Why did we invest in OrangeHealth?
India’s health tech space, especially in the consultations and diagnostics space can be broken down into the following verticals:
Doctor-patient consultations
The telemedicine market in India is expected to touch $5.4Bn by 2025, growing at a CAGR of 31%. Currently, this market is largely served through conventional offline means, and patients also tend to have an ongoing WhatsApp dialogue with their doctors. COVID created an accelerated comfort in consultations via video conferencing tools. Close to 40% of all their teleconsultations happened in Tier 2, 3 cities. While globally fairly successful, incumbent players in the telemedicine consultations space in India have struggled to make the business work.
Diagnostic testing
The diagnostic market in India is valued at $13BN and growing at a CAGR of over 15%, driven by growing need for reliable diagnostic data, awareness of preventive health, changing lifestyles, and the insurance sector. Over 1BN diagnostic tests are done in India every year. The sector is quite fragmented with organized players commanding a <20% market share – this includes pan-India chains like Metropolis, Genu Pathlabs, SRL Diagnostics, Dr Lal Pathlabs, Dr Reddy, and Apollo Group.
Over the last 5-7 years, the number of mom-and-pop labs has hovered around 100K and organized labs have reached 20K. Local players are 10-20% cheaper than organized players, but the quality of service can vary widely as accreditation is not mandatory. Today, Over 60% of the diagnostic market is concentrated in Tier 1 cities while 60% of the population lives outside these cities. The lack of differentiation of service between branded labs has thwarted their growth in a largely unorganized market. As a result, major diagnostic chains are only growing marginally higher than the industry growth rate (15% CAGR) by acquiring smaller local labs.
Orange Health Labs positions itself as the fastest diagnostic lab and is building India’s first on-demand, at-home branded diagnostic laboratory. By using the Orange Health App, a patient can request sample collection within 60 minutes anywhere in the city. This service is a boon for caretakers who find it to be an effort to take their sick family members, already in significant discomfort, to a crowded diagnostic collection center after a long wait to meet a doctor at a private clinic. The reports are also shared online with patients and doctors within just 6 hours of collection, setting the benchmark for speed in the industry which usually gives reports between 12 - 24 hours for regular tests.
Unique GTM strategy
Orange Health Labs has also built a unique GTM strategy enabling Diagnostics for private clinics. Private clinics compromise over 70% of OPD in India. Doctors in these clinics usually cannot offer diagnostics services because of a lack of volumes, manpower, or resources. With Orange Health Labs Doctor’s App, the doctor can now expand their clinic’s offering to diagnostics. This enables doctors operating any size of clinic to ride on the shared on-demand paramedic network of Orange Health Labs and at-home diagnostics service to the patient within 60 minutes anywhere in the city.
How does it work?
The paramedic force
Orange Health Labs is building one of the best-trained paramedic forces in the country. Unlike regular phlebotomists who are not well treated in India, Orange Health “eMedics” are uniformed, trained for over 100 hours. As a result, their on-ground eMedic team has the lowest attrition rate in the country ( <10% voluntary attrition against an industry annual average of over 40%). They have the highest-rated lab experience in India within just 3 years of operations.
Redefining speed of logistics
One of the key sources of differentiation for Orange Health Labs is building a highly efficient reverse logistics network to ensure that they test 99% of blood samples drawn from patient homes in their labs within 180 minutes within 400 square kilometers of their labs.
Orange Health Labs have developed automated hubs that are low-cost, operate 24 hours a day to allow asynchronous drop-offs of blood samples. This enables higher cost efficiency despite running an on-demand network.
The Factory labs
Orange Health Labs have redesigned labs to run like factories based on Kanban and SMED principles. All non-value-adding work gets done by automated systems during the logistics process.
The samples are simply processed with tight inventory and TAT tracking systems for each step like a QSR chain serving food quickly. The quality and report monitoring is done systematically by doctors for all the labs across the country, 18 hours a day using the latest technology to scan slides and collect machine information.
The founders, Tarun and Dhruv, have done an incredible job in building the business and the team since we first invested. The business captured significant demand during COVID as at-home testing became the norm but they have managed to sustain and even grow topline levels post the pandemic as well.
Today, they have established a trusted brand for more than 1MN patients and have expanded their offering to the top 4 cities.
