Metropolis set to to acquire diagnostic chains in Africa
By Swati Vijay:
Metropolis Healthcare Limited, a Mumbai-based chain of diagnostic centres, plans to expand into African markets through multiple buyouts. To pursue its growth initiatives via the inorganic route, the company is aggressively scouting for potential diagnostic chains with revenues of $1 million-$20 million. Metropolis already has three labs and 30 collection centres in South Africa, Kenya, Nigeria and Ghana. It has plans to invest $15-20 million in this potential market which would be raised through internal accruals.
“We are eyeing four to five buyouts this fiscal and talks have commenced with companies in Africa. We would invest $15-20 million over next two - three years in Africa,” Ameera Shah, managing director and chief executive, Metropolis Healthcare told Pharmabiz in email interaction.
The healthcare market in Africa is estimated at $15 billion and diagnostics business share stands at $1 to 1.5 billion annually.
“Africa market is still virgin and indicates promising growth for the diagnostic business, and therefore we are positive on garnering the required revenues from this region,” she added. Opting to enter Africa through acquisition, would give Metropolis the advantage of access to trained lab personnel and infrastructure.
Moreover the enormous disease burden and extremely poor healthcare indicators are the reasons for the company to focus on Africa. Factors like limited public health infrastructure, out-of-pocket expenses for healthcare and high degree of variation in healthcare laws are other reasons for Metropolis to look at this region. Specific to the diagnostics space which is core to healthcare service, there is no single player with a share of more than five per cent.
“This opens opportunities for competent companies like ours to chip in our expertise in quality and speedy diagnostics for comprehensive disease testing,” said the Metropolis chief.
Spelling out the challenges in Africa, Shah said, “There was a serious paucity of data access making it difficult to gauge the market and we had to send our team members to explore the market. Another challenge that could persist for a couple of years is the need to import lab reagents. It would significantly adds to the input cost, which makes it difficult to generate the required profits in a price sensitive market. The laws and regulations vary across African countries. Only few markets in the country are sensitive and stringent about laws, while in most parts of Africa, awareness amongst the medical professionals is low on quality and high on cost making it intensely price sensitive.”
“Since, we have decided to pursue acquisitions of viable diagnostic labs, we are confident to garner a substantial market share in Africa going by our experience and presence in India,” said Shah.