Diagnostic sector’s revenue to grow by 20-25% in FY22, says report

The diagnostic sector’s revenue is expected to grow by 20-25 per cent year-on year in FY22, on the back of a rise in COVID-19 and allied tests, specifically during the second wave, according to the ICRA.

Operating margins of the sector are seen increasing by 300-400 basis points during the period, the rating agency said in a report.

“Recent trends such as focus on digital brand building, improved offerings in bundled medical packages, changing consumer mindset towards organised players is likely to support demand traction for national diagnostic chains going forward,” ICRA assistant vice president and sector head Mythri Macherla said.

For FY23, with expected sequential improvement in non-COVID revenues and consolidation of regional chains, revenue growth for the sector is estimated at 8-10 per cent YoY, Macherla said.

Most diagnostic chains have invested in moderate levels of organic expansions and focused on consolidation with regional chains to tap the under-penetrated market.

“With news around the Omicron variant, testing is expected to increase in December 2021 due to travel norms in certain states. That said, increasing the pace of vaccinations could mitigate the spread of the new variant and reduce the level of COVID-19 related tests in the medium term,” Macherla added.