Diagnostic Business Under COVID Stress

In pre-Corona pandemic, the diagnostic service providers like Dr Lal Path Labs, Dr Dangs Lab and several others were facing the issues like price increase, volume pressure and rising cost base but post-corona virus outbreak the worry has shifted to the sustainability of the business. Industry leader (Honorary) Brig. Dr Arvind Lal, Executive Chairman of Dr Lal Pathlabs says, “We are not doing well at all...Our businesses have come down by 80 per cent."

"We were seeing 60 to 65 thousand patients all over India. Now that patient number has gone down by at least 60 per cent," added Dr Lal. 

When asked about how long will it take to recover from the impact of Covid-19, he thinks, "It will take anything between 6 months to 18 months for us to come anywhere near normal."

Though the market is majorly dominated by pathology services accounting for approximately 70 per cent, the impact of Covid-19 has shaken this section like other aspects of the Indian healthcare sector. But what is the main reason for this? “The percentage of GDP invested in the health sector is so low that it puts private sector under stress,” says Dr Lal. He is also the Advisor to FICCI Health Services Committee.

ICMR and NABL accredited private laboratories like Dr Lal Pathlabs and Dr Dangs Lab have joined the forces fighting against Covid-19 in the country but the situation is worse for all players. These third-party certified labs have been asked to perform Covid testing at a fixed price of Rs 4,500 where the cost of the test is higher than this. Private labs are urging to reimburse the cost of these tests after the SC’s order with Ayushman Bharat Yojana funds.

Back in 2009, private players were again called to be a part of the fighting troop against swine (H1N1) flu pandemic. Just like now, the cost of the H1N1 test was approved at Rs 4,500 by the government. Considering all the economic changes like import duty and rupees devaluation in 11 years, Dr Lal says, "These prices should have exceeded Rs 7,000- Rs 7,500. Cost-wise, we've done a marvellous job."

But that’s not the only issue faced by the private players. Although the government is putting in their efforts to fight back the coronavirus at the same time, they need to strengthen the health sector. While seeking the government’s support, industry leaders request the government to reduce the GST and import duty on the medical items and ease the pressure on payback loans. 

According to a recent Research and Markets report “Indian Diagnostic Services Market Outlook 2020”, the industry is expected to grow at 27.5 per cent for the next five years. This can be achieved by improving healthcare facilities, pathological and medical diagnostic laboratories, Public-private projects along with the health insurance sector. The report also suggests that the market will rise up to Rs 860 billion in revenues by 2020.