NEW DELHI: India’s diagnostics industry is expected to grow at a strong pace of 14 per cent compounded annual growth rate (CAGR) over the next five years, according to a recent report by PhillipCapital.
The report forecasts this growth driven by several key factors such as increased healthcare spending, an ageing population, higher income levels, rising awareness of preventive testing, wider availability of advanced diagnostic tests, increased penetration of health insurance, and initiatives by the central government to strengthen healthcare infrastructure.
It said “The Indian diagnostics industry CAGR is estimated at an accelerated 14 per cent over FY23-28 fuelled by an increase in healthcare spending driven by an ageing population, rising income levels”.
While the overall industry is on a growth path, the report believed that organised diagnostic players will grow even faster than the rest of the sector.
The report highlighted that organised companies are better equipped with more advanced and efficient services compared to their unorganised counterparts. They are also likely to benefit from faster consolidation taking place across the industry.
It said, “we believe organized diagnostics companies will outpace industry growth, led by their more advanced and efficient offerings than unorganized peers”.
Currently, the Indian diagnostics market is highly fragmented. Organised diagnostic chains account for just 15 per cent of the total market share. Hospital-based laboratories have a larger share of 37 per cent, while a significant 48 per cent is still controlled by unorganised standalone labs.
This offers a major opportunity for organised players to expand their presence through acquisitions and market consolidation.
The report also pointed out that India’s diagnostics sector remains under-penetrated compared to global standards. When measured by the number of tests conducted per person each year, India lags far behind other developing nations such as Brazil and Saudi Arabia–even though India has the largest population in the world.
This indicates that there is still a huge untapped demand for diagnostics services in the country.
So the report outlined that the Indian diagnostics industry is set for strong growth in the coming years, with organised players in a favourable position to lead the charge through better services and market consolidation.
