Metropolis Healthcare – Company Analysis

Management Views

These are snippets from Management during interviews or concalls.

Competition:

Price competition is not there much. Remember when someone is not well in a family, the family members are not shopping around who does the cheapest test, but they are shopping around who will give the correct report. People come to the Pathology lab once or twice a year and the average spend is around 500 to 600 rupees. So this will not bankrupt them nor a frequent spend. So people do not go bankrupt due to diagnosis. They spend a lot of money in hospitals. So price is not a huge concern for patients.

Disruption by Online Players

In health care, it is important to understand that trust, science and consistency of reports and test play a very critical role. In diagnostics, the doctor’s medication to a patient is based on the basis of a scientific correct lab report. Also, we have to remember that in the illness space, tests are not commoditized. A liver function profile that 1 lab is not the same as another. So, a simple price comparison is difficult when the ingredients are not the same. Doctors understand these nuances, although patients don’t. And this is where we believe pricing disruption will be lower in the illness space because doctors who are the biggest influencers in diagnostics value chain are more concerned about the quality of the lab and the consistency of the report rather than only pricing, especially in situations of moderate to critical illness. (Source: May 2022, Concall Transcript)

PPP
What are referring to most likely is the public private partnership if it is in a hospital where the government has a tender and ask labs to bid for setting up a lab inside their public hospital and these tenders are available there, this is not the focus of the Metropolis business model for various reasons often we find that the pricing and the quality scope and parameters of these tenders tend to be very different from what we are comfortable with, the practices are not what we are comfortable with and therefore we are very, very selective about if we ever get into a public private partnership is very selective about the kind of work we do, as far as working with private hospitals we do that, we do have lab, which run inside hospitals, we do take care of their patients and run the labs inside hospitals like you said it is rent free, but then you are also sharing a significant portion of your revenue with the hospital for managing that lab inside it, that is the model that makes sense it is the commercial terms affairs, which in some cases they are we do the deals, in some cases where they are not even to competitors to do if they would like to pick up a non-profitable business. (Source: August 2022, Concall Transcript)