Assessment of Indian Diagnostic sector: Great opportunity for new Businesses

Overview of Indian healthcare sector

India’s healthcare sector has seen an exponential growth in recent years. Private as well as public domain of the industry are witnessing a collective growth, shaping the future of the industry. With a growing market demand of healthcare services and products, the shift in the industry is more visible over the last decade. Talking about the data, the market size of healthcare sector in India has seen a rapid growth from USD 272 billion (FY 20) to USD 467.5 billion (FY 24). Indian healthcare market is growing at a CAGR of 14.5%, as per an analysis by The India Watch which is one of the Top Healthcare Market Research Company In India.

Not only revenue, but the sector is also contributing towards employment. As of 2024, the healthcare industry employs 7.5 million people. Recent research predicts, through the entry of Artificial Intelligence (AI) in healthcare sector nearly 3 million new jobs will be created by 2025. Also, progress in e-healthcare will create around 2.5 million new jobs. Under I.M.C Act, the number of allopathic doctors with recognised qualifications is close to 1.3 million (increasing from 0.83 million in 2010). 

Public spending on healthcare in India was 2.1% of the GDP in 2023, which was recorded to be 2.2% in 2022, 1.6% in 2021, 1.2% in 2020. The government of India has proposed this to be increased at 2.5% by 2025. An amount of USD 10.93 billion was allocated to Ministry of Health and Family Welfare (MoHFW) in 2024-25, by the Indian government.

Also read, how The India Watch, Top Healthcare Market Research Agency In India  has helped a Canadian Business Enterprise to set-up a Diagnsotic Centre in Gurgaon, India.

In 2021, there were of total of 69,264 hospitals in India including public as well as private centres. India has 1 bed per 1000 people, with a total of 1.8 million (approximately) beds. Also, there are 706 medical colleges in India as of 2023.

 

India’s FDI regime has been liberated extensively. FDI is permitted up to 100% under the automatic route for greenfield pharma projects and 74% under automatic route for brownfield pharma projects. As per Feasibility Analysis For Healthcare In India, FDI inflow was recorded to be USD 33 billion from 2000 to 2023 in the healthcare sector.

Factors driving healthcare sector in India

Several factors are propelling growth of India’s healthcare sector, as mentioned below:

•  India’s massive population creates a large base of consumers for healthcare services. With an increasing disposable income of middle class, demand for quality healthcare is spiralling upwards. India’s population was recorded to be 1.4 billion as of 8th June 2024 and is growing at a rate of 0.92%. With such a heavy population, lack of healthcare infrastructure is an issue, as there are only 18 million beds in the country with 1 bed per 1000 people (less than other developing economies such as China, Russia, Brazil, etc.) This will naturally translate into increased investments towards healthcare. 

•    India’s e-health market is growing significantly, creating a lot of opportunities. A strong interplay of forces is driving the rise of e-health. E-health solutions offer convenience by eliminating long queues and avoiding traveling through virtual counselling and remote monitoring services provided by entities such as Practo, Teladoc, Klara Health, etc. With busy schedules and increased access to internet, this has become even more enticing in today’s world. Also, e-health platforms are becoming increasingly available due to an increasing number of smartphone users and a general shift towards digital adoption. 

•    This digital penetration further goes hand in hand with easy-to-use technological platforms such as Amwell (telehealth apps), Fitbit (wearable health trackers) and MyMeds (medication management tools). These platforms not only bring about convenience but also give patients greater control over their own health choices. Thus, these factors synergize into a snowball effect—higher number of people embracing digital technology creates more appealing e-Health solutions. This result in increased user base for the next phase of innovations within the field. Eventually, convenience, digital penetration and technology platforms put together are changing healthcare system. This is making it more accessible, individualized and effective.

•    India is increasingly becoming a popular destination for medical tourism, as it has advanced facilities in cardiac surgery, transplantation, child care, dental treatment, wellness, and numerous other domains. A revenue of USD 7.69 billion was generated in 2024 from medical tourism, attracting ~634,000 tourists for medical treatment in India. according to medical tourism association India.  

•    Government implemented many regulations and initiatives to enhance healthcare sector of the country. Ayushman Bharat (AB-PMJAY), is world’s largest government funded health initiative scheme. Over 24,000 hospitals are planned under the scheme and more than 16 million hospital admissions were covered by 2021. Other major initiatives like National Health Policy (NHP), National Digital Health Mission (NDHM), Mission Indradhanush were introduced showcasing the importance of Indian healthcare sector. Also, India Watch with in-depth research can help How To Prepare Hospital Project Feasibility Study.

•    Due to lifestyle changes and genetic predisposition, India is witnessing a rise in non-communicable diseases like diabetes, high blood pressure (BP),  cholesterol and cancer. Estimates suggest that over 7.2% of the population has diabetes, over 35% of Indian adults are estimated to have hypertension and rise in cancer patients is a major concern. This demands a development of strengthened healthcare sector, backed by powerful diagnostic services. 

