Dr Shirshendu Mukherjee, is currently the Mission Director of the Grand Challenges India, the flagship program of the partnership between the Department of Biotechnology, Ministry of Science & Technology, Government of India, the Bill & Melinda Gates Foundation and Wellcome Trust. This platform supports initiatives that could dramatically change the health and development landscape in India. He also heads the Intellectual Property (IP) & Technology Transfer (TT) and Communications Division in BIRAC. In addition to the above, Dr Mukherjee also leads the National Health Authority (NHA) (Ayushman Bharat – PM-JAY) Start-up Grand Challenges program from BIRAC.
India’s MedTech market was valued at USD 10 bn in 2014 and is expected to touch USD 50 bn mark by 2025.
India is on the cusp of epidemiological transition. There is a big shift in health burden from communicable to include non-communicable diseases, which in turn is driving key MedTech segments. There is a demand for both cutting-edge precision technologies and for affordable low technology. The Indian MedTech innovation ecosystem is fast evolving and vibrant with academic research, venture capital firms, government funding and promising start-ups developing products specifically for the Indian market. In many ways, the ecosystem is very reflective of the Swiss MedTech innovation ecosystem.
India’s MedTech market was valued at USD 10 bn in 2014 and is expected to touch USD 50 bn mark by 2025. This is in part due to India’s rising income levels, swelling private sector investment in healthcare, ageing population, growing medical tourism industry, and government incentives in the MedTech space. All these factors make India an extremely attractive market for international firms. There is a need to use MedTech effectively to address the huge gap between demand and supply of healthcare services in India.
The MedTech sector in India is at a nascent stage with most of the indigenous manufacturing restricted to medical consumables.
The MedTech sector in India is at a nascent stage with most of the indigenous manufacturing restricted to medical consumables. In fact, imports still constitute over 75% of the current MedTech market. India is looking to improve self-sufficiency in MedTech as a part of the “Make in India” initiative. The rapidly expanding sector presents immense opportunities to global players.
MedTech market analysis:
The Indian market is among top 20 markets globally in terms of market size. In Asia, it is 4th after China, Japan and South Korea. The MedTech sector in India was worth USD 10 bn in 2014 and is growing at 12% compound annual growth rate (CAGR). In contrast, the global MedTech market is growing annually at the rate of 4.1%.
Healthcare in India:
MedTech sector and the healthcare sector are interdependent. Hence, it becomes imperative to understand the health status and healthcare delivery status in India. These inform the need of MedTech solutions and product development. In 2014, India was the 6th largest global market in terms of size and is expected to rank in the top 3 by 2025. India accounts for 20% of world’s population and is forecasted to cross 1.4 bn by 2025, of which 50% will be over or below 30 years. India’s average expenditure on healthcare over the last decade has been around 4% GDP.
In India, 58% of all healthcare expenditure is out-of-pocket. India has a wide socioeconomic index consisting of people who are able to afford world-class treatment and those who are pushed deeper into poverty due to healthcare expenditure. In comparison, Swiss only pay 25% of their health expenditures out of their pocket, a result of higher state expenditures on public health, advanced social security coverage and more widespread insurance penetration.
Despite advances, health infrastructure is not equitably distributed and overall the infrastructure is well below WHO guidelines. To drive equitable healthcare, the role and market opportunity of every segment in healthcare delivery systems is paramount; given the large unmet needs of the growing population to provide high quality and affordable healthcare.
Some of the key drivers for the Indian MedTech market are:
- Epidemiological transition: The health burden of India has shifted from communicable to include non-communicable diseases. cNCDs include asthma, acute bronchitis, problems of joints/ bones, hypertension, cardiovascular diseases (CVDs), diabetes, cancer, etc. There is a pattern of increasing morbidity with age. Chronic NCDs have increased over five-fold in prevalence in ageing populations especially those over 60 years. Rise in NCDs has not replaced communicable diseases either.
- Increasing population and Life expectancy: From 1.2 bn in 2011, India’s population is set to grow to 1.4 bn by 2025. Declining infant mortality and increasing life expectancy will augment the demand for healthcare. Even though the Indian population is currently young – with a median of 26 years – the population distribution is slowly changing. Indian population over 60 years will contribute to 12.5% of the total population by 2025, which means a whopping 175 m will be elderly.
- Rising income levels increases affordability: Access to affordable healthcare is a major constraint for 59% of households with an annual income of < USD 3000 per year. Households in the income bracket of USD 3000 – 7500 are expected to increase to 47.5% by 2020. This increasing population group, who are willing to pay for better healthcare services, will be favourable for the industry.
