Amazon's Entry into Health Care: A Headwind, but Diagnostic Stocks Look Attractive

The news that Amazon India has launched diagnostic services in select metro cities in partnership with the unlisted Orange Health Labs has led to a look at the competitive intensity in healthcare services.

- DEVANGSHU DATTA

Listed companies in the space such as Dr Lal Path Labs, Metropolis Health, Thyrocare, Vijaya, and Krsnaa have all seen double-digit stock price corrections over the last 6-9 months.

Orange Health Labs was founded in 2020 and raised $12 million in December 2024. It has an estimated annual revenue run rate of ₹100 crore and promises doorstep sample collection within 60 minutes and, for routine tests, digital reports delivery within six hours. It covers 450 pincodes and has a menu of 800-plus tests.

The differential between the common tests offered by incumbents and new entrants is just about 5-10 per cent and this isn't going to move the needle much in this business. The keys are quality of service, brand value, width of network and number of tests on the menu.

Metropolis and Dr Lal offer over 4,000 tests while Orange has 800.

Also, incumbents have far wider coverage and seem to maintain margins without taking price hikes.

Dr Lal reported a steady Q4FY25. Network expansion and good performance in core markets offset the muted show of Suburban Diagnostics.