STRUCTURE OF DIAGNOSTIC INDUSTRY
Diagnostics play a key role in the management of health and the
prevention, evaluation, and treatment of disease. It has a role in every step of the
healthcare value chain, from wellness testing to detection of disease right up to
post-treatment monitoring and management.
As per the Net scribes Healthcare Market Report 2022-27 the diagnostics
services segment was valued at Rs. 1.17 Tn in 2020-21 and is expected to reach Rs. 4.46 Tn
by 2026-27, registering a CAGR of 6.7% during the forecast period. The report attributes
the growth prospects to the rising demand for home diagnostic services and preventive
healthcare, leading to a shift from physical diagnostic laboratories.
The digital healthcare sector is anticipated to witness a CAGR of 6.7%
during 2022-28. The factors driving the growth are the rapid penetration of smart phones
and internet, along with supportive Government policies, preventive healthcare, opening
newer prospects for the diagnostics industry.
In the diagnostics market, pathology tests are the primary method of
diagnosis and account for 57% of the total market. Pathology tests have a greater
potential for scalability than radiology because samples can be transported for testing,
enabling companies to utilize a hub-and-spoke model.
In contrast, radiology labs must be strategically located in places
where patient-flow is high, and only basic radiology tests can be offered to the customers
With substantial investments in state-of-the-art diagnostic facilities,
India has become a prominent destination for high end diagnostic services, catering to a
broader spectrum of the population. Adding to the growth trajectory is the e-health
market, the size of which is estimated to reach USD 10.6 Bn by 2024-25. The Government
continues to support the Indian healthcare industry with a slew of measures, including
easing restrictions on Foreign Direct Investment (FDI), boosting funding for healthcare
sector, and establishing healthcare infrastructure through Public-Private Partnership
(PPP) projects
MAJOR GROWTH DRIVERS
Increasing Income Level:
The rise in disposable income and consumer spending has brought about a
change in peoples lifestyles.
This change has created opportunities to promote healthy living and
preventive healthcare, opening newer prospects for the diagnostics industry.
Prevalence of Chronic and Lifestyle Diseases:
Over the past years, chronic and lifestyle diseases such as diabetes,
arthritis, hypertension, cardiovascular diseases (CVD) and cancer have increased
substantially. Chronic diseases are a significant cause of mortality in India. The growth
in demand for healthcare benefits, owing to the expanding patient pool, drives the
healthcare market.
Improved Awareness about Good Health:
Rapidly evolving lifestyles and increase in the lifestyle-related
diseases have made people cautious about health and wellness. The prevalence of chronic
and non-communicable diseases is highest among people over 60 years of age. Opting for
preventive healthcare services, home healthcare facilities and precautionary care have the
potential to reduce the chances of getting affected with such diseases.
Rising Elderly Population:
In India, the percentage of elderly population in the total population
is increasing. The incidence and complexity of disease appear to increase with age,
propelling the need for diagnostic services and preventive care.
Impact of Government Policy:
The Government is working on a plan to establish basic standards for
regulating the countrys diagnostic and wellness services. These laws and rules are
set to ensure that best-in-class health and wellness services are available throughout the
country. This will serve as a support system for all participants in the sector.
Public-Private Partnerships:
The resources the Government needs for healthcare are brought in by
Public-Private Partnerships (PPPs), while focusing on building a model that is sustainable
in the long term. PPPs offer the potential to improve the healthcare system by bringing
together the expertise and resources of the commercial and public sectors, allowing wider
public access and utilization of subsidies.
THREATS TO THE INDIAN DIAGNOSTICS INDUSTRY
Intense Competition and Impact on Pricing
With new competitors entering the diagnostic market, such as health
tech companies, large conglomerates, reputable pharmaceutical companies, and startups,
there has been a significant level of disruption in both the B2C and B2B market segments.
These competitors tried to increase their revenue share in the diagnostic industry by
using ‘price as a crucial differentiator.
Decline in Covid-19-related Tests
After the third wave of the Covid-19 pandemic, diagnostic companies are
experiencing a decline in demand for Covid-19 tests one of the top-selling tests that
drove up their revenues during the last two fiscal years
Risk associated with Debts
While many of the diagnostic chains are expanding their infrastructure
and increasing their investments, the scenario after the Covid-19 pandemic must be kept in
mind. The focus needs to shift to whether the current debt can be paid down by focusing
less on Covid-19-related tests
Self-Monitoring and Diagnosis
The introduction of newer wearable and self-monitoring tools such as
glucometers, oximeters, and technologically advanced devices pose strong challenges to the
diagnostics sector
KEY RISKS
Rising competitive intensity within organized market
Given the highly fragmented nature of the market with organized players
share at ~17-20% makes the addressable market even smaller. Changing preferences by the
consumer, attractive industry dynamics and superior return ratios in India diagnostics
have attracted multiple new entrants thereby increasing competition.
