So far, Tier I cities like Mumbai, Bangalore, Delhi, Chennai, Hyderabad and Kolkata have been the prime markets for the radiology sector. However, these megalopolises are slowly getting saturated. In such circumstances, radiologists, imaging diagnostic chains and radiology equipment majors are now vying to tap Tier II/III cities as they have the potential to match with the larger cities in market size. Several research reports demonstrate that these cities have progressed significantly, offering an optimistic outlook for the country. So, what makes these beta cities more business friendly?
Key drivers for growth
Several demographic factors, rapid urbanisation leading to constant economic development and saturation of progress in metro cities are some of the aspects that draw radiology players to venture into these semi-urban areas and small towns. “Additionally, over the last 10 years, awareness about preventive healthcare among people has increased and this in turn has lead to growing demand for good quality healthcare services. Therefore, as demand for healthcare services increases so will the demand for radiological diagnosis and this leads to the growth of diagnostic and imaging centres within these areas,” believes Dr Anupama Dudhani, Radiologist, Hinduja Healthcare Surgical, Mumbai.
Dr Harsh Mahajan President, IRIA |
Dr Harsh Mahajan, President, IRIA and Honorary Radiologist to the President of India, also feels that Tier II and Tier III cities have huge potential for the radiology market players, especially for the local and mid-sized players. According to him, these cities represent an area of under served need, with a growing demand for improved health services and infrastructure.
J Sunderrajan Head – Strategy & BD, Siemens Healthcare |
“With increasing prosperity and growing middle class in Tier II and III cities, the propensity to spend on healthcare is growing rapidly. As a result, quite a few private and corporate healthcare providers are expanding their reach in these cities. Venture capital firms are also making significant investments with large size portfolios in the healthcare sector. The whole idea is to provide accessible and affordable healthcare in these cities,” opines J Sunderrajan, Head – Strategy and Business Development, Siemens Healthcare.
Dr Ashwin Garg Interventional Radiologist, Sri Balaji Action Medical Institute |
Speaking about the main factors responsible for drawing the the attention of the market players, Dr Ashwin Garg, Interventional Radiologist, Sri Balaji Action Medical Institute says, “Firstly, these areas are largely untapped markets. Plus, in recent times, these places are having improved physical infrastructure, better government support, and well-connected communication network which are essential for any kind of industry. We are also witnessing a lot of other businesses moving into these smaller cities. The other advantage is the improving lifestyle within these cities and towns. This has created a new set of customers for the healthcare industry.” Dr Garg also feel that the boom in the medical tourism industry is a another driver for growth of the radiology segment in the Tier II and III cities. “Medical tourism is helping a lot in the rapid progress of the radiology market as well. Over the last few years, medical tourism has gained a lot of momentum in India. Indian market is providing the care at about one-third of the cost as compared to other countries. This, in turn, is making India a popular medical tourist hub in Asia. Medical tourists are now coming to smaller cities like Gurgaon or Faridabad to seek good quality and cost-effective healthcare and radiology services at a competitive price, thus opening many avenues for the radiology sector,” he chips in.
Further, as per a FICCI study, India needs to add huge number of beds for providing satisfactory healthcare. Hence, many new hospitals would be established in Tier II and Tier III cities and this would open new markets for radiology companies.
Apart from increasing demand for healthcare services, new advancements in radiology are also contributing a lot in the rapid progress of the radiology market in these areas. Experts reveal that earlier the radiology market entered the Tier-II and III with X-ray services and then ultrasound services were brought in. However, now technologies such CT, MRI, PACS and digital radiology are also available in these cities.
Explaining how advanced technology has fostered growth for the radiology segment within the beta cities, Dr Garg quips, “Modern equipment with high quality, high-end features and tools for faster diagnosis are getting introduced in this market. For example, X-ray imaging equipment market is witnessing a major shift from analog to computed radiography (CR) and digital radiography (DR). Few years ago, ultrasound systems were only confined to radiology department. But now increasingly a number of other departments like cardiology, gynaecology, urology, critical care, emergency medicine, operating theatres etc. are showing interest in offering ultrasound services for various clinical applications. Hospitals, mainly the government owned, are therefore purchasing units for different departments. Introduction of teleradiology has also acted as a boom to the radiology market, especially in these regions.”
Speaking of technology acting as a key driver, Sunderrajan shares examples of the products that Siemens introduced in the Tier II and III cities in the last few years. He informs, “Imaging centres and hospitals from the Tier II and III cities have started adopting high-end equipment in their radiology department. For instance, one of India’s first 128 slice CT scanner called Definition AS+ was launched in Coimbatore, the second Hybrid OR system of Siemens was installed in Nagpur, the first 1.5T MRI called MAGNETOM Essenza was launched by Siemens in Surat, many such examples evidently show how technology is driving the radiology sector in these cities.”
All the above factors indicate that there are various factors propelling growth in the radiology industry within the smaller cites of India and leaves a lot of room for further progress. The industry seems to be surrounded with many opportunities that can take the radiology and imaging services in India to the next level. “Tier II/III markets can be the future growth drivers for consumer durables given the growing disposable incomes, rising aspirations of people to own quality products. We are seeing the improved infrastructure support that the government is providing with respect to the development of these cities. Private healthcare in these cities is now getting corporatised with the aim to reach closer to the people and provide best care closer to home. These corporate healthcare chains are setting hospitals on the hub and spoke model in various tier II cities. To target high rural population which is having moderate per capita income, we would be witnessing huge investment in healthcare and thus in radiology in the next decade,” predicts Dr Garg. So, if opportunities are galore, what is the nature of the market currently?
