D. Murali and Bharath Yeshwanth

Chennai: The medical technology (MT) industry is a victim of identity crisis in India, without a space both in healthcare and technology industries, bemoans Dr G.S.K. Velu, Managing Director, Trivitron Group of companies, Chennai.

“The industry has never been an area of the Government’s focus, and so it is a phase of struggle that characterises the domestic MT manufacturers, as it happened in the case of the pharma industry 20 years ago,” Velu reminisced during a recent lunch-hour interaction at Business Line.

“In the past decade the industry has witnessed no large-scale initiative. Indigenous initiatives are restricted to very few low-technology products. And the market for the high-end products is purely dominated by the MNCs who are free traders in the country without any manufacturing intent,” he adds.

A Ph.D. in Pharmacology (IBAM, Kolkata), a graduate from BITS Pilani (in Pharma), and a post-graduate from LIBA, Velu has 18 years of experience in the diagnostics and healthcare industry. Prior to the inception of Trivitron, he was the Country Manager (India) of Ciba Corning Diagnostics/Chiron Diagnostics (presently Bayer Diagnostics) and subsequently Director, South Asia. Apart from heading Trivitron, which has grown to become a Rs 110-crore group in less than a decade, Velu is the MD of Metropolis Health Services (I) Ltd, the President of AMDSI, and head of the Manufacturing sub-committee of ASSOCHAM and CII.

Trivitron, a medical technology company, specialises in medical device solutions covering a variety of fields. Growing at a CAGR of over 35 per cent for the past 3 years, and employing about 400 medical and technical professionals, Trivitron is foraying into domestic manufacturing with the launch of its ‘first-ever MT park’ in the country, informs Velu. “Currently 95 per cent of our turnover comes from trading imported products; we expect our new initiative to contribute about 50 per cent of our future revenue.”

India not only has the potential to become a destination for catering to the holistic healthcare needs of world, but also provides an opportunity for indigenisation through cost-effective products of international quality, argues Velu. He passionately believes that with the right infrastructure and conducive policies India can address the needs of global markets.

Our conversation continues over the e-mail…

Excerpts from the interview.

How big is this sector, globally, and in India?

The global medical devices market was estimated to be $197 billion in 2006 with the US capturing about $70 billion. The Chinese industry has grown to be a $12 billion industry, with over $6 billion exports. In comparison, the Indian market share is small, pegged at $2.17 billion; however, at the current growth rate of 15 per cent a year, this is expected to touch $4.97 billion by 2012.

Has the market been growing in the country?

MT industry in India is a vast and growing market, with the affluent middle class increasingly demanding access to better healthcare. Some 50 years ago, the middle class represented a mere 3 per cent of the population or only ten million people. Today, the middle class accounts for 125-150 million people, or over 10 per cent of the population. Many Indians now choose to purchase health insurance with either full or partial coverage; so growing segments of the population can now afford to receive high-technology treatment.

Unfortunately, however, access to high-technology MT products in rural areas is quite limited; many times, even where the instruments are available, these cannot be used for want of imported spare parts, or due to lack of training or maintenance. In many areas, we still use obsolete technology (e.g. low-frequency X-Ray machines) because of the prohibitive cost of imported, newer and emerging technologies.

Do we have regulations in place to ensure the quality of medical equipments used in India?

No. There has been no proper regulation till date to ensure the quality of the medical equipment being used in India. As a result of lack of restrictions on imports, India is being used mostly as a dump yard for refurbished equipments from the US. The Government needs to urgently formulate policies to control the quality of both the imported and the locally-manufactured MT products.

What is the employment potential in the industry?

The MT sector belongs to the high-mix low-volume category. As an applied science, MT draws inputs from industries such as biotechnology, semiconductor/electronic component industry, IT (information technology) industry, and mechanical industry. Therefore, growth of the MT industry can provide employments to several electronic engineers, mechanical engineers, biotechnologists, IT engineers apart from several unskilled workers both directly and indirectly. If India can demonstrate its strengths in the MT manufacturing space drawing strengths from these input industries, India can become an attractive global destination for MT manufacturing in the world as an alternative destination to China.

