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India has more laboratories then it needs, therefore all will not be able to survive

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India’s diagnostic sector is at cross roads where opportunities are many, yet certain barriers could be detrimental to its progress. In a brief conversation with Dr A Velumani, Founder and CEO, Thyrocare, Raelene Kambli learns about the key trends shaping the sector and the road blocks ahead

What are the opportunities you see for the diagnostic sector in India?

The Indian diagnostic industry is not less than `30,000 crore and `3000 crore is the reagent industry. Almost 95 per cent diagnostic instruments and reagents are imported. Everyone feels diagnostics as an industry has immense opportunities but the truth is that it has immense challenges too. To give you a fair idea of the situation, I would like to inform you that India has more laboratories than it needs, therefore all will not be able to survive. If all cannot survive then it is a challenge and not an opportunity. Unlike in the education sector where we have a good system but funding is meagre, the healthcare sector is blessed with funds but we have a poor system. Moreover, on the market front, the Indian diagnostic industry is currently dwarfed, primarily due to low per capita income and low mean age of India. With growing age, per capita income and awareness among Indians, the healthcare industry and diagnostics in particular would have 20 per cent CAGR for the next 20 years. Such an event would enable stakeholders to understand the opportunities and challenges they will face in their journey.

What are the key trends shaping the diagnostic industry in India?

  • Biochemistry focussed laboratory chains are having better growth and profitability.
  • Better profitability getting better investor attentions and aggressions.
  • Branded and accredited laboratories growing faster than unbranded.

Should prices for diagnostics be standardised?

Determining the right price for diagnostics have huge challenges. There are variable factors that determine the cost of tests. The cost of diagnostic instruments, cost of reagents which are 95 per cent imported are some of the major factors that determine the cost.

Are you concerned that prices do not match the quality/value of diagnostic services today? Patients many a times are not even aware of the tests they are undergoing, as patient education and counselling is absent at the laboratory level. What is your opinion?

Regarding pricing, it is favourable to the common man. In the entire world, India is cheaper and hence that is not the worry. Quality continues to remain the same when compared to the rest of the world. While some existing laboratories have improved their quality of services, there are a few which have got into the business with lower quality standard. Regarding awareness, it is pathetically low but has started improving recently.

What impact will the Essential Diagnostic List (EDL)  have on the business of diagnostics?

Well, EDL will only mean that there will be price control for all the test following under this.

Tell us your opinion on the impact of EDL on the diagnostic sector?

EDL says these tests should not be charged more than the listed price. Unfortunately, stake holders have no knowledge or control on them. They are predominately sick care tests. In long, the list will be longer. Will to implement will be stronger.

How do you see the reagents market shaping in India? How long are we going to depend on imports?

India continues to depend upon on imports for reagents and instruments to an extent of 80 per cent. Since volume favours profitability Japan, Europe and the US manufacturers continue to lead and dominate. Local players have quality, costing and pricing challenges. You are of the opinion that if the country does not focus on preventive care, the nation may suffer a huge economic loss. Yes. In any country there should be 50 per cent of testing done in individuals (who are not tagged as patients) to call it developed. In India, in 1990, it was just 2 per cent. In 2015, in 25 years it has moved to 10 per cent. By 2050, it would be 50 per cent. A stitch in time saves nine is apt in healthcare.

You also say that around 75 per cent of diagnostic tests do not help in providing accurate diagnosis of illness?

Yes. In a menu of let us say 100 tests approximately only 20 of them have false positives or false negatives. While rest have limited usages – as a stand-alone test or in conjunction with others only gives a higher probability of a disease or disorder. That is a worry and not many new and definitive tests are coming out from the researchers.

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