- Increasing Health Awareness Drives People To Seek Healthcare:
In January 2016, India crossed 1 billion mobile phone subscribers mark. The ubiquitous reach of mobile phones has made it the most effective way for last mile connection. Of these 302 m had internet connections (33). Cheapest calling rates in the world and increasing internet penetration are of consequence for tele, e- and mhealth. This translates to an increased market opportunity for MedTech in this segment. Connected devices are currently one of the top 5 fast-growing segments in MedTech in India.
- Health Insurance Coverage: In 2014 only 17% of the Indian population had health insurance (34). So, the ability of lower income groups to access quality healthcare still remains an impediment. Government sponsored schemes account for around 80% of the health insurance coverage provided. The low penetration is set to change as the commercial health insurance policies have been increasing at 10% CAGR (35). Health checkups which are mandatory for health insurance will also rise requiring quality MedTech to service the demand.
- Medical Tourism in India: India is currently one of the top three destinations for medical tourism in the world. The medical tourism industry in India is expected to grow to USD 10.3 bn by the year 2020 from USD 2.8 bn in 2015. Investments in luxury healthcare are growing because of the strong demand for high quality below-international prices of healthcare.
MedTech is a focus sector for start-ups – a study of technology incubators showed that over 25 per cent of incubated start-ups were in MedTech, the second largest sector after IT
Although some of the key drivers for the MedTech market are as stated above, the key considerations for a successful MedTech venture could be the following:
A. Purposeful Innovation: Solving Indian Healthcare Challenges, One Startup at a Time
The Indian MedTech sector continues to be dominated by imports, which account for 75per cent 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 startups which are creating novel technologies and proprietary, patented, products for healthcare challenges facing the ordinary Indian. This new wave of MedTech is driven by purposeful innovation- i.e. innovation that addresses specific challenges, and taps associated economic opportunities, seen in Indian healthcare.
Globally, MedTech is a focus sector for start-ups – a study of technology incubators showed that over 25 per cent of incubated start-ups were in MedTech, the second largest sector after IT. In India too, startup activity in the MedTech sector is growing by leaps and bounds, albeit from a low base. Today, there are several startups solving Indian healthcare challenges by creating novel technologies and generating a global intellectual property in the process. Startups 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 startups 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.
B. Financing Challenges Facing MedTech Innovators
Globally, MedTech startups 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. BIRAC, the funding arm of the Department of Biotechnology, has been instrumental in this phenomenal development. Under the visionary leadership of Dr Renu Swarup, Secretary, Department of Biotechnology & Chairperson BIRAC, the organization has funded more than 100 MedTech projects and been instrumental in the design and development of many innovative technologies addressing critical Indian challenges. Additionally, there are other international foundations such as Millennium Alliance, Gates Foundation, Wellcome Trust, Lemelson Foundation, and USAID that provide grants to the Indian MedTech sector.
Venture capital investment in MedTech startups has also been increasing over the years- 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 startups, this sector is getting increasing interest from savvy VCs and family offices.
C. The MedTech market- The Public Procurement Challenge
Most innovative MedTech products in India 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 percent of MedTech procurement in government happens through the tender system- where multiple companies bid to supply a 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 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.
D. Partnership with Established MedTech Companies
After a startup develops an innovative product, it faces further challenges in manufacturing, commercialization, distribution, and service. In the West, a startup 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 startups 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.
E. Product development takeaways for India:
Tailoring the product to India, specifically to the market (private or public)/ region (urban or rural, specific state or city) one intends to sell
- Cost differentiation
- High quality at lower prices
- Portable products that can be used at lower levels of health infrastructure
- Products requiring less training (low operational requirement)
- Saleability at early stages of development
- Innovative business models
Worldwide, healthcare systems are in great economic stress and are increasingly demanding greater returns on investment. Innovating for India automatically focuses on maximum value.
The Indian market is very unique. In India, consumers shop for healthcare. This means there’s a market for every segment of MedTech to enable healthcare delivery. Ideas for the MedTech and healthcare segment are plenty – innovative business models, working directly with clinical research and hospitals to provide customized solutions, using the population as a base to inform big data and analytics, developing new products and manufacturing in India. By 2020, Asia-Pacific will surpass the European Union in terms of size of the MedTech market, with the majority of the customers beyond the premium segment. Further, individual markets that make Asia-Pacific are a complicated collection with different political systems, culture and disease profiles.
Doing business in India gives a heady mix of the same extraordinary challenges and big opportunities, mimicking that of Asia-Pacific market as a whole. Worldwide, healthcare systems are in great economic stress and are increasingly demanding greater returns on investment. Innovating for India automatically focuses on maximum value. This learning translates to helping healthcare systems worldwide with their cost curve, a global opportunity. India is characterized by complexity, ambiguity, uncertainty. However, a country with over a billion people cannot be ignored. To succeed, come with the right mindset, establish local leadership, create innovative business models, pay attention to the customer and make MedTech for India.