Nov, 2013     

Delhi Radiology Market – Market Overview

Healthcare market is seeing a sharp growth in many sectors, one of which is radiology (X-rays, MRI, CT-Scans, Ultrasound, Mammography and Dexa are covered in the radiology market). With the emerging trends and technology, it is interesting to see the tremendous scope that this sector has to offer. Radiology is used in the context of diagnosis, the first step towards treatment and general healthcare. With a noticeable shift surfacing in the world, from prescriptive to preventive health care, access to quality healthcare is gathering greater importance compared to earlier decades. A study was done to analyse the Delhi Radiology market by RedSeer.

A market overview was done by our team and it was determined that the Radiology market of Delhi amounts to 700+ crores and is expected to grow at CAGR of 12%. It was found that the key growth drivers of the radiology market are the increasing affordability among patients, the efficiency and accuracy of diagnosis and the increase in lifestyle disorders. Our team made field visits and conducted interviews with renowned individuals from the industry and mapped the split of modalities in the radiology market. It was seen that MRI and CT Scan account for 65% of the Delhi radiology market. The rest is covered by sonography, X-ray, Dexa and Mammo. On a broader level, it was seen that there are only 109 MRI machines in Delhi out of which 61 are with stand-alone centres and the rest were present in government and private hospitals. Most of the stand-alone centres had a 1.5 Tesla machine. In case of CT scan machines, it was found that there are 124 CT Scans in Delhi out of which 54 are in stand-alone centres and most of these stand-alone centres use 64 Slice machines. Since the location of the centre is an important criterion for setting up a lab, our team contacted multiple centres and experts and it was found that the average tests in a month per MRI machine are 516, out of which South Delhi had the highest machine utilization. Our analysis showed that Orthopaedics and Oncology accounted for 52% of the overall market.

After contacting a few doctors, it was found that the reporting standards and higher referral fee by labs are the key decision-making criteria for doctors to refer a lab. A high referral fee is paid to doctors referring a good number of patients and CME programs and gifts are most prevalent engagement activity for doctors. Our research said that the typical referral fee for influential specialists is in the range of 30- 40% of rack rate out of which SRL pays the highest referral fee in the market with 25-40% of rack rate. Doctors are willing to switch diagnostic service providers for a high referral fee, better reporting standards and better brand. Our team also performed a profile analysis for a few players to determine the revenue, function and policies of that centre. Customer behaviour analysis was performed post profile analysis and it implied that patients prefer labs referred by doctors but have brand and price of the test as key lab selection criteria. More than 90% of patients are willing to travel to a good lab referred by their doctor and only 10-15% of patients are influenced by the websites of the radiology labs.

The overall market overview obtained from the above analysis gave a better idea of the radiology market status in Delhi. The IRR for the client's lab was found to be ~17% on a capex of ~10 crore and the IRR for MRI machine was found at ~19% on a capex of 5 cr. and CT Scan machine at ~12% on a capex of 3.5 cr. The operating model and market overview were therefore determined by the team.