Market at present
Jaipur, Lucknow, Nagpur, Pune, Jalgaon, Meerut, Phagwara, Kochi, Bhopal, Ludhiana, Faridabad, Chandigarh, Agra, Amritsar and Nashik are the Tier II cites that are currently witnessing a surge of activity in this field. Picking up pace are Tier III cities such as Dehradun, Meerut, Muzaffarnagar, Gurgaon, Noida, Greater Noida, Thiruvananthapuram etc. Many new imaging centres run by local radiologists have mushroomed in a span of three to five years. Imaging and diagnostics chains such as Metropolis Health Services, Suburban diagnostics, NM Medical, Lifecare Diagnostic Centres etc. are also foraying into these markets. On the other hand, radiology equipment manufacturers and distributors are leaving no stone unturned to introduce equipment that suits the needs of their customers within these markets.
Radiology equipment manufacturers such as Allengers, Sonosite, Carestream, Modi Medicals, Toshiba, Fuji and many more have made the most of the opportunities available in the Tier II markets. These players have introduced advanced imaging systems that cater to the needs of radiology departments and imaging centres, both big and small. Equipment majors such as GE, Siemens and Philips are also showing interests in these market.
Market tactics
Looking at the favourable circumstances available in the market, many radiology players are chalking out a strategic plan to venture into these market. “Indian radiologists in general are very tech-savvy and very knowledgeable. So the companies are targeting the hospitals and radiologists. They are conducting seminars across India to share advanced radiology imaging techniques and solutions with their customers as well as organise training programs for radiographers. Some of the equipment companies are now making direct presence in India with their own sales and service teams covering all the states of India. Few companies are even developing products according to the needs of semi urban and rural areas like an upgradable retrofit solution, Carestream DRX1 System for Digital radiography. There are other foreign companies which are in collaboration with local companies to build equipment keeping in mind the Indian buyers. Some PPP models are also being created to make radiology and imaging available to the rural sector,” briefs Dr Garg.
Elaborating on the strategy,adopted by Siemens to tap Tier II and III cites Sunderrajan explains, “Siemens started an initiative called Zero Installed Base or ZIB, where we target districts that have no imaging equipment – either of Siemens or of the competition. This strategy has helped Siemens to expand its geographical reach and today we have presence in almost 525 districts of India. Moreover, we are also fostering our R&D efforts to come up with highly innovative and at the same time more cost-efficient imaging equipment.” Sharing Siemens’ plans for 2013 he adds, “Siemens Healthcare’s global initiative of Agenda 2013 entails objectives like expanding our regional presence in the fast-growing emerging markets and further extending our portfolio of systems in the middle price segment.”
At the same time, because of the huge costs involved in establishing the radiology machines, various companies are providing financing options so that a hospital can make significant purchases such as a CT or MRI machine, thereby to increase access in healthcare as well. Hence, many equipment majors are introducing refurbished imaging equipment in these markets. Refurbished medical imaging equipment serves as an affordable alternative to otherwise expensive high-end equipment. It gives an opportunity for the customers to purchase latest technology products for their clinic or hospital at a lower price. In fact, more and more corporate hospitals in the beta cities are opting for alternatives to cut down on capital investments. Refurbished equipment companies such as Sanrad and Master Medical Equipment have been leading the race. Year after year, these companies introduce various refurbished CT Scanners and MRI machines at an affordable cost. This also indicates a growing market for refurbished equipment within these cities.
On the other hand, Dr Mahajan sees a growing trend of deploying re-used equipment in these markets. He informs, “There are many local medical imaging equipment companies who sell re-used radiology machines to hospitals and imaging centres. These machines are available at a price which is half the cost of a new equipment and provides reasonable, quality services. However, adopting re-used equipment within hospitals and imaging centres could also mean risking patients’ lives. When asked on the risks involved in using these equipment Dr Mahajan replied, “These machines are normally FDA approved machines. Radiologists opt for these machines as they are not in the position to invest in high priced imaging systems. When they buy these re-used machines they feel that at least they are providing a service which was not available to people earlier. Personally, I feel opting for these machines could risk a patient’s life. One needs to be very careful while purchasing these systems. All safety parameters, especially the radiation dose levels should be checked prior to buying these equipment.”
Overcoming obstacles
If there are opportunities, challenges are bound to be there as well. Major challenges that cloud this budding industry include lack of skill manpower, legal and regulatory issues and growing need for huge investment. Dr Dudhani urges medical education institutes to introduce diploma courses in radiology and imaging operations. She says that introduction of such courses can add to the human resources in this field. “India is in need of innovative radiology products and services that can be made available to all at an affordable cost,” points out Dr Mahajan. Talking on the legal issues concerned, Dr Mahajan feels that systematic guidelines and proper regulations can be instrumental in keeping a check on all fly-by-night operators in this field. Dr Garg, on the other hand, stresses that introducing teleradiology services in all Tier III cities and rural areas of India can help sow the seeds of success in radiology.
All these small measures, if incorporated, can indeed bridge the gaps within the industry. Moving forward, it is estimated that 2013 will definitely see more and more radiology players investing in Tier II/ III cities.