Exploring role of India in leading Med-Tech Device Innovation
The Medical Device market in India was $6.3 billion in 2013 and is projected to grow to $42 billion by 2025—growing at a cumulative annual growth rate of over 17%. This market growth will be accompanied by still-low levels of per capita spend (projected at $30/year in India, about 5% of the projected US per capita spend)- resulting in a growing need, and market, for affordable MedTech innovation. This need, and market, is not restricted to India- all emerging markets will have large MedTech spends at low per capita income levels, and India can become a global leader in MedTech innovation for these markets.
Current Scenario of Med-Device Sector in India
The Indian medical device market can be broken down into Diagnostic and Imaging (37%), Medical Consumables (16%), Orthopedic & Prosthetic Devices (10%), Patient Aids, and Dental Products. Today, the medical device industry in India is fragmented with the bulk of the manufacturing done by SMEs (65%) focusing on low-margin, low technology products like consumables and disposables such as bandages, suturing materials, and syringes.
The Consumables segment is the only Indian device segment with a trade surplus and is led by companies like Hindustan Syringes and Sutures India. The high-tech and high-quality medical products space, such as Diagnostic and Imaging equipment, is largely dominated by multinationals like GE, Philips, and Siemens.
Regulation & Cross-Border Integration
The Indian industry is largely unregulated with only a handful of products coming under the Drugs & Cosmetics Act, (and classified as ‘drugs’ for regulatory purposes). Most large buyers in the private and public sector therefore look for regulatory certifications like European CE and US FDA for most products.
Several large multinational medical device companies are present in India with their own establishment to produce India-specific products. These companies look to integrate their Indian operations with global research and development, along with manufacturing organizations to create higher quality products (compared to local Indian products) but with comparable cost structures.
For example, GE Healthcare has an ‘in country/ for country’ program through which it has designed, developed and manufactured products in India using local components. GE’s India-specific products are priced at one-third the cost of imported equivalents. Also, doctors and engineers at Philips’ Innovation Campus in Bangalore have developed a range of products and solutions in the neonatology space that help to save the lives of babies (especially premature babies) in the critical hours after birth.
Investment Overview & Additional Funding Resources
The innovation ecosystem in India has been steadily growing in the past several years. We have identified over a 120 private companies that are developing products and solutions for the Indian and emerging markets. Many of these start-ups have also garnered investors’ interest.
Around 31 private equity investments were made in the medical technology sector between 2005 and 2013, with a combined deal value of $265 million, with a bulk of the investments (18) and deal value ($226 million) coming in 2012 and 2013 alone. Perfint (robotic products for tumor biopsy and ablation) has raised several rounds of VC capital, and is currently estimated to be valued at over $150 million.
Forus Healthcare has raised two rounds of funding (total $13 million) while several others have raised smaller amounts of upto $1 million (Consure, Biosense) from angel investors and social impact funds. Several Indian companies have also been acquired in the past few years. Adler Mediequip was acquired by Smith & Nephew, Optics India was acquired by Essilor, TTK Healthcare acquired the orthopedic implants division of Invicta Meditek.
Grants are another big, and growing, source of funding for startups. Key granting agencies include Grand Challenges, Canada, the Wellcome Trust, Gates Foundation, and also the Department of Biotechnology, which has a range of funding programs from early stage research to manufacturing. DBT provides early stage (grant) funding through its Biotech Ignition Grant program- to bring an idea to a prototype stage. This grant is available to individual researchers and companies- and provides upto INR 50 lakhs to take an idea or a concept to a prototype stage.
DBT also sponsors a Fellowship called the Stanford India Biodesign (now rebranded School of International Biodesign) which trains Fellows in MedTech innovation, and has resulted in some quality startups emerging in India.
Private initiatives to address the gaps in the ecosystem include entities such as InnAccel that has set up India’s first MedTech Accelerator in Bangalore to support medical technology innovation targeting the Indian and emerging markets. InnAccel supports startups with its proprietary platform, development expertise, and seed capital- and gets them to a regulatory-certified product in 2-3 years
In summary, the ecosystem to support medical technology innovation has been rapidly improving over the past few years, resulting in a growing number of entrepreneurs and startups in the ecosystem. However, a lot still needs to be done to make India a thriving hub of innovation for the emerging markets.
About the author
Siraj Dhanani is the Founder of InnAccel Pvt. Ltd and serves as its Chief Executive Officer. He has 12 years of multifaceted pharmaceutical and healthcare experience in the global markets. Mr. Dhanani’s experience spans market research, health economics, pharmaceutical marketing, pricing and reimbursement, and in-licensing activities with Bristol-Myers
About StartHealth Competition
StartHealth Competition is a nationwide program to identify, mentor and invest in the most promising early-stage healthcare technology startups that are serving India’s masses – the 20 crore families living on under 20,000 rupees per month. The winner will receive INR 10 lakhs and they, along with the runner-up will get an opportunity to pitch for entry to Unitus’ StartHealth Program and get connected to its extensive partner network.
