‘We have got enough internal accruals, and we are able to do acquisitions on our own.’
Photograph: Kind courtesy Metropolis Lab
Metropolis Healthcare Executive Chairperson and Whole-time Director Ameera Shah talks about her plans for network expansion, and focus on business-to-consumer segment as well as expansion of footprint in smaller towns of India.
In a video interview with Sohini Das/Business Standard, Shah outlines her strategy for international business, and also talks about why she got in a new CEO.
How have the test mix and price hikes helped improve margins in Q1FY25?
The first structural lever is volume – patient and test volumes.
We are doing more than industry numbers in terms of volume growth – 7 per cent patient volume and 10 per cent test volume.
Also, we have clocked a 6 per cent increase in average revenue per patient, which is a combination of both price hikes (2.5 per cent) and change in product mix.
People are moving up the ladder when it comes to tests, and are going for more specialty tests. We have also managed to curtail costs.
You have got a professional CEO and your role has changed too. Are promoters taking a backseat?
The company has become big enough at a market-cap of Rs 10,000-11,000 crore, and employing 6,000 people.
We need to have a separation of roles between governance and strategy, and someone who is running the day-to-day business.
I am available full-time to focus on governance, strategy, talent and culture, and the CEO is able to concentrate on executing the business plan and running the business.
I am doing it when I am 44. I have the vision to say that I am not so stuck in my own ego and am doing what is right for the business.
And usually, you see promoters hold on to control and not want to let go, etc.
But my theory is that the combination of a really strong promoter and strong professionals actually makes the best quality team. And with that idea we’ve done it.
Any plans to bring in a strategic investor to Metropolis?
As a listed company, no question of bringing in an investor right now.
We have got enough internal accruals, and we are able to do acquisitions on our own.
If we need money tomorrow, we can always go to public and do a QIP.
Are you still looking to acquire assets in the Northern and Eastern parts of India?
Not just in North and East, but we are open to acquisitions across the country.
Our business is not about regions, but about cities.
If there is a good acquisition in that local market where we are not strong, we would certainly consider it.
The share B2C in your overall revenues has been increasing — from 51 per cent in Q4FY24 to 54 per cent in Q1FY25.
What is your strategy for further growth?
The goal is to take this (share of B2C) to around 60-65 per cent of our business.
B2C brings two-three benefits — better margins, it’s a relatively more stickier business as you are engaging directly with the patient, and hence more sustainable.
In around 9-10 cities where we have a strong consumer brand, we see a lot of opportunity to keep growing.
These are cities like Mumbai, Pune, Chennai, Bengaluru, Nashik, Kolhapur, Goa, Surat, etc., where we can penetrate deeper.
So, we are opening more collection centres in micro markets in these cities.
If one provides the right customer experience, right price and right quality, then patients will walk into these centres.
Apart from this, on the digital side, we will keep using content to differentiate ourselves.
While most of the business happens offline in the brick-and-mortar space, the discovery happens online.
Can you elaborate your plans on network expansion?
Currently we have 4,200 centres and we are adding approximately 500 centres per year.
At present, we are in 650 towns, and from here we will go to a thousand towns in India next year.
We don’t have a set number on the number of centres we want to have by next year.
In the last four-five years, we have added around 79 labs, and we will end this year with 90 labs.
Most of these new labs are in Tier-II, Tier-III and Tier-IV cities and towns. For example, in Maharashtra we have gone as deep as Chandrapur and Malegaon.
So, we are going deeper where our strength is, and going broader where we are not present already.
We’ve been investing about Rs 60-70 crore per year in capex, which is a combination of investment in technology, new equipment, new labs, and maintenance capex.
Top 10 cities account for 60% of your revenues. What kind of share do you expect from Tier-2/3 towns in coming years?
About 62 per cent of our revenues come from the top-eight cities, and around 75 per cent of our revenues come from the top-20 cities in India at present.
This means that the remaining 25 per cent is coming from smaller towns and cities in Tier-2, Tier-3 and Tier-4 categories.
We will obviously try to grow this 25 percent, but at the moment, I don’t have a number in mind.
The opportunity is large – out of 650 cities (where we are present), we are getting 25 per cent revenues from 630 cities.
Wellness (preventive tests) is only 10 per cent of the market, while illness tests constitute 90 per cent, and will remain the mainstay.
Wellness is more in demand in major cities at this point, but illness tests are the main drivers in Tier-2/3 towns.
But each market will go through an evolution phase.
Let’s say when more cancer therapies will happen in these markets, they will require more advanced diagnostics.
How are you planning to move up the value chain in tests as you have introduced molecular genomic testing?
Top hospitals outsource their pathology. They are experts in treatment, not in diagnostics.
We have a 4,000-test menu, and most hospital chains would do a maximum of 1,000 tests.
But with genomic testing, we are talking about more personalised therapies.
These can be very useful in cancer or neurological treatments as these are expensive drugs and therapies.
There is a steady demand for such tests in areas of cancer, neurology, and reproductive medicines.
Tell us about your international business and plans to expand further.
We are trying to make India a hub for specialised tests. Advanced diagnostic testing ability that we have can bring in demand from different countries.
We have been getting samples from 10 countries, and we are going to see that we constantly expand going forward.
We have collection centres in five out of these 10 countries.
For example, in African countries we have our own labs and collection centres.
In others, we have partnered with existing chains that are doing routine tests themselves and they send us samples for specialised tests.
International business contribution is currently less than 10 per cent of our overall revenues.
We are already among the top-3 players in Tanzania, Uganda, Zambia, Ghana, etc., except in Kenya.
Feature Presentation: Aslam Hunani/Rediff.com