Are you looking forward to policy changes that can facilitate the growth of the medical equipment industry? What difference will the demanded changes make to the common man?

The dependence on imported goods is brought about by the lack of regulations. By restricting free trading and motivating indigenous manufacturing initiatives we can reduce the cost of MT products to less than half, over the next five years. For this, the Government should remove anomalies in customs duty (at present finished goods attract less duty than raw materials/components imports), and incentivise MT manufacturing in India by removing excise duty/VAT, and provide capital subsidies like it was done for several industries including pharma in the past. By providing the right incentives India can become a hub for the manufacture of MT products, which will ultimately help to bring down the cost of healthcare to the common man.

With an increase in the incidence of lifestyle diseases in the country, there is an exploding need for a stronger medical device industry. To the common patients, therefore, advancement in MT will help in cutting costs effectively and also helping them in the process of prevention and diagnostics, and the treating of diseases and disorders more conveniently.

Did the latest Budget make any difference to the industry?

The Government has yet again failed to recognise MT as an industry, which is reeling under an unprecedented tax burden of 36 per cent. There was no special mention made for the industry and no reduction in custom duties for the import of medical equipments/ devices. The Government has not given any incentives like capital grants and subsidies for local manufacturing of medical devices as well.

The Finance Minster has proposed to increase the healthcare allocation by 21.9 per cent and has extended a 5-year tax holiday for setting up hospitals in non-urban cities, but this will not reduce the cost of healthcare in the country as long as the cost of medical equipments is not reduced.

Even if we consider depending on imports, it is unfortunate to see that many high-tech products like PCR diagnostics kits, and certain other critical products like ICU beds, which are essential as mobility and comfort tools for the critically-ill patients, are classified under the furniture category, with a duty burden of 34 per cent.

What are the skill shortages, and gaps in education, that the industry faces?

Unfortunately many biomedical engineering courses and biotech courses are offered by engineering colleges with no clinical surroundings. Hence none of the fresh engineers fit into the MT industry; consequently, there is an acute shortage of skilled manpower in design, development, manufacturing and even servicing of medical equipments and devices.

Once we have a vibrant domestic manufacturing industry, it can definitely contribute to shaping the career path of young biomedical engineers and medical biotechnology graduates in the country. There is an urgent need for medical universities to offer sandwich courses along with engineering colleges to bring out graduates with the right skill sets for the MT industry.

On the greater role that information technology and wireless developments play in today’s medical equipments, and how the same can benefit Indian rural areas. And, can you brief us on the cutting edge research happening in the industry.

There is a general belief that our departmental stores have better adopted the latest IT and communication technology than the healthcare industry. The IT and communication industry plays a pivotal role in healthcare delivery today. Unfortunately, though, Indian IT companies are so busy with their export business that they fail to see a lucrative business opportunity in the Indian healthcare sector. Feeling this need, and banking on our expertise in the industry, Trivitron recently formed a healthcare IT division to offer indigenously developed software/hardware solutions in the areas of hospital information systems, laboratory information system, radiology information systems, PACS, telemedicine etc. Worldwide remote monitoring of patients, remote diagnosis, robotic surgery, telediagnosis etc are gaining fast momentum; if cost-effective indigenous solutions are available, the Indian healthcare industry will adopt these technologies soon.

According to a survey conducted by a New Delhi based NGO, Society for Economic and Social Studies, 64 patents have been granted for medical devices in India from 2005 to March 2007. Your comments.

I have no idea on the nature of patents and where they have originated from. Definitely, there is a lot of innovative basic research happening in the ICMR-funded research Institutions, the IITs, IISc and so on. But the unfortunate thing is there is no formal interaction with the industry and hence many such patents/ innovative initiatives go commercially unexploited. I am yet to hear of any great commercial success that originated out of an Indian patent in the MT industry.

You speak of MT parks…

Yes, to promote MT manufacturing in the country, there is an urgent need to give a focus to the industry by creating a ‘Medical Technology Park’ scheme on the lines of the ‘Software Technology Park’ (but with more focus on domestic sales rather than exports in the first phase). Such an initiative will attract substantial foreign investments and will also create successful global Indian companies in the MT space as it happened in the pharma industry.

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