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Covid-19 ventilators and the med-tech industry
Here is the story of Covid-19 ventilators: Skanray Technologies, started by five former General Electric engineers in 2007 in Mysuru, has been manufacturing and exporting advanced ICU ventilators since 2014. While Skanray sold in the premium private sector or exported to developed countries, the Government of India (GoI) and the state governments have been buying ventilators from China in large quantities, and in smaller numbers from Europe and the US.
Come Covid-19, and the only choice before the government was to scout for domestic manufacturers, and Skanray and Max Ventilators of AB Industries were the only ICU ventilator manufacturers with long domain experience. The rest of the ventilator story is there in overdose and variety in public domain: Start-ups, joint ventures, cheap imports, second-hand machines, scams, accolades, theories and metaphysics, all emerged during this period, all claiming to be making or supplying ventilators. Our politicians congratulated each other for creating products for Covid-19 in a short time. The truth is, we always existed and were exporting our machines while the government slept over this critical healthcare sector and continued to import ventilators for reasons well known to all of us who deal with government.
On March 18 this year, we got calls from Niti Aayog, Health and Defence ministries requesting 100,000 ventilators to deal with the Covid-19 calamity. The underlying story here is that the Centre and the states could not import from China or elsewhere during Covid-19 since these countries had domestic shortages and compulsions of their own. China, which had dismantled Covid-19 hospitals in April, had lots of sparingly used machines ready to export, but it chose to sell them to European and American markets than India for higher profits. Still, not many people know, our med-tech (medical technology) imports from China have grown significantly since March while we have all been screaming “Atmanirbhar Bharat” and “Make in India” from our rooftops. Most Indian manufacturers suspect that whatever domestic buying is happening now will end as soon as the pandemic subsides, and we will be back to importing cheaply from China.
For us in the industry, it was a cruel joke to watch all kinds of hype being peddled in the name of Atmanirbhar Bharat. Even in a national calamity, many state governments indulged in large-scale Chinese imports, corruption and scandals in Covid-19 treatment; and Indian banks never lent to anyone on time. It was CDC Investment Works, a UK government development finance institution that came forward quickly to offer working capital, not Indian banks nor the state or central governments.
We have payments as old as three years pending from the Andhra, Telangana and Chhattisgarh governments, and no amount of follow-up or legal notices help. The funny part is, these same governments are asking us to set up facilities in their states, promising crores in grants. This is the story of hundreds of companies working with the government. Unless this is fixed, we will never have an Atmanirbhar Bharat.
The only silver lining has been the speed at which the PMO and central ministries, Bharat Electronics Limited (BEL) and DRDO worked to help us deliver the 30,000 units of Skanray ICU ventilators for which the Centre placed orders on BEL. It was a clean GoI to GoI transaction, with no scope for middlemen or graft.
What must the government do to build a robust and self-reliant industrial base? I’ll speak for the med-tech industry.
Consider the reality today: China has more than 16,000 med-tech companies, 300 of them of size above Rs 1,000 crore; India, with a similar population, potential in technology and manufacturing capabilities, lower cost of R&D and manufacturing, has very few companies in med-tech core technology, thanks to the hostile ecosystem, corruption, opaque tendering processes, weak quality vendor base and the pathetic Indian banking sector.
How did China do it?
A vibrant domestic market is the basis for new investments and growth. Currently, healthcare delivery penetration in India is less than 20% in its huge 1.4 billion population. Increasing the healthcare delivery and insurance cover to 40% of the population will spur a 500% growth in healthcare delivery, med-tech, pharma, consumables, health tourism, telemedicine, homecare and help India become a global healthcare hub.
Secondly, MNCs came to India at the same time they set up base in China. Indian med-tech market and healthcare penetration has been dismal while China’s grew a hundred times. Companies that brought in R&D/Manufacturing into India lost money and interest to invest due to poor domestic demand, corruption in tenders and high attrition of trained R&D staff. China provided a strong supplier base with the government supporting them to gain domestic market and exports. And China then used this to build its own local skills and inhouse technology, disregarding international Intellectual Property (IP) laws.
It was European/Scandinavian technologies that China scaled in the mobile market to make cheap cellphones and services to the entire world. India has a unique opportunity to do the same in healthcare. With our versatile and strong technology base, strong democracy, respect for IP, 80% lower cost in core research budgets, being 70% cheaper in engineering, testing, software development costs, 50% higher in productivity, healthcare can be a $500 billion forex earner for India if government and industry act with speed and seriousness.
(The writer is founder & MD, Skanray Technologies, Mysuru)