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India spawning top notch medical devices companies at affordable prices

The Economic Times:  February 28, 2013

New Delhi: 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 sel ls 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.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.