Preventive and wellness tests drive growth for diagnostic companies

Covid-19 led to increase in self-testing awareness, particularly about preventive and wellness services

Diagnostic players are focusing on preventive and wellness tests along with bundled test packages to grow their top lines. For many industry players, these tests now constitute around 10-20 per cent of their turnovers.

Arvind Lal, executive chairman of Dr Lal PathLabs said in the December quarter analysts call that, “India’s diagnostic sector is undergoing a rapid transformation. The increasing burden of non-communicable diseases, as well as new emerging and existing communicable diseases, increased adoption of evidence-based treatment and a growing emphasis on preventive healthcare diagnostics are expected to sustain the growth momentum.”

Dr Lal PathLabs already draws around 20 per cent of their top line from Swasthfit (full body check-up packages). Om Manchanda, MD, Dr Lal PathLabs told Business Standard that, “Bundled tests are more common these days as these offer benefits to the patient (by offering a holistic view of his health parameters) and it also helps the diagnostic players to run a bunch of tests at the same time on a machine, thereby giving economies of scale.”

“Our Swasthfit packages are doing well. Bundled tests are around 20 per cent of our top line at the moment and we see this growing,” he said.

 “The overall market for wellness and preventive diagnostics, estimated at around 19 per cent of the total pathology diagnostics segment as of FY23, is expected to grow at a healthy rate of 13.5-15.5 per cent between FY23 and FY28, led by major factors which include rising disposable incomes, increase in urbanisation and increasing awareness about prevention and wellness following Covid-19,” said Anand K, CEO, Agilus Diagnostics.

A significant growth in the demand of preventive health check-up in India in recent years, and the Covid-19 pandemic has resulted in an increased awareness of self-testing, particularly in relation to preventive and wellness services. These health packages help to identify pre-existing diseases and assess the risk of a particular disease before the onset of actual symptoms, he said.

India’s diagnostic services industry is estimated to be around $16.2 billion in 2023, according to Polaris Market Research. Of this, pathology tests account for around 60 per cent of the market, while imaging tests form the rest.

The revenue share of preventive health check-ups has been steadily increasing over the last few years, said Ameera Shah, Promoter and MD, Metropolis Healthcare.

“At Metropolis, the Premium Wellness Tests category currently contributes 15 per cent of the total revenue, a significant increase from the 8-9 per cent seen in 2019-20,” she said. Metropolis has been strategically focusing on this segment through tailored packages catering to diverse demographics and wellness profiles.

“Through a mix of up-selling strategies and targeted initiatives, we have achieved noteworthy revenue growth in the premium wellness segment. Looking ahead, we envision wellness as a robust growth pillar for Metropolis, with aspirations to elevate our contribution to our overall turnover to 20 per cent in the near future,” Shah said.

Diagnostic players are trying to up-sell their products to patients as bundled packages, feel analysts.

“There has been some growth in the share of preventive check-ups or bundled test packages in recent years. Their contribution to the top line has inched up post-Covid. We have seen growth in bundled test packages as diagnostic players up-sell their products to the patients. This trend is likely to continue,” said Aashita Jain, Assistant Vice President - Equity Research, Nuvama Institutional Equities.

Up-selling helps not only with top lines but also with economies of scale, said an industry insider.

“If one machine is running several tests at the same time, then we can offer the same test at an affordable rate to the patient. This is a win-win for both, and thus up-selling or bundling health package tests help,” said the MD of a leading diagnostic chain.

Corporate tie-ups are also helping to boost the segment.

Dinesh Chauhan, CEO of CORE Diagnostics, which now draws 10-15 per cent of its turnover from preventive health check-up tests, said that the growth in this segment in the third quarter was around 50 per cent.

“Our strategic corporate partnerships have played a pivotal role in facilitating greater awareness and uptake of preventive healthcare services.  Our proactive engagement in digital marketing initiatives has effectively amplified our outreach efforts, contributing to the observed growth trajectory,” Chauhan added.

The preventive or wellness or bundled tests segment initially was driven by online players. But of late online players have reduced discounting, while offline players have raised prices. 

Nuvama Institutional Equities noted in a recent report: "Metropolis has rebranded its TruHealth packages by adding additional parameters at a higher price. Tata 1mg has reduced the price of its Good Health Platinum package by 21 per cent without any change in parameters while Netmeds has raised its Swasthya package rate by 14 per cent. Apart from this, the package prices remain largely stable."

Testing Report

- Dr Lal Path labs draws 20% of top line from ‘Swasthfit’ full body health check-up 

- Metropolis Healthcare draws 15% of top line from premium wellness tests

- Metropolis is eyeing 20% of turnover from such tests in near future 

- Overall market for wellness and preventive diagnostics estimated at 19% of the total pathology segment as of FY23

- Market is expected to grow at a  rate of 13.5-15.5% between FY23 and FY28

- Rising disposable incomes, urbanisation and increasing awareness about wellness following Covid-19 are leading to the growth in this segment

(With inputs from Anjali Singh)