## Diagnostic Companies Poised for Growth in 2025
The diagnostic industry is expected to experience significant growth in the coming year, with revenue projected to increase by 10-11% in financial year 2025. This growth is attributed to a rise in the number of patients seeking diagnostic services and an increase in revenue per patient.
This projected growth follows an estimated 8% increase in revenue during the previous financial year (2024). The expansion of established diagnostic companies into smaller cities and the growing demand for comprehensive preventive health packages are driving this positive trend.
Expansion into Tier-II and Tier-III Cities
Diagnostic companies are increasingly focusing on expanding their reach into Tier-II and Tier-III cities. This move is driven by the stagnant growth opportunities for routine tests in larger cities due to stiff competition from e-pharmacies and hospital-attached labs. By venturing into smaller cities, diagnostic companies can tap into a new patient base and drive higher patient volumes.
Growing Demand for Preventive Health Packages
The demand for comprehensive preventive health packages is also contributing to the industry's growth. These packages, which include various tests tailored for different genders, age groups, and consumer profiles, enable individuals to proactively monitor their health and identify potential issues early. This focus on preventive healthcare is leading to an increase in the average revenue per patient.
Steady Operating Margins
Despite the increase in brand promotional expenditure, diagnostic companies are expected to maintain steady operating margins in the upcoming financial year. This stability is attributed to the rising share of premium wellness packages, which command higher margins compared to routine tests. These packages are projected to account for nearly one-fourth of total revenues, ensuring financial stability for diagnostic players.
Strong Balance Sheets
With healthy internal accruals and modest capital expenditure, diagnostic companies are expected to maintain strong balance sheets and low reliance on external debt. This financial strength will further support their credit profiles and contribute to the industry's overall growth.
Study Methodology
The findings presented here are based on a study conducted by ratings agency CRISIL. The study analyzed data from ten diagnostic companies, including five pan-India players such as Dr Lal PathLabs, Metropolis Healthcare, Agilus Diagnostics, Thyrocare Technologies, and Vijaya Diagnostic Centre.