I hesitated to write sequential post about India but I saw a recent article in the Economic Times that is worth recapping. In it, the authors noted a boom in the country’s medical device industry, now about 700 companies and $5.2 billion in sales, and quoted a KMPG report that said 2013 growth is expected to be 25% (Economic Times article). The article cited several motivating factors: a maturation of the graduates of biomedical educational programs that were started at many technical institutes and colleges about 10 years ago, a crop of successful medical device distributors (64% of the countries’ devices are imported) moving into manufacturing, a pressing domestic need for relatively inexpensive and low-resource-appropriate technology, and increasing opportunities to distribute these products into emerging markets in Africa, the Mideast, and Southeast Asia. Putting on my business development glasses, I noted data points that may be useful to the small US-based medtech companies, those pre- and modest-revenue companies that make up most of the US industry and the many university-based wannabe medtechs that I am familiar with.
First, the article mentioned several companies, two of which (Phoenix and Forus) have explicit efforts to sell inexpensive, India-appropriate products:
- Forus Health (FH) whose main product is an inexpensive, portable “pre-screening” system for detecting diabetic retinopathy, cataracts, glaucoma, and cornea and refractive problems now in 100 institutions, domestic and foreign;
- Perfint Healthcare (PH) which invented precision-guided therapy delivery machines for the relatively new field of interventional oncology, with 40 machines placed in India and the rest overseas (Forbes article);
- Phoenix Medical Systems (PMS) which designs, manufactures, and sells neonatal and maternal care equipment, including a jaundice phototherapy light that was licensed from D-Rev, the US-based, appropriate medtech design company (D-Rev products), one of the few examples that I know of successful medtech transfer between the not-for- and for-profit sectors;
- Sutures India (SI) a manufacturer and distributor of disposable surgical products; and
- Trivitron Healthcare (TH), India’s largest medtech company with sales of about $130 million annually.
Second, the article also noted that these companies have been successful in raising funds from a range of investment firms, all either India-based or with local offices. For US companies with innovative technology looking to expand into India, these firms may be a good place to start to look for funding:
- Accel Partners (AP India);
- Artiman (Artiman);
- CX Partners (CX Capital, CX Capital);
- Fidelity Growth Partners India (FGPI);
- IDG Ventures (IDG India); and
- Norwest Venture Partners (NVP India).
Lastly, the authors noted a few of the challenges for the industry, quoting the founder of Trivitron who complained of the lack of government support for local manufacture and innovation unlike in China and Brazil, home to companies exporting medtech products to India. I was bit surprised that the article did not mention the inconsistent and non-transparent regulatory system which I had gathered from a report by the consulting firm, PwC (PwC report), that I reviewed for a previous post was a challenge (“New and Improved!”). It is worth mentioning that the report and my post emphasized the need and ways for companies to change their operational models to suit the Indian environment, e.g.: understanding the market and buyers’ needs and concerns (like the middle- and lower-income out-of-pocket buyers); redesigning existing products to simplify procedures and decrease accessory cost; and designing new products for affordability and value, not just low price.
Since I am on an Indian roll (which I understand is a mix of meat and veggies rolled in flat bread that originated in Kolkata), here are other data points. According to a Times of India article last August, the in vitro diagnostics market is growing substantially at about 13% per year and a major multi-national player in it, Roche Diagnostics, is expecting double–digit growth in its IVD business over the next five years (Times of India article). Roche is targeting blood screening and HPV testing as part of its growth strategy. Other multinational device companies are getting stiffer competition from local companies, and a recent Fierce Medical Devices article noted that the multinational companies should be looking for cooperative rather than competitive opportunities. They may be missing opportunities to learn from local partners about how to tailor their products for emerging markets beyond India as well as getting insight into strategic acquisitions they may make in India (FMD article 1).
Finally, also from Fierce Medical Devices, is an article on Core Diagnostics, a clinical testing firm using molecular diagnostics for oncology and cardiology, that started up in New Delhi in January (FMD article 2). Core is interesting because it is founded by two 20-something Indian nationals; has backing from a major US diagnostics company (CardioDx), a pharma company (Genentech), and a VC firm (Artiman); and is utilizing technology obtained/licensed from OncoMDx, a Silicon Valley start-up (OncoMDx) (FMD article 3 and Core). Whoever was involved in starting Core gets my creative business developer(s) of the year award.