The Hindu Business Line : Consolidation seen in diagnostic services

THE `chain' store concept is not new, but in the Indian diagnostic space it is still nascent. Large path labs, though few, aver that "consolidation will happen in this space within the next five years".

According to Dr Sushil Shah, Chairman, Metropolis Health Services (India) Pvt Ltd, this fragmented market would witness some consolidation in a regulated environment. "While there are some regulations for opening a shop, there is no law to prevent the mushroom growth of path labs in the country. There are over 3,000 path labs in Mumbai today, but less than 400 are run by a qualified pathologist. As the demand for quality tests mount, consolidation is bound to happen," Dr Shah told Business Line.

"This fragmented market will see some churns and only the best will survive," stated Dr G.S.K. Velu, Managing Director of Metropolis Health Services.

Metropolis has over the years established a chain of 8 diagnostic clinical laboratories. Dr Velu has not ruled out acquisition in its growth path. "This is the growth model in the US. Ten years ago, the US market was as fragmented as the one in India today. But over the years, four major chains have emerged to control 90 per cent of the market in the US. The market in India will also evolve in a similar way," he said.

While Dr Velu did not share any finer details of its acquisition plans, he said Metropolis was in talks with at least 10 players. "We will look for acquisition in the first place to start with a certain load."

Large path labs though, have been showing impressive growth rates. Metropolis claims that its business grew 50 per cent over last year, despite the unorganised sector's dominance in this space. "The focus on quality and accuracy of test results, minimal turnaround time has been our edge," he said.

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