 "Govt intervention in the import of lifesaving reagents is crucial: Ameera Shah")
Having a network of more than 85 state-of-the-art laboratories across India, UAE, Sri Lanka, South Africa and Bangladesh, and with over 700 collection centres, Metropolis Healthcare Ltd has come a long way since its inception three decades ago. Over the past dozen years, it has grown from just one diagnostic centre in Mumbai to a chain of laboratories. Managing Director and Chief Executive Officer Ameera Shah, in an interview with Vijay C Roy, speaks about the challenges the industry is facing, the government interventions required and the company's expansion plans. Edited excerpts:
When did Metropolis Healthcare come into being?
Metropolis Healthcare began as a single proprietary lab in Mumbai in 1981, managed by my father. It was in 2001, when I returned to India after getting a Business Management degree in finance at the University of Texas in Austin, that the single lab was baptised as Metropolis Healthcare. The reason for the name change was to give the lab a neutral name that could reflect the vision of creating a chain of labs across India. Our first step towards our vision of creating a chain of labs was taken when we made our first big acquisition, Lister Metropolis. Today we have more than 85 state-of-the-art-laboratories across India, UAE, Sri Lanka, South Africa, Bangladesh, etc., with over 700 collection centres.
It is astonishing that 85 per cent of the industry is fragmented, and out of 80,000 labs in India only 100 labs are accredited. Also, there is no authority that checks for lab quality. So unless a lab is accredited you can never be sure about your lab reports.
What are the key challenges before the diagnostic industry?
The key challenge is the lack of consolidation. The lack of policy further adds to this challenge. Today if anyone talks about the healthcare industry in India, there are only two kinds of healthcare companies that are talked about: pharmaceuticals and hospitals. The diagnostic industry lacks the identity of a full-blown industry, from which emanates challenges of lack of public and political awareness. When an industry lacks this essential representation, innovations get curtailed, which are essential to boost accessibility, affordability and quality in healthcare.
Further, there are no official figures in India that could give you an account of how many labs are present in India, and what is the overall expenditure on diagnostics in outpatient and inpatient care. Such comprehensive data is hard to come by if there is no mandatory body keeping a check on who can put up a lab and how a lab should be operated.
What are the interventions needed on the supply side to reduce the costs of delivering diagnostic tests?
The typical lab supply side has two important cost determinants in addition to the infrastructure: reagents and machines (analysers). Since the diagnostics industry lacks the image of a full-blown industry, important national plans completely ignore any financial cushion for the industry that could enable diagnostics players to absorb price fluctuations. Most reagents that we use in our labs are imported, since the quality of indigenous players lacks consistency and doesn't give any assurance of accuracy. The rupee-dollar fluctuation hit the supply side hard. Material costs in the recent cycle of fluctuations rose dramatically, and there was no scope for us to transfer the price to doctors and patients. Government intervention in import of such lifesaving reagents and analysers is extremely crucial to making quality diagnostics affordable and accessible to all.
What are your domestic and overseas expansion plans?
We have plans to expand our operations in Mauritius, Tanzania, Nigeria and Ghana, besides expanding our domestic operations across India. We have already invested $500,000 in Africa, with major labs set up in Nairobi. We have planned another $5 million for further expansion, and set up five labs in the neighbouring countries. In the coming financial year we also plan to add 14 new labs to our network.
Who are your competitors? There are very few organised players in this sector. What are the reasons for this?
There are a handful of major players in the market, which includes SRL, Dr Lal, Thyrocare and Quest. The limited number of large players in the market is primarily because although the pathology business looks very lucrative from the outside, on entering the business, one realises the relentless challenges of the industry. One of the most important challenges is striking a balance between quality and pricing in a market dominated by smaller local labs. There are a number of businesses which tried entering this space. But many of them were driven out due to the cut-throat price challenge coupled with the need to establish oneself in a science-driven industry.
When did Metropolis Healthcare come into being?
Metropolis Healthcare began as a single proprietary lab in Mumbai in 1981, managed by my father. It was in 2001, when I returned to India after getting a Business Management degree in finance at the University of Texas in Austin, that the single lab was baptised as Metropolis Healthcare. The reason for the name change was to give the lab a neutral name that could reflect the vision of creating a chain of labs across India. Our first step towards our vision of creating a chain of labs was taken when we made our first big acquisition, Lister Metropolis. Today we have more than 85 state-of-the-art-laboratories across India, UAE, Sri Lanka, South Africa, Bangladesh, etc., with over 700 collection centres.
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What is your overview of the industry?
It is astonishing that 85 per cent of the industry is fragmented, and out of 80,000 labs in India only 100 labs are accredited. Also, there is no authority that checks for lab quality. So unless a lab is accredited you can never be sure about your lab reports.
What are the key challenges before the diagnostic industry?
The key challenge is the lack of consolidation. The lack of policy further adds to this challenge. Today if anyone talks about the healthcare industry in India, there are only two kinds of healthcare companies that are talked about: pharmaceuticals and hospitals. The diagnostic industry lacks the identity of a full-blown industry, from which emanates challenges of lack of public and political awareness. When an industry lacks this essential representation, innovations get curtailed, which are essential to boost accessibility, affordability and quality in healthcare.
Further, there are no official figures in India that could give you an account of how many labs are present in India, and what is the overall expenditure on diagnostics in outpatient and inpatient care. Such comprehensive data is hard to come by if there is no mandatory body keeping a check on who can put up a lab and how a lab should be operated.
What are the interventions needed on the supply side to reduce the costs of delivering diagnostic tests?
The typical lab supply side has two important cost determinants in addition to the infrastructure: reagents and machines (analysers). Since the diagnostics industry lacks the image of a full-blown industry, important national plans completely ignore any financial cushion for the industry that could enable diagnostics players to absorb price fluctuations. Most reagents that we use in our labs are imported, since the quality of indigenous players lacks consistency and doesn't give any assurance of accuracy. The rupee-dollar fluctuation hit the supply side hard. Material costs in the recent cycle of fluctuations rose dramatically, and there was no scope for us to transfer the price to doctors and patients. Government intervention in import of such lifesaving reagents and analysers is extremely crucial to making quality diagnostics affordable and accessible to all.
What are your domestic and overseas expansion plans?
We have plans to expand our operations in Mauritius, Tanzania, Nigeria and Ghana, besides expanding our domestic operations across India. We have already invested $500,000 in Africa, with major labs set up in Nairobi. We have planned another $5 million for further expansion, and set up five labs in the neighbouring countries. In the coming financial year we also plan to add 14 new labs to our network.
Who are your competitors? There are very few organised players in this sector. What are the reasons for this?
There are a handful of major players in the market, which includes SRL, Dr Lal, Thyrocare and Quest. The limited number of large players in the market is primarily because although the pathology business looks very lucrative from the outside, on entering the business, one realises the relentless challenges of the industry. One of the most important challenges is striking a balance between quality and pricing in a market dominated by smaller local labs. There are a number of businesses which tried entering this space. But many of them were driven out due to the cut-throat price challenge coupled with the need to establish oneself in a science-driven industry.