India can be more than a pharma hub

Every year, over 12 lakh infants die within a year of being born in India, while more than 50,000 mothers die during or just after childbirth — statistics worse than that of Bangladesh or Nepal. But the truly shocking fact is that a majority of these deaths could have been prevented with the development and use of five or six simple medical devices. Medical technology (devices, diagnostics, equipment, etc.) is one of the three key components of any healthcare system, the others being pharmaceuticals and services. India has created the world’s lowest-cost pharmaceutical industry, through ‘genericisation’ of medicines. A similar ‘indigenization’ of medical technology (MedTech) is needed to replicate the pharmaceutical miracle.

Today, high-priced western imports comprise over two-thirds of our MedTech market — imports which are not affordable, or appropriate, for the vast majority of our citizens. As David Kelso, a professor at Northwestern University, says: “If people began designing devices specifically for resource-poor settings, they could come up with much better solutions.”

MedTech for the poor is not an insubstantial market. MedTech spend in India alone is expected to explode to over $40 billion (₹2,50,000 crore) by 2025, from about $6 billion (₹36,000 crore) today, while Bric countries together will spend about $200 billion (₹12,00,000 crore) by 2025. Most of this expenditure will be by low- and mid-income consumers, in India and elsewhere.

Some initial steps are already being taken in this direction. A handful of startups in India are designing products specifically for our markets — like unpowered transport incubators for premature babies born at home; foetal and neonatal monitoring systems; low-cost, mobile ventilators; and automated screening devices for different diseases. Innovative funding programmes such as the Biotech Ignition Grant or BIG programme, managed by the department of biotechnology, play a seminal role in supporting early stage research in these areas. However, India needs hundreds of indigenous products.

An eight-month study, conducted by InnAccel, identified several critical gaps in the innovation ecosystem for MedTech which make it very difficult for a start-up to emerge and succeed in this field. The study also found that these gaps could be fixed with a combination of government and private initiative.

The good news is that this has been done before by other countries, notably Israel. In the late 1990s, the Israeli government funded the setting up of 24 technology incubators (with a strong focus on MedTech), brought in private management, and matched private investment in VC funds with government funds through the Yozma programme. Today Israel, with a population smaller than that of Bangalore, has over 1000 private MedTech companies compared to about 50 in India. Singapore has launched a similar programme to kickstart its own MedTech industry — an area the country has picked as critical for its growth.

Such an ecosystem can also be created in India through an innovative public-academia-private partnership (PAPP) model. Under such a model, the Government would set up world-class research and incubation infrastructure in partnership with key academic institutes, and strengthen grant funding for early-stage research in this area.

The private sector can be roped in to provide management and technical expertise to innovators and startups in this ecosystem, and invest seed capital in these companies during the high-risk product development phase. The Government can incentivise such high-risk capital by providing matching funds (like Israel and Singapore), giving indigenous startups preference in procurement for the public health system, and providing an enabling export environment.

Making this happen will not take too much time or money. InnAccel estimates that a total sum of ₹500 crore over seven years would be needed to create a globally competitive MedTech industry. This funding would enable the setting up and operations of six to eight world-class MedTech incubators and high-risk seed capital to fund 100 startups. Under this proposed partnership model, the Government expenditure would be less than ₹250 crore . Such a partnership model can provide a template for the Government to enable research-led innovation in other critical areas, such as agriculture, transport, water, energy and so on.

The writer is the founder of InnAccel Consulting Services

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