Russian Private Medical Labs Surge with 19% Revenue Jump in H1 2024 Amid Rising Health Check Demand

In the first half of 2024, revenue for private medical laboratories and hospitals in Russia increased by 19% year-on-year. This growth marks a recovery in market demand following a post-pandemic decline. The surge is driven primarily by an increase in resident demand for comprehensive health check-ups, genetic testing, and prenatal screening.

According to data from Check Index and the online consultation platform SberHealth, sales revenue from laboratory services and diagnostics grew by 19% from January to June 2024. The average transaction value for laboratory tests rose by 10%, reaching 1,170 rubles. Gemotest reported that their sales revenue for the first half of this year is comparable to that of 2022-2023.

LabQuest Medical Group's General Manager, Daria Pikaryuk, noted a 41% year-on-year increase in sales revenue due to the expansion of service points and offerings. Similarly, Valery Savanovich, founder of online medical lab Lab4U, stated that their sales revenue grew by 68.6%, reaching 666 million rubles. Despite a drop in COVID-19 testing orders as infection rates declined in 2022, the demand for other types of tests continued to rise. According to BusinesStat, the quantity of tests performed by major medical labs decreased by 14% in 2023 compared to 2022, but other diagnostic services saw increased uptake.

SberHealth's data indicates that the most in-demand tests currently are venous blood analyses, including clinical examinations, complete blood counts, and hormone analyses. From January to June, demand for these tests grew by nearly 53% year-on-year.

Major medical laboratories have reported that the most substantial growth is in comprehensive health examinations. Gemotest introduced a comprehensive health check plan in 2022. Tatyana Peskova, their medical director, explained that Russian citizens are increasingly performing routine health checks, leading to higher demand for comprehensive exams.

Analysts from Freedom Finance Investment Company believe that the development of private hospitals plays a crucial role in enhancing healthcare quality and accessibility. Private hospitals tend to offer more flexible and personalized treatment methods, leading to quicker and more effective care. Competition between private and public hospitals has driven up healthcare quality standards, benefiting overall public health. Moreover, private hospitals can quickly adopt new technologies and treatments, providing patients with advanced healthcare services.

Daria Pikaryuk mentioned that the rise in comprehensive health check orders has led to an increase in the average transaction value. LabQuest's average transaction value grew by 7% year-on-year, reaching 4,100 rubles. Valery Savanovich pointed out that while medical testing costs continue to climb, participants in the highly competitive laboratory services market are reluctant to be the first to raise prices. Daria Pikaryuk added that LabQuest has been striving to lower testing costs since 2023.

In addition to comprehensive health check-ups, there has also been a rise in demand for genetic testing and prenatal screening. LabQuest's genetic testing increased by 123%, and prenatal infection screenings grew by 38.6% in the first half of the year. Major lab networks continue to expand their service points. GemoTest opened 123 new branches and 26 labs in 2023, while LabQuest added 44 new locations, bringing their total to 177. Valery Savanovich commented that the market is approaching saturation regarding the number of service points.

Savanovich also noted that over time, market participants might have to raise prices due to rising testing costs. The profitability of lab networks faces pressure from increased reagent costs, difficulties in settling with foreign suppliers, and delivery times.