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Thyrocare Disrupting The Indian Medical Diagnostic Industry Case Solution

Solution Id Length Case Author Case Publisher
2290 2578 Words (12 Pages) Suresh Srinivasan, Swati Agarwal, Sameera Sepuri Ivey Publishing : 9B20M096
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Macro-Economic Analysis: Macro-economic conditions are important to consider, as they have a great influence on the operational frameworks of different industries in the country. The medical diagnostic industry gained a sufficient degree of importance in India, and this can be ascertained by the emergence of a standalone local laboratory in the healthcare sector of the country. Considering the PESTEL analysis, it can be seen that India has become one of the fastest-growing economies. However, the healthcare investment did not improve as per the desired international standards. This can be attributed to the lack of strategic focus by the political authorities in the country. As far as the economic aspect is concerned, the industry has a lot of potentials. This can be understood from the fact that despite a marked slowdown in the macro-economic environment in the country, the diagnostic industry has done a remarkable job. India has a massive population, and at the same time, the country has a vibrant health infrastructure in the country that has developed over a period of time. This shows that the economy has the strength to make productive use of the opportunities that can be used to improve the healthcare structure of the country.

Following questions are answered in this case study solution

1. Conduct a macro-environmental analysis of the Indian diagnostic industry at the time of the case; identify the main macro-environmental influences. Assess the impact of the Key Drivers on the industry. 

2. (a) Using Porters Five Forces model, conduct an industry analysis of the Indian diagnostic sector in 2017 from the perspective of Thyrocare’s position and conclude on the attractiveness of the industry.

(b) Identify three ways in which the forces have changed between the 1990’s and 2017 and comment on the implications for the players in the sector. 

3. (a) Assess the strategic capability of Thyrocare at the time of the case using a strategic capability grid.

(b) Assess the sustainability of the competitive advantage of Thyrocare.    

4. Identify and evaluate the corporate directional strategies and strategic methods of Thyrocare from the formation of the company to the time of writing of the case. Comment on future options in terms of directions and methods. 

Case Analysis for Thyrocare Disrupting The Indian Medical Diagnostic Industry Case Solution

Medical diagnostic services in the country were highly fragmented, and also accessible to a limited number of people. At a certain point in time, in the 1990s, there was limited awareness with regards to wellness and preventive care. Patients were normally dependent on doctors for referrals from doctors, who were not in sufficient number, at least in the 1990s. Although there were around 1000 diagnostic sectors in the country, they were highly fragmented in their presence. The diagnostic center was also quite unorganized. With the improving economic profile of the country, the focus on healthcare also increased. Economic liberalization in the country in the early 1990s also led to a wider scope for private sector players. Therefore, a number of private diagnostic chains came into existence. Standalone laboratories also went on to acquire a major share in the diagnostic industry. As far as the social aspects were concerned, awareness also rose among people about various preventive measures related to health. Furthermore, the increased urbanization in the country offers great potential that can be effectively exploited by the diagnostic industry. In other words, it was also a great opportunity for different players in the diagnostic industry to develop their presence further in the country, considering the diverse aspects of the country.

The prospects for the industry are also looking quite positive beyond 2017, as the macro-economic situation is improving, and many investors are also quite willing to invest in the industry. This means that this industry is more likely to see a prosperous future.

Key Drivers: The key driver of the industry can be the emergence of an organized diagnostic industry in the country. The awareness has also increased, and this has resulted in more people going for acquiring diagnostic services, eventually driving the business of the overall industry. The healthy margins enjoyed by the industry can also be considered as an enticing aspect of the industry, and this has motivated major players of the industry. Furthermore, it is also important to consider that even in 2017, the majority of the industry (85%) was unorganized. Therefore, this offers immense potential for growth, and entrepreneurial opportunities can be developed. The increasing population of the country also is a very positive driver for the industry, as this increases the chance for greater people availing the diagnostic services. As also discussed in the case, the health sector has not got the appropriate attention that was due to it. So, private players in the healthcare industry can bridge this gap, and this can help them realize their respective growth aim as well. This is further understood by the good performance of Thyrocare, despite unsuitable macro-economic conditions in the country.

Question 2

a. Using Porters Five Forces model, conduct an industry analysis of the Indian diagnostic sector in 2017 from the perspective of Thyrocare’s position and conclude on the attractiveness of the industry.

The Threat of Entry

 

Economies of scale & Experience

It is a highly unorganized sector, and laboratories have subscale operations. However, some large scale pan India diagnostic chains did enjoy economies of scale, as they were catering to the needs of their respective loyal customer base.

Access to supply and distribution channels

It was possible, but it can be costly as suppliers wield a lot of power and influence, and if the new entrant is dealing with low volume, then it might not be able to avail appropriate discounts.

Expected Retaliation

 

The retaliation can be high for an established organization, as some pan India organizations enjoy great influence on pricing in the industry.

Government restrictions (e.g. licensing)

Accreditation requirements are there for diagnostic centers. However, it is not a mandatory process to receive accreditation.

Incumbency Advantages

The incumbent has the advantage of industrial knowledge, and awareness about distribution system of the industry.

Conclusion:

 

Entry barriers can be considered as high, as entry requires heavy investment and also there is a need to develop a suitable infrastructure related to diagnostics.

Threat of Substitutes

 

The price/performance ratio of the substitute

Cannot b determined.

Extra Industry Effects

It is a highly fragmented industry, and this provides a number of options to the target audience.

Conclusion:

Cannot be determined.

 

The bargaining power of buyers

 

Buyers are concentrated

This is high, as there are a number of options available to them, but this can be restricted to those test that are not that important.

Buyers have low switching costs

It can be said that they face low switching cost, as cost differentials are not that high.

Buyer Competition Threat
 

Buyers can choose to conduct test from a different diagnostic center, provided they are not offering the right price for the service.

Low Buyer Profits & Impact on quality

Not applicable

Conclusion:

Medium-High is threat of buyers

 

 The bargaining power of suppliers

 

The suppliers are concentrated

Yes

Switching costs are high (it is disruptive or expensive to change suppliers).

It I disruptive to change suppliers, as quality suppliers are less in number.

Suppliers can integrate forwards

Yes

Differentiated products

N/A

Conclusion

Low power

Rivalry between competitors

High competition between major players in the industry.

Competitor Concentration & Balance

Pan India diagnostic centers are quite low in number.

Industry Growth Rate

Over 10%

High fixed costs

Yes

Exit barriers are high

Exit barriers are high, as there is a huge opportunity cost of foregoing heavy investment

There is a low level of differentiation

Low level of differentiation exist in the industry in terms of the services offered to the target audience.

Conclusion:

Competitive rivalry is high in the organized market segment.

Industry attractiveness

The industry is quite attractive, considering the growth potential offered by it. The industry is steadily becoming organized. However, barriers to this industry are quite high, as there is a need for heavy investment before beginning of the operations. It is also important to consider that it offers tremendous potential, as there is a wide range of tests that are offered in the form of a portfolio.

b. Identify three ways in which the forces have changed between the 1990’s and 2017 and comment on the implications for the players in the sector. 
Changing forces:

With the passage of time, the industry has become relatively more organized. The infrastructure has also become more costly, as sophisticated techniques are used in laboratory testing. Furthermore, a number of private sectors player emerged in the diagnostic sector. It has also been observed that certain strong players in the industry are also exercising price controlling influence, and this is coupled with competitive rivalry in a certain segment of strong players in the industry. However, considering positive economic indicators, there is immense potential in the industry.

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