India is poised to be the world’s third largest economy by 2030, according to Economic Affairs Secretary Subhash Chandra Garg. However, improvements in healthcare expenditure, outcomes, and infrastructure, especially on the public side, have not kept pace with economic growth. In fact, poor quality of healthcare is the biggest cause of preventable deaths in India.
A 2018 report published in The Lancet showed that nearly 2.4 million Indians die of treatable conditions every year. The scenario continues to be dire for the rural and urban poor citizens who have little or no access to quality, affordable, healthcare. Hopefully, government schemes such as Ayushmaan Bharat, if funded appropriately, will change the face of healthcare for these groups.
One sector that can play a pivotal role in transforming healthcare is the MedTech sector. Although small by global standards, the MedTech market in India is estimated at about $10 billion (Rs 70,000 crore). This market, growing at 15-20% annually, is expected to cross $25 billion (Rs 1,75,000 crore) by 2025.
The MedTech sector includes a multitude of products - from syringes and bandages to MRI and CT machines, from simple surgical tools to cutting-edge robotic surgery platforms - and comprises over 1,00,000 different devices, diagnostics, and consumables.
From diagnosis, to monitoring, to treatment, to end of life support, MedTech touches all aspects of patient care. It is no wonder that an innovative MedTech sector is the cornerstone of any successful healthcare system- and is the need of the hour.
The sector in India continues to be dominated by imports, which account for 75% of the market. So far, Indian companies have been making “me-too” products, which compete with MNCs primarily on affordability. However, there is a new crop of MedTech start-ups which are creating novel technologies and proprietary, patented, products for healthcare challenges facing ordinary people. This new wave of MedTech is driven by purposeful innovation - innovation that addresses specific challenges, and taps associated economic opportunities.
Globally, MedTech is a focus sector for start-ups – a study of technology incubators showed that over 25% of incubated start-ups were in MedTech, the second largest sector after IT. In India too, start-up activity in the sector is growing by leaps and bounds, albeit from a low base.
Today, there are several start-ups solving healthcare challenges by creating novel technologies, and generating global intellectual property in the process. They are tackling challenges such as hypothermia management in premature babies, lung infection in ventilated patients, life support for babies outside the NICU, more accurate labour monitoring, vertigo diagnosis, post-cardiac event monitoring, and screening for blindness, cancers and other conditions.
These start-ups leverage cutting-edge technologies such as machine learning and artificial intelligence, along with electronics, mechanical engineering, and product design expertise, to create innovative, patented, products that not only serve Indian needs, but address global market opportunities.
Financing challenges: Globally, MedTech start-ups have access to both grant and equity (VC) funding at all stages of product development. Thankfully for Indian start-ups, grant funding for innovative MedTech projects has increased exponentially over the last few years.
The Biotechnology Industry Research Assistance Council (Birac), the funding arm of the Department of Biotechnology, has been instrumental in this happy development. Under Dr Renu Swarup, MD, Birac, it has funded more than 100 MedTech projects, and been instrumental in the design and development of many innovative technologies addressing critical challenges.
Venture capital investment in MedTech start-ups has also been increasing. However, it is still negligible compared to digital and consumer sectors. This is largely due to the relatively long timelines in MedTech - 3-5 years for product development, and another 3-4 years for commercial success.
However, given the breadth of opportunities in this sector, and the relatively low number of start-ups, this sector is getting increasing interest from savvy VCs and family offices.
Public procurement challenge: Most innovative MedTech products today have been designed and developed for low-resource, low-skill, public health facilities, and can transform healthcare for low-income consumers who depend on public healthcare.
However, over 90% of procurement in government happens through the tender system where multiple companies bid to supply a (commodity) product, typically competing on price. This method does not work for an innovative product, which is manufactured and supplied by just one company, the innovator.
This systemic issue leads to unacceptable delays, and sometimes outright rejection, in deploying life-saving, affordable, innovative, technologies that are made `for’ India.
A defined public procurement system, specifically for indigenous innovative products, perhaps certified by the central government, would go a long way in getting these innovations into the public healthcare system, where they can save innumerable lives.
Deployment of such innovations can also be supported through the creation of an Innovation Fund, which funds procurement and deployment of relevant innovations in a pilot district- to generate real-world data on effectiveness and outcomes, and drive nationwide adoption of the best innovations.
Partnership with established MedTech companies: After a start-up develops an innovative product, it faces further challenges in manufacturing, commercialisation, distribution, and service. In the West, a start-up typically partners with a large MedTech company, which takes on these activities.
This partnering ecosystem is still nascent in India, with the result that most start-ups focus on these activities themselves, and not on their core competency of innovation and product development.
As the ecosystem matures, it is hoped that India too sees such partnerships between startups and established companies, which get these lifesaving innovations to the market faster, and allow the innovators to focus on what they do best- innovate.
Indian MedTech sector is coming of age as evidenced by strong growth in innovative start-ups that are creating novel technologies to solve Indian, and global, challenges. It is vital to nurture and support such indigenous innovation in these early days - as they can make India the MedTech innovation hub for global emerging markets.
(The writer is CEO and co-founder, InnAccel Technologies)
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