For hospitals in the United Kingdom and the United States it's cheaper to outsource laboratory and diagnostic tests to India. This is the case in West Asia as well. India is on the cusp of another outsourcing wave: high-end laboratory and diagnostic testing.
"Generally these are highly specialised tests like molecular diagnostics and hormones-related tests. Indian laboratories are 70-80 per cent less costly than the US ones," says A Lal, chairman of Dr Lal Path Labs.
Adds Sushil Shah, chairman of Metropolis Health Services, a referral centre for a wide range of medical specialities that caters to over 1,100 laboratories, hospitals and research institutes in India: "Outsourcing of laboratory testing and diagnostic services is set to become big business in India."
Some high-end tests that could be outsourced to India are cancer, HIV, tumour and hepatitis marker tests. Indian labs offer a comprehensive test menu -- over 1,500 tests under one roof.
With that range on offer, it's no surprise that the big laboratory companies here are either in talks with or already are partnering hospital chains overseas in connection with lab tests. Dr Lal Path, a key laboratory company, is close to finalising outsourcing tie-ups for high-end laboratory testing with hospitals in West Asia.
Metropolis Health Services has already tied up with Gulf Medical College Hospital, Ajman, in the UAE. "We are currently in talks with a consortium of hospitals in the US and in the UK and are close to finalising the deal. We expect our turnover to exceed Rs 100 crore (Rs 1,000 million) by next year from the present Rs 35 crore (Rs 350 million)," says Shah.
Metropolis expects $30 million per annum [about Rs 130 crore (Rs 1,300 million)] in orders from each international tie-up or at least 100 samples for testing from each partner every day.
The industry's other big boys are Ranbaxy SRL, Ezy Health, Gribbles, N M Diagnostics and Nicholas Piramal Pathology labs.
According to a study on the Indian healthcare industry by SKP Crossborder Consulting, the Rs 4,000 crore (Rs 40 billion) diagnostics and pathology laboratory testing business is growing at a compounded annual growth rate of 20 per cent.
While the industry has around 20,000 laboratories, only a few prominent ones have any international accreditation that instills confidence about their quality among foreign hospital chains.
To be sure, Indian laboratory companies think that local US and European labs could kick up a rumpus about outsourcing work to India and argue that the quality of work here is below par. But Indian labs may have an ace or two up their sleeves.
For example, they could underline the quality control standards here. To import blood samples for testing purposes, laboratory testing companies have to acquire a licence from the Drug Controller General of India, in addition to approval from the Director General of Foreign Trade. Lab companies have already approached them for approvals.
Still, a huge backlash against outsourcing lab work in the West is unlikely.
Says the chief scientific officer of a research-based Indian pharmaceutical company: "Research and other medical activities may not face as severe a backlash. These are highly complex and expertise-driven jobs where the quality of work is the most essential element."
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