India’s ailing Diagnostics Sector

The private diagnostics sector in India is facing significant scrutiny after a series of cases highlighted concerns over the accuracy and reliability of medical tests. Reports of incorrect test results leading to improper treatments have raised alarms about the lack of qualified professionals in diagnostic labs, pointing to systemic issues in the sector.

Current Status of the Sector

• The diagnostics industry in India consists of around 300,000 labs, with the sector contributing 9% to India’s healthcare industry, valued at Rs 860 billion in 2024 and expected to grow to Rs 1,275 billion by 2028.
• Main segments of the sector:
  • Pathology involves diagnosis of diseases through the examination of tissues, cells, and body fluids
  • Radiology involves use of medical imaging techniques to diagnose and treat diseases and injuries. Radiology is split into
    • Soft (x-ray and ultrasound)
    • Advanced radiology (CT-scan, MRI, nuclear imaging, and interventional radiology)
  • Reason behind growth: Rising prevalence of chronic diseases, growth in geriatric population, demand for preventive tests, and higher penetration of government insurance schemes.
  • Despite rapid growth, the sector remains under-regulated and fragmented, with many small, unorganised labs operating with varying standards.
  • Regulations:
    • The Clinical Establishments (Registration and Regulation) Act 2010 aims to bring all diagnostic centres and labs under its ambit, with their registration with respective State councils as clinical establishments.
    • The National Commission for Allied and Healthcare Professions (NCAHP) Act 2021 do not permit laboratory technicians to practice independently and issue reports without certification by a pathologist. 
    • Diagnostic centres in India can obtain accreditation voluntarily from organisations such as the National Accreditation Board for Testing and Calibration Laboratories (NABL).

Issues Faced by the Sector

• Lack of Skilled Personnel: There is a significant shortage of qualified lab technicians, pathologists, and microbiologists. This leads to many diagnostic centers operating with untrained staff, which affects the quality and reliability of test results.
• Fragmentation and Under-Regulation: The sector is highly fragmented due to low entry barriers and the absence of stringent regulations. While some states have adopted regulations like the Clinical Establishments Act, implementation is inconsistent, and many labs remain unaccredited.
• Regulatory Gaps: There are gaps in the enforcement of laws in several states. For instance, states like Karnataka and Tamil Nadu struggle with inadequate regulation of the diagnostics sector, particularly regarding lab quality assurance, staff qualifications, and transparency.
• Urban-Rural Divide: There is a significant disparity in diagnostic services between urban and rural areas. While most diagnostic labs are concentrated in urban areas, rural regions, home to 70% of India’s population, account for only 24% of diagnostics revenue.
• Pricing and Affordability: Pricing in the diagnostics sector varies widely, with some patients being charged exorbitant fees for routine tests. Government initiatives like T-Diagnostics in Telangana aim to provide affordable diagnostic services, but issues with supply and resource allocation have hindered their effectiveness.
• Quality Assurance Issues: Many diagnostic centers lack standard operating procedures (SOPs) for sample collection, testing, and reporting. Inadequate attention to quality control, including proper biomedical waste management, has led to concerns about the reliability of lab results.

Space and Infrastructure Constraints: Several states have stringent space requirements for labs, which are often unfeasible for small-scale diagnostics providers. In Kerala, for example, only a fraction of the 6,500 small labs would be able to comply with existing space standards under the State Clinical Establishments Act.