Sriram Iyer, CEO, Apollo Health & Lifestyle, says “more than 80% of the diagnostics market is still unorganised, less than 20% is between the national and the regional players. There is definitely headroom for growth and the prospects look brighter and the awareness is really going up. Preventive health check is becoming the key now and there is a lot of work happening in the healthcare space for consumers to become more aware.”

Given the lots of tugs and pulls and a wrestling of a larger share volume that continues to remain high, the price competition may have cooled off a tad. What is your diagnosis of the industry as a whole?
Sriram Iyer: So, as rightly said, the prospects are quite good for the industry. There are two things. Obviously, the penetration of healthcare is quite low. Diagnostic is the first point of really getting checked before you get into further treatments in healthcare.

As all of you are aware that more than 80% of the market is still unorganised, less than 20% is between the national and the regional players. There is definitely a headroom for growth and the prospects look brighter and the awareness is really going up. Preventive health check is becoming the key now and there is a lot of work happening in the healthcare space for consumers to become more aware, to get themselves tested and it is a big role that everyone together is playing here to really ensure that most of the population gets early and correct diagnosis at the right time.

What about your outlook on generic testing because that seems to be gaining quite a bit of traction? Do you think that there is going to be significant growth within this segment?
Sriram Iyer: Oh, absolutely. Genetic testing is driving the trend towards personalised medicine and basically tailoring the specific diagnosis to the particular individual or to his and her particular health conditions. That is the way forward. It has just started taking some traction. But going ahead, we see genetic testing really will start taking more and more shape for two reasons. Number one, it is specifically tailored to the particular individual’s needs. So, the individual here can really take a calculated call, a very informed call, a very proactive call on his health conditions and it is not alone about his health; it is about lifestyle, it is about what he or she is allergic to and how they can really manage their health better.

So, genetic testing definitely has a future, the work has started. There are a lot of data points available as well, to really do some sort of predictive modelling as well, saying at a particular cohort what are the kind of tests that are required to be done and what could somebody be at a risk of in future. So, not only genetics, but with the AI overlay over it, it really makes up for a very beautiful use case that we all have, which I think is definitely getting traction, it is quite low right now, it is gaining traction. But going ahead, as I said, it is personalised to the particular individual who is taking it. So, one can be really far more proactive about managing one’s health.

When a sector is growing and when competition is growing, prices for basic blood tests always tend to come under pressure. A) There is technology, B) there is AI, C) there is advantage of scale. How do you see pricing for the basic bread and butter diagnostic businesses and services moving on, which actually account for nearly 60% to 70% of the total revenue for most of the diagnostics chains, that is the reason I am asking this question.
Sriram Iyer: As you rightly said, yes, the routine test, the one that you really said, they account for a chunk of the volumes here. See, while there has been some sort of pricing salience, I do not think prices on those particular entry products have really gone up dramatically. There are still what it is and we also have to understand in India while as you rightly said, see less than 20% is through organised and unorganised, there is a huge chunk which is unorganised and most of the unorganised players typically work with it because of the pricing factor.
If you are overpriced, then there is no way that you are going to get some share of business there. But a lot of companies in addition to promoting some of these routines have also got panels or packages or preventative packages, those are the ones that really offer not only one or two particular tests, but a very wholesome solution that covers the entire body, from a basic test to a very comprehensive test and some of these are quite attractive as well and that is what we really see a very uptake happening for some of these tests, where consumers come and see value for some of those tests, so they might as well get themselves tested, not only for a blood but for a cholesterol, heart, liver, the entire body per se and that is what we really see is the thing that is happening now.
There was a time when Apollo was looking at listing the diagnostic business seriously, but that was just after Covid. Are you looking at revisiting that point again?
Sriram Iyer: We definitely have plans for that, but not in the near term. Right now, we are growing pretty well. Our growth rates are much better than some of the peers and we have a good headroom to grow further and we have a plan to expand as well. We still have not reached a point where we want to go to the market and go for a listing. But that is definitely there in the plans for the future, not right now.

What is your understanding of the growth numbers for Apollo Health for next three to five years approximately and for the industry?
Sriram Iyer: We are quite bullish and buoyant about what lies ahead. As I said, it is a great brand that we have. It is a very good recall among consumers and we offer the highest quality of clinical service, testing, interpretations of the highest quality. We are quite buoyant about what lies ahead for us. As Rahul said, a mid-teen growth for the industry seems more likely.

We have seen a lot of players taking the price up in the last one to two years. The margins are definitely under pressure, but holding onto the margins and keeping it stable would be the way to go and the growth and the strategy for Apollo clearly is to really grow volumes. If you see some of the top players and look at the growth rate – 10% to 30% – most of the growth is led by price. We would prefer to lead by volume and that is clearly the plan for us to really expand and there is a market available.

There is a shift from unorganised to organised. A huge awareness is coming up. We have a great brand. We have a very wide reach. As all of this comes together, we are quite bullish for the next three to five years.