The Hindu Business Line : Diagnostic pie — healthcare finds a path to big growth

Medical aid
HLM marks the consolidation of the Rs 6,600-crore domestic diagnostics market.
Compared to standalone labs, those within hospitals rule the roost with 80 per cent of the diagnostics business.

Bangalore , April 14

Healthcare business, like everything else, is innovating. If you want a fast piece of, say, the booming diagnostics pie but don't want to start a new path lab or buy one outright, just try the middle path — HLM.

The tribe of those who believe hospitals should not mix diagnostics and treatment is growing. Hospital lab management is seeping quietly into the country.

The idea of outsourced path-lab management has attracted diagnostics majors SRL Ranbaxy, Metropolis, Dr Lal's, and even drug major Nicholas Piramal.

Externally managed hospital labs in the country are still under 50 but they are certainly the new big-growth area, according to Dr G.S.K. Velu, Managing Director of Metropolis Health Services. Compared to standalone labs, those within hospitals rule the roost with 80 per cent of the diagnostics business.

Metropolis runs ten of its 17 labs under HLM, including in Sri Lanka and Seychelles.

The model, which started with Malar Hospitals in 1999, can grow a hospital's lab revenue three-fold to 30 per cent and would be the company's main strategy, Dr Velu told Business Line. Set up in 1981, the Dr Sushil Shah-owned Metropolis has seen its revenue surge from Rs 8 crore in 2002 to Rs 70 crore this year and expects to double it next year.

It plans a Rs 40-crore private equity placement this year and an IPO later to fund acquisitions in South East Asia, he said. This year will see acquisitions and overseas alliances worth Rs 50 crore, while Metropolis has spent Rs 25 crore on lab takeovers including Chennai's Lister's Labs. Metropolis recently added the lab of M.S.Ramaiah Memorial Hospital, Bangalore.

Talks are on for more HLM tie-ups with 500-1000 bed hospitals in the Gulf, South East Asia, Africa as well as within the country. HLM, Dr Velu said, marks the consolidation of the Rs 6,600-crore domestic diagnostics market. A picture of what it can be like in India is the world leader, Quest Diagnostics Inc, now a $5.5-billion player. With lab reports in the West taking even 21 days, pilots are being done for the UK NHS. Dr Velu said Metropolis was setting up LIMS (lab information management system) shortly to encourage UK hospitals to outsource.

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