Low entry barriers for the business
Scale-up in Indias diagnostic business is led by the asset light
model like third party arrangement or franchisee this reduces the initial set-up cost for
the business. Also, there is no specific and stringent regulation by the government making
it easy for new players to enter the fray.
Geographical concentration
Most of the recent competition is focused on key metros and Class I
cities like Delhi NCR, Mumbai, Pune, Hyderabad, Bangalore, and Chennai. Even the overall
diagnostic market is concentrated in urban region of India (~78% of overall share).
Moreover, many small diagnostic chains that operate 3-4 centers or that are concentrated
in a particular place/region are susceptible to the demand-supply dynamics of that
location.
Price capping by the government under NEDL
Any government-ordained price cap under NEDL (National Essential
Diagnostic list) could be a major risk for routine tests which account for ~40-60% of
sales for most of the leading layers.
Higher input costs and inflationary pressure
Over the last few quarters, the price of input reagents is increasing
due to the higher cost of chemicals as well as USD appreciation (vs. Rs) leading to some
pressure on gross margins. Also, inflation-led increases in costs for logistics (higher
fuel price), utility costs and employee costs impacted the EBITDA margin for most of the
players. If such a scenario continues, it could keep margin under pressure.
COMPANY OVERVIEW
Aspira Pathlab & Diagnostics Limited ("ASDL"/"The
Company") is a leading pathology specialist, with Pan-India presence. ASDL is one
of the leading players in the diagnostics space, with footprint in both B2B and B2C
marketplace. The Company offers best-in-class pathology and diagnostic services to
individual patients, hospitals, other healthcare providers, and businesses. The Company,
with a wider presence in Maharashtra India, enjoys a loyal customer base, that reflects on
its strength as a brand, providing superior diagnostic testing and services.
Each year, it reaches a new milestone, touching the lives of numerous
patients and healthcare professionals by offering actionable health insights. ASDL
ideology is founded on technological supremacy, patient centric approach, and dependable
diagnostic results. It performs diagnosis and test like Covid-19, urine, stool, X-ray,
Ultra sound sonography, Blood test etc with highly developed and advanced equipment. ASDL
ideology is founded on technological supremacy, patient centric approach, and dependable
diagnostic results.
The Company strategizes to focus on wellness, technology, footprint
expansion, while increasing efficiency and productivity. It is also integrating
sustainability across the value chain to offer long-term value creation for all its
stakeholders. The Company envisages these strategies to unlock growth on new frontiers and
drive expansion with the same spirit.
NETWORK OF LABS
Aspira is focused on establishing itself as a strong regional player
before scaling up its operations. Although we follow an asset light model, other costs are
significantly high. Most of these cost is front ended and the payback period is high. We
are therefore working on building the right systems and aggressively optimize the cost. We
are adopting new technologies that would improve customer experience. Some of these are
use of Chatbot, improving website, implementing patient engagement platform, Customer
Service, etc.
Also concentrating more on HLM, trying to expand area by targeting
newly setup hospitals and laboratory and trying to achieve more technology and
advancement.
Financial performance (in INR Lakhs)
Particulars |
FY 2022-23 |
FY 2021-22 |
FY 2020-21 |
| Revenue from operations>
| 1445.69 |
1954.19 |
1520.54 |
| EBITDA |
191.41 |
646.78 |
371.70 |
| Profit after Tax/Loss |
(8.87) |
445.94 |
138.10 |
Key Financial Ratio
Particulars |
FY 2023 |
FY 2022 |
Variance |
Reason for major variance |
| Current ratio (in times) |
3.70 |
3.99 |
-7.48% |
- |
| Debt-Equity ratio (in times) |
0.08 |
0.07 |
12.34% |
- |
Debt service coverage ratio
(in times) |
1.68 |
4.78 |
-64.93% |
Increased on account of
decrease in net profit (due to decrease in revenue) during the year. |
Return on equity ratio (in %) |
-0.69% |
42.26% |
-42.96% |
Decreased on account of
decrease in net profit during the year. |
Inventory turnover ratio |
6.22 |
8.14 |
-23.61% |
Decreased on account of
decrease in cost of material consumed. |
Trade receivables turnover
ratio (in times) |
4.23 |
6.31 |
-32.91% |
Decrease on account of
increase in average trade receivables. |
Trade payables turnover ratio
(in times) |
4.42 |
4.98 |
-11.38% |
- |
| Net capital turnover ratio (in times) |
3.38 |
3.65 |
-7.25% |
- |
| Net profit ratio (in %) |
-0.61% |
22.82% |
-102.69% |
Decreased on account of decrease in net
profit during the year. |
| Return on capital employed (in %) |
2.40% |
35.40% |
-93.23% |
Decreased on account of decrease in EBIT
during the year. |
| Return on investment (in %) |
NA |
NA |
NA |
- |
HUMAN RESOURCES MANAGEMENT
Aspira is a new age lab. Human resources are the key to performance. As
of March 31, 2023, the company has 105 employees on its payrolls. The focus during the
year has been around enhancing the productivity of the workforce and increasing the team.
