Home » Diabetes » Consumer awareness changing the diagnostic market dynamics for Investors, ET HealthWorld

Consumer awareness changing the diagnostic market dynamics for Investors, ET HealthWorld

Share Now :

Facebook
Twitter
WhatsApp
Telegram


New Delhi: Diagnostics investments have historically been viewed as a relatively secure and reliable bet in the healthcare sector. Post-COVID, the industry saw increased awareness among consumers which changed the dynamics of the diagnostic market for investors. This impacts the performance of investments by variables like governmental restrictions, problems with insurance reimbursement, competition, and technological upheavals.

The CEOs and leaders of the healthcare industry provided their insightful views on the challenges faced by investors at the leadership talk session on ‘Investments in Diagnostics – Still the Easiest Bet?’ at the second edition of India Diagnostic Summit 2023 (IDS 2023) organised by ETHealthworld.

The session was moderated by Dr Arjun Dang, CEO, Dr Dang’s Lab. The panellists included Anand K, Chief Executive Officer, Agilus Diagnostics Ltd, Aravind Viswanathan, CEO, Transasia BioMedicals Ltd, Dr Mansi Aggarwal, Partner, Alkemi Growth Capital, and Raghavendra Goud, Global CEO, Empe Diagnostics.

Commencing the session, Dr Dang posed a question regarding the emergence of the diagnostic industry in the past few decades and the impact on its growth post-COVID, to which Anand replied, “I think what is important, to begin with, is that the diagnostic industry over the last decade has grown extremely well. And those drivers of growth have been the ageing population. With non-communicable diseases and chronic conditions prevailing, these factors helped the industry grow in the last 10 years, but during the last two years, we have seen how COVID has brought about a drastic change, and that growth has been further accelerated during the COVID period. Post-COVID, we are seeing some changes, which are primarily responsible for further growth, and this is going to considerably help us keep the momentum on the road as diagnostics keeps moving ahead.”

Anand also emphasised the fact that it is very important for the country to have a proper diagnostic lab and equipment as healthcare is not just limited to doctors and nurses. COVID-19 made a clear indication that there is a necessity for diagnostic availability in India as well.

Viswanathan informed that with increasing awareness, diagnostic rates, and the need for accessible treatment alternatives, the Indian IVD manufacturing industry has too experienced growth. Treatments have become affordable for a larger population because of the Indian pharmaceutical company’s ability to make them at low costs. “When you put all these together, I think the Indian diagnostic sector is poised to grow. More than 50 per cent of the IVD businesses is held by Indian companies. And probably that will move up from 65 per cent to 70 per cent over the next five years.”

Elaborating on the emergence of new companies, technologies, investments, and manufacturing, Viswanathan shared, “Every year probably more than 1000 people are getting hired for research & development (R&D) in the IVD space across India, which is huge when compared to other segments. So with all this potential, the government’s role, in addition, will play a significant role in enhancing access to infrastructure. Budgets are also allocated every year, whether it is to the National Health Service (NHS) or state governments. Few state governments have equipped laboratories for basic tests, even in their primary health centres (PHCs).”

Talking about the aspects where financial markets experience instability and uncertainty as a result of the COVID-19 epidemic and prompted changes in consumer behaviour, and disruptions in businesses that changed the economic dynamics of the industry which overall impacted the market valuation, Dr Aggarwal said, “The Earnings before interest and taxes (EBIT) is one of the many things that get looked at, where the multiples have moved over the years. It was a very outlier transaction because a private company was buying all the publicly listed companies, and therefore, private valuations were significantly higher than public market valuations.”

“Even the margins have remained, which means the economies of scale have not played out because of the increased competitive intensity and increased costs that are coming out. I think everyone needs to do much more testing. There is a micro and macro need to do much more testing. But given that there is a large shift from unorganised to organised, I think EBIT multiples will be where they are today. I don’t think there’ll be much more expansion on that. But we are definitely going to see much more investments because the market is large,” Dr Aggarwal added.

When it comes to a disease like tuberculosis (TB) that poses a significant global health challenge in India, remains a major public health concern. Investing in innovation related to TB management and diagnosis can play a crucial role in addressing this disease and shedding light on it. Dr Dang then nudged Goud to share his insights on this, to which he replied, “As per recent data we have 10.8 million cases coming up every year, one of the second largest infectious diseases, and the thirteen largest cause of death. Every day 4000 people are dying. If you look at the national TB elimination program report, there are about 172 incidents per lakh population. With all these data points, there is still a domain for a proper diagnosis, which is something that will lead to the proper treatment.”

Elaborating on TB diagnosis, Goud said, “The other important factor is the multidrug resistance. India is not the only country that you see with multi-drug resistance, this is spread across the globe. The resistance is because of the prevalence of the disease for so many years, and there are four or five antibiotics that have been prescribed and rifampicin is one of the oldest. The Prime Minister’s office says that they want to eliminate TB by 2025 and the WHO says 2030. When one puts these things in perspective, and if one wants to work in sequence, it’s highly impossible to get to the milestone of what the government is looking at. This means that there is immense scope for innovation and multiple companies have to come forward to achieve that kind of milestone very quickly.”

“Coming from an investor’s perspective, I think there is immense potential, especially from a molecular diagnostic standpoint. If you look at the molecular diagnostics platforms, and the precision which it is going to give, I think that is where the scope is,” he added.

In addition to this, consumer behaviours too have critical aspects that are going to drive the industry forward. Explaining the aspects, Anand said, “Firstly we’re seeing an informed consumer. The consumer is more knowledgeable now, they know what they want. There are also the consumers’ expectations, which have changed the expectations of convenience, demand for at-home services, and demand for omni channel experience.” Omni channel suggests the integration of all physical channels (offline) and digital channels (online) to offer a unified customer experience.

“Demand for Omni channel experience means that as they give the samples in the lab and they want the report on WhatsApp. This kind of combination of hybrid services requirements is also there for the reviewers. These are going to be very important in shaping the future of how the consumer journey happens. So, the consumer journey and the digital transformation that happens across the value chain, are going to be very critical. The last aspect is the safety and convenience store in consumers who are aware and they know that they’re expecting quality. They’re also looking at safety and convenience as the key aspects when it comes to choosing their labs. So that is going to be an important factor,” added Anand.

The panellists at the end of the session were of the opinion that while investments in diagnostics have historically been considered a relatively easy bet, investors should conduct thorough due diligence and consider both the opportunities and risks associated with the specific companies and technologies involved.

  • Published On Jun 20, 2023 at 02:08 PM IST

Join the community of 2M+ industry professionals

Subscribe to our newsletter to get latest insights & analysis.

Download ETHealthworld App

  • Get Realtime updates
  • Save your favourite articles


Scan to download App

Source link

madhuprayas
Author: madhuprayas

Leave a Comment

Related Post