Diagnostics major Metropolis Healthcare is accelerating its expansion into India’s tier-II and tier-III markets, capitalizing on a multi-year investment push designed to capture a growing shift toward organized healthcare.
This strategy is already yielding results: about 27-28% of Metropolis's business now comes from tier-III towns and beyond, markets that are growing at around 25-26%, significantly above the company's overall growth rate.
“The tier-III expansion and the outcome that you are seeing is a result of a very long journey. We have been investing in tier-II and tier-III towns for the past two to three years, knowing that they will definitely start turning towards the organized operators,” managing director Surendran Chemmenkotil told Mint in an interview. The company has added 70-75 labs in smaller towns in the past three years, he added. Competitors such as Dr Lal PathLabs have also been making inroads in tier-III markets over the past few years.
Executive chairperson Ameera Shah said the entry of organized players is not just taking market share away from unorganized providers, but actively creating new demand for specialized diagnostic testing in smaller towns.
"We are creating the market when we go into tier-II and tier-III towns," Shah said. “We are educating doctors about tests they may not know about. Those samples naturally come back to organised players because local laboratories don’t have the capability to perform these tests." In a previous interview, Chemmenkotil had told Mint that the firm employs a micro-market pricing strategy with market-relevant pricing in different regions.
Shah added that anecdotal feedback from vendors also suggests procurement volumes from unorganised laboratories have been declining, indicating a gradual shift towards organised diagnostic chains.
Beyond the company's own outreach efforts, several structural changes have been driving this growth. These include the recent expansion of hospital chains into smaller cities, the growing availability of specialist doctors outside metros, improving healthcare infrastructure, and greater consumer awareness around quality diagnostics.
Despite these tailwinds, there remains significant headroom for growth, as organized players account for just 15% of India’s diagnostics market, with listed companies holding roughly 10% of that share, Shah said. According to Metropolis, India's diagnostics market was worth $11 billion in 2025 and is projected to expand at a 11% compound annual growth rate until 2034.
Focus on network density
To build capacity ahead of this demand, Metropolis acquired four assets over the past two years to strengthen its foothold in Maharashtra and north India, and to increase its specialized capabilities. This followed aggressive organic expansion over the previous three years, through which it established 90 labs to serve around 750 towns.
Now, Metropolis is prioritizing network density by adding collection centres, partnering with smaller labs and hospitals, and deepening its reach in existing markets, the executives said. However, it remains open to strategic acquisitions that either expand its geographic footprint or add niche capabilities, much like its acquisition of Core Diagnostics, which bolstered its oncology diagnostics portfolio, Shah said.
This expansion push coincides with strong operational performance. In the June quarter of FY27, Metropolis reported a 17% year-on-year increase in revenue to ₹450 crore, while net profit rose 26% to ₹57 crore. Operating performance also expanded, with Ebitda rising 27% to ₹113 crore and margin of 25.2%.