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From Curative to Diagnostics: A Shift in Healthcare Services 

We are witnessing a major shift of healthcare from curative to diagnostics. The Indian government and healthcare businesses are aggressively promoting preventive healthcare with diagnostics playing a vital role in early detection and intervention even before the symptoms even arise. 65% of Indian population is under 35, and because of lifestyle changes and genetic inheritance they are more prone to NCDs. So, for their well-being diagnostics and early detection plays a vital role. 

Government is also bringing in a lot of initiatives for preventive healthcare. Ayushman Bharat (AB-PMJAY) aims to provide preventive healthcare including diagnostics, to a large section of the population. National Health Mission (NHM) includes building a strengthened infrastructure for preventive healthcare. 

Benefits of early detection drives a major section of people, some of these game changing benefits are:

•  Improved treatment outcomes: Early diagnosis allows for an effective treatment and increases the success ratio for the patient, leading to better quality of life. According to reports early detection and treatment of breast cancer can improve survival rate up to 5 years.  Early intervention also reduces the risk of heart attacks by 80%. 

•  Reduced Healthcare Costs: early intervention prevents need of expensive treatments in later stages of the disease. A WHO report suggests that an investment of $1 on preventive health care can save up to $3 of treatment costs. Early diagnosis often results in shorter hospital stays, reducing treatment costs for advanced treatment.

•  Empowering Individuals: Knowing their health status allows individuals to take steps towards maintaining good health. Lifestyle modifications like diet changes, increased physical activity, and managing stress can be incorporated. More can be known by doing the Feasibility Study To Start A Diagnostic Centre In India.

Overview of diagnostic sector in India

The Indian laboratory diagnostics industry, estimated at USD 18.5 billion, is growing at a healthy rate of 13–14% per annum. Currently there are more than 1 lakh labs across the country, offering a wide range of tests (up to 4500). The Indian industry operates at one of the lowest price points in the world. The costs are around one-eighth those in the US. Even at these low rates, the Indian medical diagnostics industry has been able to provide people living in remote areas access to modern diagnostics facilities. Companies have developed a mechanism to regularly collect and take samples from remote areas to their reference labs (located kilometres away).

Indian diagnostics laboratory is divided into 3 categories based on provider-type, these are hospital based, diagnostics chains and stand-alone centres. 

Indian diagnostics sector is broadly divided into two categories:

I.  Pathology:  this involves analysing body fluids and tissues, like blood and urine samples. This category holds 60% of the market share and is further divided into various sub-categories. Biochemistry, immunology, microbiology, hematology, and histopathology are key categories of pathology. Also, if interested to open a new pathology then opt for Feasibility Study To Start A Pathology Business In India.

II.    Radiology (imaging diagnostics): rest 40% of market share belongs to this category. This segment consists of various imaging techniques to diagnose and monitor health conditions. Looking at the broader picture it is further divided into categories like – X-Ray, Ultrasound, CT scan, MRI Scan. 

Indian diagnostics sector offers a wide range of tests, however there are 3 main categories- Clinical laboratory tests, routine tests and speciality tests. 

Emerging trends in Indian diagnostic business

Indian diagnostics sector is experiencing a period of thrilling transformation, driven by emerging trends, awareness regarding preventive healthcare, technological advancements and more. Here are some key trends to keep an eye on:

I.  Point-of-care testing (POCT): 

This refers to diagnostic test preformed outside the laboratory settings. These tests are majorly conducted in doctor’s clinic and patient’s home. PCOT delivers results within minutes allowing quicker diagnosis. These devices are user-friendly and portable, so it can be promoted in rural areas having lack of traditional diagnosis. 

Types of PCOT devices: Blood Glucose Meters, Rapid Strep Tests, Pregnancy Tests, Cholesterol Tests, HIV Tests. PCOT market is projected to reach at 70 million by 2030.

Major players: -

II.    Genetic testing and biomarker analysis:

Genetic testing analyses patient’s DNA to identify variations related to diseases like cystic fibrosis, inherited cancers, or pharmacogenomics. This has benefits like early disease detection, personalised treatment and knowing certain genetic disorders before pregnancy allows for informed family planning. 

On the other hand, biomarker measures levels of specific molecules in bloods, tissues and other body fluids. These biomarkers indicate disease presence and growth. Cancer Biomarkers, Cardiovascular Biomarkers, Infectious Disease Biomarkers are some of its examples. Indian genetic testing and biomarker market is projected to reach USD 1.3 billion by 2027. 

III.  Digitalization and Artificial Intelligence:

Introduction to artificial intelligence has been a major revolution in diagnostic sector in India.  These enhancements are improving accuracy and making diagnostics more accessible in remote areas. Digitalization in diagnostics has benefits like improved efficiency, enhanced data management, POCT, and telepathology. 

