Non-Covid biz not back to pre-pandemic levels: Metropolis Healthcare MD

In a Q&A, Ameera Shah says, however, that the impact of the second wave on her industry segment wasn't as bad as the first

After clocking a 22-fold jump in profits and a 128 per cent year-on-year rise in revenues for the first quarter of the FY22 fiscal, Metropolis Healthcare is planning to expand its geographical footprint to add 90 more labs and 1,800 collection centers as it aims to go deeper into the hinterland. Talking to Sohini Das, Promoter and MD of Metropolis Healthcare, Ameera Shah shares her thoughts on the way ahead for the diagnostic sector. Edited excerpts:

Is the non-Covid business back to pre-pandemic levels?

The non-Covid business, which had come back to normal in the fourth quarter of last fiscal, again got hit in the Q1FY22 due to the second wave. However, compared to last year, the hit isn't that bad. The footfalls have increased at the collection centres. Things will vary quarter from quarter, however. When a wave hits, the footfalls and demand for non-Covid tests automatically come down as people sit at home, and lockdowns are implemented. So, Covid and non-Covid businesses are to some extent inversely proportional.

Non-Covid will continue to pick up, but if there is a third wave, then we expect Covid tests to again be in demand. It all depends on whether a third wave hits or not. Over a one or two-year period, non-Covid will pick up and Covid tests will continue to go down, not so much for the emerging point of care Covid testing, but due to vaccination. Covid tests will remain relevant for travel purposes and obviously for accurate diagnosis of the disease.

Labs that have unused capacity and could use that for Covid testing were able to eke out better margins overall because Covid testing was adding to their bottom line as the infrastructure was common.

At Metropolis, we have increased our portfolio of tests, and also our home service as a channel of testing. We have done a lot of cost efficiencies at the back-end, which has boosted our margins.

At an industry level, diagnostics are not back to pre-Covid levels in terms of non-Covid business.

Are point-of-care tests like self-testing etc a threat to lab-based Covid tests?

Point of care tests caters to different requirement, compared to RT-PCR tests. They are used in scenarios when one needs quick results. However, there are qualitative differences between the point of care tests and lab-based RT-PCR tests. Point of care tends to give false negatives, and thus can give us a false sense of security.  

Internationally, or at airports for travel, the insistence is on RT-PCR, as the accuracy of point of care tests is lesser. These tests may find takers for screening purposes – for example, an employer wants to screen his employees periodically.

What are your growth plans for the fiscal year?

We are adding 90 labs and 1,800 more collection centers over the next three years. We want to get deeper into tier-2 towns. We had collection centers in tier-2 towns, but now we are also setting up labs here. We add 100 varieties of tests to the menu. We now have over 4,000 tests.

The bulk of the revenues comes from the top 15 cities. The healthcare services that have managed to differentiate have built their brands based on the quality of services, accuracy of tests etc. When accuracy and specialized tests are the differentiators, then one imports equipment from across the world. From an affordability and a pricing perspective, it may not be affordable for a lot of patients in rural areas. Thus there is a natural bias to expand in top cities. While we are present in 200 towns, the majority of the revenues come from the top 15 cities. Going forward, this may change.

In cities like Mumbai, Pune, and Chennai where we are market leaders, we have around 10-15 percent share of the market. We would like to increase that to 25-30 percent, and this would happen through geographical expansion.

Any plans on creating a digital health services experience?

We are looking at a number of things on the digital side, and took some initiatives in the last six months to a year. We are using digital tech for customer lifecycle management as well as automate the manual experiences for a customer. A new app is under development, while our old app is currently in use. We have introduced sample-tracking after a customer gives his or her sample to Metropolis.

How do you think the Thyrocare acquisition impacts the sector?

The Thyrocare acquisition is very recent and will take some time for them to integrate. This is creating a concept of a health eco-system for a patient, on the assumption that people who want to buy drugs would also want to book a test and do teleconsultation. While some of these assumptions may be true for chronic patients, I feel people behave very differently when they are sick and differently when they are doing fine. When we are unwell, we want to go to a doctor with a good reputation. We aren't looking at what is available conveniently on an app or what is nearby. It is not akin to getting food delivered.

Some of these things on patient behavior would come out in the years to come.

Patients will move digital in terms of how they access healthcare services, but not for everything and anything. We will have to wait to see how consumers behave digitally – what they consume digitally and what they don’t. There is no simple answer to this.

How are you preparing for a third wave?

Nobody knows when a wave will hit. Capacity expansion takes time. Let’s say we ended the last wave with a capacity to test 25,000 people a day, and now if a third wave hits with a vociferous intensity that requires 50,000 tests a day, we will not be able to expand capacities overnight. One has to order machines, get space, hire people, and train them. There is no predictive modeling for this.

We have to strike a balance in terms of building capacities, but also not over-build.