Xponentia-backed Medsource Ozone hires EY to explore funding options

“The company may look to raise about ₹300-400 crore, and the promoters may liquidate some stake for the incoming investor," one of the people cited above said. The company plans to reach the ₹500 crore revenue mark over the next 3-4 years, this person said.

“While the exact deal structures are yet to be decided, this is part of the company’s larger plans to operate as a professionally run institution," the second person said. Both people spoke on the condition of anonymity as details are private.

Medsource did not respond to Mint’s emailed queries, while Ernst & Young (EY) declined to comment.

Second external funding round

If successful, this will be the company’s second external funding round in more than four years. Medsource last raised about ₹35 crore from private equity firm Xponentia Capital Partners in 2021 to launch products and expand its distribution in India and overseas. The company also outlined plans to consider acquisitions and partnerships in adjacent product segments at the time.

Medsource’s expansion plan reflects the potential of India’s growing med-tech market, which EY estimates to more than double from $12 billion in FY24 to $50 billion by 2030, with India’s share in the global market projected to surge from 1.65% to 10%-12% within 25 years.

The Indian medical device industry comprises five key segments: electronic equipment (56% share), disposables & consumables (26.5%), in-vitro diagnostics (8.1%), implants (7.1%), and surgical instruments (2.3%), according to EY’s 2024 report.

Much of the growth is expected to be driven by rising income levels, expanding healthcare coverage and growing medical tourism, creating new pockets of demand for affordable and innovative medical devices. Infrastructure development in tier 2 and 3 cities, coupled with differential pricing models, is also expected to unlock future growth for this sector, EY said.

Founded in 2003, Medsource Ozone Biomedicals claims to be one of the largest Indian manufacturers of IVD products, supplying to labs across India and more than 35 countries. Its key products include testing instruments, rapid test kits, and reagents. The firm was also one of the few suppliers of Covid RT-PCR test kits to Indian laboratories.

Its competitors are Tulip Diagnostics, Agappe Diagnostics, and Avecon Healthcare, while peers in India’s overall diagnostic kits supplier include Transasia Bio-Medicals, Trivitron Healthcare and Accurex Biomedical. Other multinationals present in India include Abbott Diagnostics, Siemens Healthineers India and Meril Diagnostics.

The company, which reported a revenue of ₹173 crore in FY24, added a new manufacturing unit in Faridabad to further enhance its research, development, and production capabilities.