India’s organised diagnostic industry is likely to sustain its growth momentum, with revenues expected to rise 12-14% in FY27, supported by deeper penetration in non-urban markets, rising demand for bundled packages, preventive health checkups and speciality tests, and increasing preference for organised diagnostic chains, ratings agency ICRA said on Monday.
The agency said that the diagnostic test volumes for its sample of five listed companies – which together account for around a quarter of the organised diagnostics market – to grow 10-12% this fiscal. Though the realisations are projected to grow at a modest 1-2% as leading chains continue to avoid major price hikes amid an increasingly competitive market.
“Leading national chains have avoided any meaningful price hikes, and also passed on the GST (goods and services tax) rate cut benefits on diagnostic kits and reagents. This moderated the realisation growth to some extent during FY26,” the report noted.
It further suggested that the industry’s growth has become structural due to the rising incidence of lifestyle diseases and non-communicable diseases (NCDs), improving insurance penetration and a gradual shift towards organised diagnostic chains.
ICRA’s sample companies recorded a 16.1% year-on-year revenue growth in FY26, supported by a 9% increase in patient footfalls, a 2.5% rise in the number of tests per patient and a 5% increase in revenue per test. This followed an 8% increase in footfalls in FY25, indicating that patient volumes have remained resilient even after the Covid-driven surge subsided. Profitability also improved in FY26, with the operating profit margin of the sample companies expanded 90 basis points to 29.2%.
“The credit profile of ICRA’s sample set of companies is expected to remain healthy and sizeable free cash and bank balances, supported by moderate debt-funded capital expenditure (capex) plans and limited dependence on working capital borrowings,” the report said.
According to the report, the nature of testing is also evolving. Higher adoption of bundled preventive health packages and growing demand for speciality diagnostics are helping companies improve their product mix, even as pricing remains largely stable.
ICRA also noted a distinct seasonal pattern in the diagnostic demand. For instance, the agency said that the volumes for diagnostic companies typically peak in the July-September period of each fiscal due to higher incidence of infectious diseases during the monsoons. “The volumes decline sequentially in the October-December period amid the festive-period slowdown in elective surgeries and patient visits,” it added. The activity, however, rebounds in the fourth quarter, aided by tax incentives on preventive health check-ups and annual corporate medical examination deadlines.
Going forward, ICRA expects organised diagnostic chains to leverage artificial intelligence (AI) and digital technologies to improve diagnostic accuracy, enhance operational efficiency and offer more personalised patient services.