HealthMaP Diagnostics, a diagnostic chain controlled by Manipal Group and a private equity fund managed by Morgan Stanley, is looking to merge with Mumbai-based iGenetic Diagnostics, valuing the company at 750 -1,000 crore in a continued sign of M&A and PE activity in the diagnostic space.
iGenetic, co-founded by former senior executives of private equity firm Actis, is a leading specialised diagnostic chain that caters to the high-end critical care segment.
Under the proposed deal, HealthMap will get access to iGenetic’s core markets in Mumbai and other profit-making regions. “The idea is to merge both entities and get bigger. The high-end diagnostic market that iGenetic is into, is a decent margin business. There was a plan to go for another round of PE fundraising, but now things are moving towards a proposed transaction with Manipal,” said one of the sources, close to iGenetic. When contacted, Manipal, iGenetic and Morgan Stanley declined to comment.
iGenetic was incubated in 2013 and began full swing operations in 2015. It was led by by Arunima Patel, a former Actis Private Equity executive along with her colleagues, Siddharth Patodia and Homer Paneri. iGenetic specialises in molecular diagnostics.
In 2017, iGenetic had raised 130 crore from UK’s CDC Group and Manipal Education by diluting close to 30% stake. The company has one central processing lab located in Mumbai, four satellite labs and six collections centres with operations mostly spread across western India.
iGenetic posted a revenue of about 70 crore in FY21, and expected a combined revenue of 170 crore in FY22 once the merger process is materialised, said one of the sources mentioned above.
HealthMaP was set up as a joint venture between Manipal Health and Philips India. Morgan Stanley India Infrastructure has invested 150 crore in HealthMap in 2019. It has a strong presence in radiology through its pan India presence with 40 centres. It provides radiology and oncology diagnostic services such as performing and reporting CT (Computed Tomography) scans, MRI (Magnetic Resonance Imaging) scans, PET-CT Scan, USG (UltraSonography) scans, X-ray scans, and ECG (Electro-cardiograph).
The potential transaction will mark HealthMap’s entry into the pathology segment.
The domestic diagnostic industry is estimated at about 67,500 crore ($9 billion) and is expected to grow at a compounded annual growth rate (CAGR) of 10% over the next five years, according to a report last year by Edelweiss Investor Research.
According to estimates, the pathology segment contributes 58% of total market revenue.
The Indian diagnostic industry is highly fragmented and under-penetrated despite the presence of over 1 lakh labs. Organised diagnostic chains command 16% market share, while hospitals with their own labs hold 37% market share while standalone centres hold 47% market share.
The diagnostic industry has seen robust private equity activity in the last couple of years.