AI algorithms can analyse medical images like X-rays, CT scans, and MRI scans to detect abnormalities and aid in disease diagnosis. AI can also analyse individual patient’s data and make personalised treatment plans according to that.

IV. Rise of Direct-to-Consumer (D2C) Testing:

The Indian healthcare industry is witnessing a surge in Direct-to-Consumer (D2C) testing. D2C testing offers a convenient and accessible way to check health markers and receive results in a timely manner. There are 46% of stand-alone diagnostics centres in India, showcasing its increasing demand. The segment offers tests like- Nutrigenomic Testing, Allergy Testing, Hormonal Testing, Genetic Carrier Screening etc. 

V.  Full-body checkups:

Full-body checkup is another emerging sector in diagnostics industry of India. Due to genetic inheritance and demographic shift, people are more prone to diseases and in such cases demand timely full-body checkups boosts making this a trendy segment. Generally, it is divided into two categories: annual and biannual full body checkups. These checkups come with various set of tests, depending on the plan chosen. Renowned hospitals like Apollo, Fortis, Max and many more offer these packages. There is a need for Feasibility Study To Start A New Hospital In India.

Growth of organized diagnostic players

While the stand-alone and local diagnostic centres seem to have more hold in their region, organised players like METROHL, DLPL, Thyrocare and SRL had made a huge difference having strong foot in the sector across the country. The major challenge for the diagnostic players is not capital constraints to drive scale but the local referral ecosystem. Thus, players must focus on brand value and Feasibility Study To Start A Pathology Business In India to gain in the referral ecosystem, deepen penetration and upsell complex tests. 

For year 2022-23, annual growth rate of Thyrocare was 21%, SRL with 17.4% and DLPL had a growth rate of 16.4%. 

a) Thyrocare: It has established a vast network of collection centres across India, ensuring wider accessibility for patients. Currently Thyrocare offers more than 700 tests and has over 1100 centres. Annual revenue in FY23 was amounted to be USD 65 million. 61% of the company’s revenue comes via franchise networks. They have also adopted digital tools for online appointment booking, report delivery, and customer service. 

b)  SRL: boasts a vast network of over 900 patient service centres and 400 labs across India. FY2022-23, the revenue was recorded to be USD 193 million. SRL is active in both the domain, B2B as well as B2C. The company offers almost 3500 tests & diagnostics solutions and manages 35 million tests annually.  

c) Dr Lal Pathlabs (DLPL): DLPL is one of the top three diagnostics chain in India. DLPL has a vast network of collection centres which was recorded to be more than 5,100 alongside 277 clinical laboratories. It offers more than 5000 varieties of lab test and imaging solutions.  Company’s profit after taxes was USD 251 million for FY23. It has served over 110 million patients in the last 5 years.

The attractive Landscape of Diagnostics: Why Entrepreneurs Should Take Notice

Mentioned below are the reasons why entrepreneurs should consider entering the diagnostics sector of India and need Feasibility Study To Start A Diagnostic Centre In India:

•  Indian population is now more focused towards health awareness. According to a survey by ASSOCHAM and Market Research For Healthcare Services In India, 72% of Indian adults are now focused on their health and well-being. With a rise in disposable income, people are willing to spend a good amount from their pockets on individual’s well-being. India’s average disposable income is projected to be USD 4200 by 2025. 

•    Aging population also drives a lot of consumer base towards the healthcare and diagnostics sector. By 2030 India is expected to have close to 173 million elderly people which will increase the need of regular health checkups. 

•    Ayushman Bharat Digital Misson aims to develop national digital healthcare infrastructure and boost access to diagnostics. Because of this initiative, government is offering a lot of schemes and incentives for new-settlers and startups. FDI starting from 75% and up to 100% is leveraged in healthcare and wellness sector.

•    As per Feasibility Analysis For Healthcare In India, Indian diagnostics market is projected to reach at USD 31.2 billion by FY 2028. As of now the diagnostics sector has lot of untapped potential. A report by FICCI states that only 30% of the Indian population has access to diagnostics sector in rural areas. Entrepreneurs can make use of this gap and fill it. 

•    Artificial Intelligence (AI), Point-of-Care Testing (POCT), and Next-Generation Sequencing (NGS) are revolutionizing diagnostics. Early players leveraging these advancements can gain a competitive edge.

•    Consumers are seeking convenient and personalized testing options. D2C models can cater to this growing demand. Diagnostics can be integrated with telemedicine platforms for remote consultations and improved patient care pathways.

If you are a healthcare investor or a business enterprise planning to enter the diagnostic business (or other healthcare business), we can help you with Market Research For Healthcare Services In India and information advisory. Our range of services include feasibility services, market research services, surveys, tailor made business research solutions, etc. For any further information, feel free to connect with us at info@theindiawatch.com 

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