Lifesavers on the Rise
Just like with software nearly two
decades ago, India is spawning top-notch medical devices companies which are
competing globally with cutting-edge technology at affordable prices.
In India, about 15 babies die every minute due to asphyxiation in maternity homes that can’t afford the costly imported infant warmers. Many midwives try and make do with table lamps — but they are a poor substitute.
As a student of IIT Chennai in 1988, Sashi Kumar was asked to repair imported baby warmers for a hospital. Kumar, 49, not only fixed the warmers but also started making them on his own — his company Phoenix Medical Systems was born.
Phoenix is among the nearly 700 medical equipment companies in India’s $5.2 billion (Rs 28,000 crore) medical device industry that make affordable alternatives to equipment supplied by global giants. Kumar’s baby warmer costs about Rs 80,000 a piece, onetenth that of an imported warmer. The Chennai firm is expected to clock revenues of Rs 50 crore this year.
“There is a perfect storm brewing in the medical devices space,” says Ajit Singh, partner at venture capital fund Artiman Ventures, which manages a global corpus of about Rs 4,100 crore. “The factors that are driving Indian innovation in medical devices are availability of talent, global demand, current deficit and the disruptive impact by reduction in cost.”
India’s $63-billion healthcare market imports almost 65% of the required medical devices, which are often too expensive to be used by small nursing homes. But sensing the need and the urgency, many Indians are now making cheaper X-ray machines, imaging equipment, ECG scanners and even robots to cure cancer, blindness and heart diseases.
The medical device industry in India is set to grow 23% to $6 billion by this year end, according to KPMG. Cost is not the only driver; gaps in medical treatment have led some Indians to come up with breakthrough innovations.
Treating cancer by robots is an example. Chennai-based Perfint Healthcare has developed next-generation robots that treat cancer by precisely inserting a needle in the affected area to burn or freeze a patient’s tumour, leaving the good tissue alone.
The founders of the firm, all former GE Healthcare employees, quit their jobs to form this venture when they realised that the treatment available then would also kill the good tissue, making it harder for cancer patients to survive. They were keen to make a difference.
“Instead of building a low-cost car, we created another way of transportation,” says S Nandakumar, 43, cofounder and CEO of Perfint. Besides precision, the swift movement of the robot causes less pain and discomfort to the patient.
The firm sells these robots for $150,000-$300,000 to markets in South-East Asia, Europe and Latin America. It clocks revenues of about Rs 50 crore and aims to touch Rs 550 crore in the next four years. Perfint has raised funding of $28 million from Norwest Venture Partners, IDG Ventures and Accel Partners.
Blindness is another major problem in India — of the 39 million blind people in the world, almost 12 million are in India.
Nearly 80% of the blind in India can be cured. One of the reasons for the high numbers is the scarcity of ophthalmologists. Currently, the ophthalmologist to patient ratio in the country is about 1:60,000.
Founded by former Philips executives, Bangalore-based Forus Health has developed ‘3nethra’, a low-cost portable pre-screening ophthalmology device. “You can carry the device in a suitcase. It is rugged and has been carried on bus tops and even on horses in places like Mizoram,” says K Chandrasekhar, 45, co-founder and CEO.
The device, which is one-sixth the cost of other comparable devices, can identify multiple diseases that cause blindness. Forus has already done over 100 installations at various institutions and is now selling these devices in emerging markets like Africa, Thailand and Oman. It plans to soon enter Latin America and the US. Last year, Accel Partners and IDG Ventures, together invested $5 million in Forus Health.
One of the reasons for the spurt in the growth of medical device makers is that almost a decade ago, many IITs and engineering colleges started biomedical programmes. “We are now seeing first signs of fruition,” says Singh who is also a consulting professor at the School of Medicine at Stanford University.
Also, entrepreneurs who were distributors of medical equipment in the 1990s are now becoming manufacturers.
BITS Pilani graduate GSK Velu, 46, founded Trivitron Healthcare in 1997 after a stint at Chiron Diagnostics as country head. After almost 10 years of distribution, Velu turned to manufacturing his own equipment. Trivitron has grown to become one of the largest medical technology companies in India. Trivitron, which has established several manufacturing facilities in India and exports products to 165 countries, aims to clock revenues of Rs 700 crore in fiscal 2013.
It was the dream of providing world-class medical devices at a fraction of cost that led Vishwaprasad Alva, 45, to quit a lucrative job at GE in Milwaukee, US, and start Skanray Technologies in 2007 in Mysore. “We have been able to make world-class medical equipment almost 50% cheaper,” he says.
Alva makes dental imaging systems, mobile X-ray units, USB based ECG units, and other remote health monitoring systems. He also exports to Europe and the US.
“Earlier, it would cost a villager Rs 2,000 per trip to a city to get a disease diagnosed in a hospital. Now, we are able to do it at one-tenth of the cost with our low cost portable devices,” says Alva.
The firm, which bought L&T’s medical equipment business last year, is expecting to touch Rs 500 crore in revenues in the next five years.
INVESTOR SUPPORT
Last year in October, Fidelity Growth Partners India invested Rs 400 crore in Trivitron. Private equity firm CX Partners invested Rs 200 crore in Sutures India, which makes surgical sutures.
“This year may well be a defining period for attracting private equity or strategic transaction interest,” says Mahadevan Narayanamoni, partner and national leader for healthcare and life-sciences advisory at Grant Thornton-India
Singh of Artiman, believes medical devices sector may follow in software’s footsteps. “When software industry emerged in India, it became a trend; it was not a one-time effect. India became the global supplier of software.” According to estimates, India will need an investment of about $400 billion by 2026 in healthcare. The bed to population ratio in India stands at only 1.5 per 1,000 persons, compared to a global average of 3.3, indicating the huge potential for growth.
Despite the opportunity, entrepreneurs complain that there is no incentive by the government to locally manufacture them unlike the help given in China or Brazil. Imports from China have started dominating the imported market.
“If India’s policies become more favourable to local production and innovation, we can come out of the clutches of imports and become self-sufficient in the sector,” Velu of Trivitron adds.
Harsimran Julka and Peerzada Abrar ET130208
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