Leading diagnostics chain Metropolis Healthcare is focusing on improving its footprint across key regions by customising its services and offerings for these micro markets, chief executive officer Surendran Chemmenkotil told Mint in an interview on Wednesday. This will likely enhance regional performance and push sales in the near term.
“What we’ve done is we have divided the entire country into 100 plus micro-markets…markets which behave similarly or the competitive position, growth levels and opportunities are similar,” he said. The company has introduced market-relevant pricing in different regions, tweaked its partner and distribution model depending upon the needs of the area, and tailored its test menus according to disease patterns and needs in specific regions.
With diagnostics traditionally being a hyper-regional business, this strategy could boost the company’s strong hold over key markets. These micro-marketing strategies are estimated to contribute an additional 2% revenue growth in the next quarter. “This will be our way of working going forward in this company,” Chemmenkotil said.
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“Usually diagnostic companies have pan-India pricing…they don’t see any fluctuation or major difference in the pricing,” Tausif Shaikh, lead pharma analyst at BNP Paribas, told Mint. Metropolis will adjust the pricing according to the patients’ needs based on their data. “Micro marketing strategies should be seen as realignment of pricing, in regions where opportunity exists for price hikes in certain tests and packages,” he said. This may benefit the company in the near term only, Shaikh pointed out.
Expansion plans
In FY22, the company had planned to increase its network by adding 90 laboratories and 2,000 service centres by FY25. Chemmenkotil said they are on track to achieve the target with about 25 labs and 500 centres being added in this fiscal year. Metropolis increased its presence to about 700 towns from 300 in FY23.
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“Most of the labs are coming in tier 2 and tier 3 cities,” he said. “We plan to move to 1,000 towns by the end of the next fiscal year.”
However, the next leg of growth for the company will primarily be inorganic. “Next year onwards, that rapid pace of lab expansion will not be required…we will already be serving about 1,000 towns, which is our core market,” he said.
It will take 12-18 months to see how these labs push the company’s overall performance, BNP Paribas’ Shaikh said. “Once you put in a lab, it takes 18-24 months to get the patients, tie up with franchises and get the B2C volumes…it is a time-consuming process,” he added.
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However, the company is actively looking at acquisitions, especially in North India, to raise its presence in the region. Metropolis announced the acquisition of Delhi-NCR-based Core Diagnostics last quarter. The chain is expected to strengthen its presence in North India and add to its oncology portfolio. Chemmenkotil said the acquisition process will be completed in four to six weeks.
“At the same time, we are actively considering other multiple targets in North India so that we can acquire more good quality assets where B2C contribution is very high,” he said.
The diagnostics chain announced its Q3 FY25 results on Tuesday. It reported a 15.4% year-on-year increase in net profit to ₹31.4 crore. Revenue from operations grew 11% y-o-y to ₹322.8 crore.
The company’s Ebitda (earnings before interest, taxes, depreciation and amortization) increased 9.4% to ₹72 crore in the third quarter of this fiscal over ₹64.8 crore in the year-ago period. The Ebitda margin was flat at 22.3% in the quarter.