The growth in business was achieved with marginal increase in workforce strength. The
Company strongly believes that its competitive advantage draws strength from its highly
skilled workforce. Through a range of development activities, the Company helps its
employees nurture their professional skills and leadership abilities, thus charting a
clear career path. The automation in HR has significantly improved employee experience,
which, in turn, has increased productivity. The vision of the Companys senior
leadership guides and shapes the future of ASDL. The Company will continue to invest in
the talent of its employees to achieve its business goals and fuel expansion.
IT & DIGITAL INFRASTRUCTURE
Digital strategy plays an important role in customer engagement. The
Company focuses on enhancing its IT and automation across value chain to create a digital
ecosystem for all its stakeholders. The ASDL has launched app named Aspira Health for all
its patients, with easy access to download reports, book tests and find nearest diagnostic
centers. Further for those patients whose email address is not registered test reports are
sent to them on WhatsApp. ASDL also provide home visit facility for blood sample
collection The Company maintains a robust IT and digital infrastructure to stay ahead of
competition and deliver an outstanding performance.
CAUTIONARY STATEMENT
Statement in this Management Discussion and Analysis describing the
Companys objectives, projections, estimates, expectations or predictions may be
‘forward looking statements within the meaning of applicable securities laws
and regulations. Actual results could differ materially from those expressed or implied.
Important factors that could make a difference to the Companys operations include
global and
Indian demand and supply conditions, finished goods prices, input
materials availability and prices, cyclical demand and pricing in the Companys
principal markets, changes in Government regulations, tax regimes, economic developments
within India and the countries within which the Company conducts business and other
factors such as litigation and labour negotiations. The Company assumes no responsibility
to publicly amend, modify or revise any forward-looking statements, on the basis of any
subsequent development, information or events or otherwise.
|
For and on behalf of the
Board of Directors |
|
ASPIRA PATHLAB &
DIAGNOSTICS LIMITED |
|
Sd/- |
Sd/- |
|
Dr. Pankaj J Shah |
Mr. Nikunj Mange |
Date: August 12, 2023 |
Managing Director & CEO |
Executive Director |
Place: Mumbai |
DIN :- 02836324 |
DIN: 08489442 |
Statement on Conservation of Energy, Technology Absorption &
Foreign Exchange Earnings and Outgo
A. CONSERVATION OF ENERGY
i. the steps taken or impact on conservation of energy: The
operations of your Company are not energy-intensive. However, significant measures are
being taken to reduce energy consumption by using energy efficient equipment. The Company
has taken initiatives to conserve energy and consume less energy like Shutting off the
lights when not in use. The Company has designed its facilities keeping in view the
objective of minimum energy loss. The Company has taken all steps to conserve Energy in
workplaces by educating and training employees to conserve energy. Energy saving LED
lights are installed at various laboratories and collection centers.
ii. the steps taken by the company for utilizing alternate sources of
energy: The Company being in the service industry does not have any power generation
units and did not produce/generate any renewable or conventional power.
iii. the capital investment on energy conservation equipments:
The Capital investment on energy conservation equipments is insignificant.
B. TECHNOLOGY ABSORPTION
i. Efforts mad towards technology absorption-
The Company being in service industry has adopted all new technology in
terms of new software and hardware and latest machinery with automated processes available
in the current Techno-environment to the size, scale and complexity of operations.
ii. Benefits derived from technology absorption-
Technology absorption has helped the Company to provide better and
accurate results to the Customers.
iii. in case of imported technology (imported during the last three
years reckoned from the beginning of the Financial year- a. the details of technology
imported; - Nil b. the year of import; - N.A c. whether the technology been fully
absorbed; - N.A d. if not fully absorbed, areas where absorption has not taken place, and
the reasons thereof;
iv. the expenditure incurred on Research and Development.: Nil
C. FOREIGN EXCHANGE EARNINGS AND OUTGO:
The Company has not earned nor spent foreign exchange during the year
under review.
|
For and on behalf of the
Board of Directors |
|
ASPIRA PATHLAB &
DIAGNOSTICS LIMITED |
|
Sd/- |
Sd/- |
|
Dr. Pankaj J Shah |
Mr. Nikunj Mange |
Date: August 12, 2023 |
Managing Director & CEO |
Executive Director |
Place: Mumbai |
DIN :- 02836324 |
DIN: 08489442 |
+91-9892691696
