablement and
share improvement • Procurement cost
Transformation hospitals, corporate Implementation
and expansion reduction customers • Target screening
• Micro-market • Consumption • LTV maximization
• Digital optimization • Post merger
evaluation
transformation • Digital integration with integration
doctors, hospitals,
Business expansion Network optimization
• Portfolio & Growth patients
strategy • Adjacencies
Control Tower • Project execution
• Expansion into Transformation
radiology
Product cost and
• Pricing, Bundling, product profitability
Packages &
Discounts KPIs: Board to lab
alignment of KPIs
Data monetization

Omni channel strategy

State wise market

share growt

Sources: Secondary research, Praxis analysis © Praxis Global Alliance | 46

 Healthcare
Praxis offerings

Our solutions to help increase shareholder value

Customer loyalty and Market share

Network optimization Operational efficiency
experience improvement

• Measurement of loyalty • Analysis of demand, • Benchmarking operational • Regional market share

(NPS) footprint, economics, and KPIs improvement
resources
• Design initiatives to • Design and implement • Identify growth
improve CLTV and lower • Define leaner network operations performance opportunities e.g. test
customer acquisition costs operating models improvement initiatives bundling, B2B, etc.

Control Tower Cost of test reduction Board to lab alignment

of KPIs

• Implement control tower • Holistic analysis of direct • Aligning business objectives

set up to makes both costs across a with the team and
operations cost and service comprehensive set of individual goals
efficient levers • Establishment of
performance measurement
metrics

Sources: Praxis analysis © Praxis Global Alliance | 47

Connect with us Build together. Win together.

We will be happy to share perspectives

Madhur Singhal Aryaman Tandon Sumit Goel

Managing Partner & CEO Managing Partner & Co-Founder Managing Partner & Head – Healthcare
Praxis Global Alliance Praxis Global Alliance and Lifesciences
Praxis Global Alliance

For media queries, please contact

Vishakha Mahajan Akanksha Surbhi
SVP - Corporate Communications Associate Manager - PR & Brand Marketing
E: communications@praxisga.com E: pr@praxisga.com
M: +91 7678228406 M: +91 93541 37148

New Delhi | Gurugram | Mumbai | Bengaluru www.praxisga.com

Disclaimer: This material has been prepared by Praxis Global Alliance, which is the trade name of Praxian Global Private Limited (“Praxis”, “we”, or “our”) with the intent to showcase our capability and disseminate learnings
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