NOW TESTING EVERYWHERE

SMALL TOWN INDIA IS TURNING OUT TO BE A POWERFUL MAGNET FOR ORGANISED DIAGNOSTIC PLAYERS. THEY ARE CONTRIBUTING A SIGNIFICANT PART OF REVENUES, OUTPACING METROS IN GROWTH. WILL THE RIDE CONTINUE?

- BY NEETU CHANDRA SHARMA

LAST MONTH, METROPOLIS Healthcare Ltd said it was buying Agra-based Scientific Pathology Pvt Ltd to strengthen its presence in western Uttar Pradesh. Valued between ₹55 crore and ₹83 crore based on adjusted Ebita for a defined period, the deal will allow Metropolis to take over Scientific Pathology's laboratories and sample collection centres in the prosperous region.

In April, Metropolis followed that up with the acquisition of Dr. Ahujas' Pathology and Imaging Centre, a diagnostics network based in Uttarakhand, for ₹35 crore in an all-cash deal. This was the third purchase in five months by Mumbai-based Metropolis Healthcare. In December 2024, it expanded its footprint in northern and eastern India by buying Gurugram-based Core Diagnostics for ₹246.8 crore, broadening its advanced care diagnostics portfolio.

Both Agra and Gurugram, a city in Haryana on the outskirts of New Delhi, are classified as Tier II cities, recognised for the lucrative business opportunities and relatively cost-effective operational base compared to metros like New Delhi and Mumbai.

According to the Healthcare Federation of India, over 50% of the so-called “aspirational districts” identified by the government think tank NITI Aayog are now being served by diagnostic chains. Public-private partnerships (PPPs) have improved access to diagnostic services in Tier II and Tier III cities, it says.

An upwardly mobile middle class that's propelling the rapid growth of small cities. Diagnostic firms are expanding both organically and inorganically through mergers and acquisitions (M&As) in an industry that is expected to more than double in revenue between 2024 and 2030.

Companies like Dr Lal PathLabs have their sights set on further expansion, having gauged the potential of Tier I and Tier II cities. The company says that it is spreading its reach with the opening of 15-20 new labs in FY25.