Testing waters in diagnostic and lab services outsourcing

June 25, 2009

In a recent Frost & Sullivan end user survey that implicated 500 central labs across Europe, lab managers were asked what they would do if they needed to perform a particular assay for which they did not have the right testing equipment. Their carefully considered answer, believe it or not, was that they would outsource it to a third-party vendor who had the necessary expertise. Less than a decade ago, they may have answered differently (said they would invest in new technology), but today, in view of the cost-constraining climates that ails the diagnostics industry, outsourcing – rather than investing in new technology – emerges as a more viable solution.

Although savings in excess of 80% per test have been reported in outsourcing lab-testing services to India, a more realistic estimate would be around 25%. The Indian diagnostics and pathology laboratory business is currently estimated around USD 864 million and is growing at a rate of 20 % per annum, according to various surveys.

Put together, the 150-big to medium Indian outsource vendors are reported to have the combined ability of testing around one million samples a year. The model is pretty simple. After X-rays and other procedures are done abroad, the reports are dispatched to technicians in India, who interpret the tests and send written reports back, while in the case of lab tests, the photomicrographs are electronically sent to Indian doctors who write back the results.

According to the Federation of Indian Chamber of commerce and Industry (FICCI), the size of the global clinical trials market is around 26 billion, of which diagnostic and lab-testing business holds the most potential for Indian vendors.

Clinical Research Outsourcing (CRO) and drug manufacturing are two other sectors that hold potential but that currently requires lot of domestic infrastructure growth.

Another pertinent issue — loopholes relating to certification, customer service, data management, informed consent and patients’ confidentiality, need to be completely plugged if we do not wish to be left behind in the race to capitalize on this global outsourcing trend over the next decade, according to the Frost & Sullivan report.


2 Responses to “Testing waters in diagnostic and lab services outsourcing”

  1. rogerkk on June 26th, 2009 8:59 am

    can i know how long it will take these type of projects?


  2. Radhika on June 27th, 2009 2:49 am

    Are you inquiring about the turnaround for a single report to be read by an offshore team? If yes, the answer is one business day, or even less as the interpretors work in a different time zone.

Got something to say?