Torrent Pharma expected to enter diagnostics space in next 2-3 months

Ahmedabad-based Torrent Pharmaceuticals is foraying into the diagnostics space after its peer Lupin started a similar venture last year.

A formal launch of Torrent’s diagnostics business is expected in the next two-three months, according to sources in the know. An email sent to the company remained unanswered.

Sources, however, indicate that Torrent Pharma has firmed up plans to enter the diagnostics business and has already started the recruitment process.

A company called Torrent Diagnostics Private Ltd was incorporated in February this year and has a Torrent Pharmaceuticals executive director as one of its directors.

“Recruitment of team members is on and the company is setting up a reference laboratory now. Things would take a few more months before a formal launch can be expected,” the source said.

Mumbai-based Lupin had forayed into diagnostics last year through Lupin Diagnostics, which is a part of Lupin Healthcare, a wholly-owned subsidiary of Lupin. It set up a reference laboratory in Navi Mumbai and hired professionals from Apollo Diagnostics, Dr Lal’s Pathlabs, SRL, and Reliance Life Sciences.

Analysts Anubhav Aggarwal and Sayantan Maji of Credit Suisse are of the opinion that with the entry of Lupin the competitive intensity will increase in the diagnostics business.

“Low entry barriers, high return on capital employed (over 50 per cent) and fast growth (double digit) profile of the diagnostics sector is attracting new entrants, including digital health aggregators,” said the analysts.

A trend of pharma companies foraying into diagnostics is on the rise. Sector observers feel that this is a logical step for drug firms, who already have the advantage of a good doctor network.

Why diversify into diagnostics?

India’s Rs 55,000-crore diagnostics sector is largely dominated by unorganised players. From 15 per cent, the share of organised players is likely to rise to 25 per cent in three to five years, feel analysts. 

Bulk of the diagnostics sector revenues come from prescriptions or illness detection. Currently, there is a growing trend of ‘wellness’ testing or preventive healthcare. This is a space, which is witnessing a churn after the entry of online diagnostics players.

“Leading drug firms that already have strong relationships with doctors through their sales force can leverage this prescriber network for generating patient volumes to diagnostic centres,” said an analyst.

Torrent has already increased its field force to 3,900 medical representatives from the earlier 3,600. Edelweiss Securities noted that this may be further increased by another 200-300 by the end of the first quarter.

In the Indian market, it has increased its share to 3.5 per cent in FY22 from the earlier 3.2 per cent.

PIECE OF THE PIE

• Organised players hold only 15% of India’s Rs 55,000-crore diagnostics market
• Their share may touch about 25% in 3-5 years, say analysts

NEW PASTURES

• Large organised diagnostics networks depend on prescriptions and illness detection to drive growth
• This is where pharma firms score, as they already have a connection with physicians