A phlebotomist arrives at your home at 7 am. A tiny tube of blood is labeled, placed in a bag, and taken away. A few hours later, a report appears on your phone, bearing the logo of a national diagnostics company.
It is the experience of a laboratory. What the customer saw, however, was largely an exercise in logistics: booking software, routing, patient identification, sample collection, bagging, temperature control, and transportation. The machine that reads the blood sample may be a world away. The business is about getting that sample to the right machine.
The Centre May Not Be the Laboratory
A diagnostics company can create multiple patient-facing collection centres without multiple expensive machines. It can employ a hub-and-spoke model. Smaller centres and home collection agencies can act as spokes, feeding into bigger laboratories, the hubs, which have the equipment and staffing to process samples. India’s National Health Mission’s Free Diagnostics Service Initiative works on similar lines.
The peripheral centres collect samples and send them to central labs and also outsource certain high-end tests when needed (National Museum of Natural History). Private players have followed the same network economics.
As of June 2025, CRISIL estimates that Metropolis Healthcare has about 222 pathology labs and 4,616 service centres. It has a hub-and-spoke model. It has scaled up from about 300 towns in fiscal 2023 to 750 in fiscal 2025 (CRISIL). The distance between the spoke and the hub is visible in the ratio between the number of laboratories and the number of service centres. The customer-facing network can be extensive, while the expensive testing infrastructure remains concentrated.
A Machine Earns More When It Stays Busy
Diagnostic machines have huge fixed costs. The analyser must be bought or leased. Space must be found to accommodate it. Staff must be hired and trained. Reagents, calibration, quality control, and information technology must be in place. These are large expenditures, irrespective of whether the machine is being used to test 50 or 500 samples. Once that capacity is created, however, every additional test has only marginal costs.
This is where scale helps. A network of collection centres can create volume. That volume can be used to justify the huge fixed costs. Routes can be created so that a single van can service multiple centres. Specialised tests that previously had to be done in every laboratory can be concentrated in one or two reference labs.
The same economies of scale allow the same diagnostic company to offer a much broader range of tests. CRISIL estimates that Metropolis Healthcare offers thousands of laboratory tests and profiles. Its specialised and wellness testing contributed to its adjusted operating margin of around 24% in fiscal 2025 (CRISIL). The machine matters, but so does its utilisation. An idle analyser is an expensive proposition. A full one is an asset.
The Collection Network Is the Moat
A diagnostics company can buy machines. It accumulates a network of reliable collection centres, which is much harder to recreate. The company needs to create visibility of its centres, hire and train phlebotomists, have hospital tie-ups, and digital booking systems, and optimise routes so that the collection vans have enough volume to make the trips viable.
It must convince doctors and patients that a sample collected in one centre will yield reliable results in another. That is why diagnostics companies continue to expand their presence in towns at a faster rate than the number of laboratories. A new collection centre can generate volume for an existing laboratory. The laboratory does not need to create an entirely new set of infrastructure. Home collection is an extension of the same network.
It allows the company to reach the patient without having to set up a full-fledged centre in that area. The competitive advantage is both medical and geographical. A company wins when its vans, collection centres, and software keep its laboratories busy.
The Fragile Journey Before Testing
The centralisation of testing infrastructure is not a guarantee of efficiency. A large network of collection centres, hospitals, and laboratories is only as good as the weakest link in the supply chain. The World Health Organization has a detailed set of standards for the pre-analytical phase, patient preparation, collection, labelling, transportation, and documentation. It is a critical determinant of the accuracy of the test results (EMRO).
The correct patient must be matched to the correct tube. Some samples need to be transported at a specific temperature. Others have a narrow window between collection and testing. Improper storage, mishandling, leakage, contamination, patient fasting, or delayed transportation can affect test results.
The logistics network is not a simple distribution chain. A delayed T-shirt is annoying. A faulty sample is potentially life-threatening. Quality control and accreditation are central to the business model. The company is essentially transporting biological information. It is not just moving goods.
The Report Is the Final Product of a Route
From the patient’s perspective, the diagnostic service ends when the report is generated. Ideally, it should be a simple list of numbers: haemoglobin, glucose, thyroxine, cholesterol. In economic terms, however, it is the culmination of a network.
Someone sold the test. Someone collected the sample. Someone counted the red blood cells. Someone put the sample bag in the right temperature and humidity-controlled van. Someone used the software to get that bag to the correct laboratory. Someone read the machine.
The analyser gets the majority of the technical attention. It is the culmination of a complex supply chain. However, its accuracy is determined by how well the sample was collected and transported. A diagnostics company may have state-of-the-art machines. Its competitive advantage may lie in the network that keeps those machines busy.