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VIEW: Untold story of Indian
medtech and how to make it ‘Atmanirbhar’
September 28
India has larger medtech companies, but
predominantly trading Chinese products, refurbished machines or selling products
that are not compliant with international safety standards.
Skanray was founded in 2007 by 5 ex GE engineers in
an incubation centre in Mysore and started commercial production in 2012. By
then it had put compliance, safety, regulatory, quality systems, CE, UL, FDA
certifications and audits in place making Skanray stand apart as a unique
start-up. 2013 onwards was the era of organic growth and acquisitions with L&T
Medical systems, Pricol, CEI Italy, Skanray Europe, Cardia Netherlands, Skanray
USA starting activities at Brazil, Mexico and China for local manufacturing and
sale of Skanray designed products.
Today Skanray stands as a leader in the Indian
medtech space with 100,000 machines in installed base across 80 countries, over
50 products, 80 trademarks, IP and proprietary designs, more than 700
professionals, 6 facilities worldwide and an Advanced Electronics test facility
getting ready at Mysore in partnership with the Government of India (GOI),
Government of Karnataka (GOK) and the private sector.
By 2020, there was significant core technology,
supply chain, global regulatory, manufacturing capability established inhouse by
the company. Apart from Skanray, there have been companies like Clarity
Medicals, Phoenix, RMS technologies, Shalya, Alan, Nice Neotech, Divya labs and
a few others who had core technology with them. Skanray is leading the Indian
R&D/Core technology-driven medtech sector.
India has larger medtech companies, but
predominantly trading Chinese products, refurbished machines or selling products
that are not compliant with international safety standards. India is still
lacking in enforceable safety and performance regulations. Large MNCs have
brought in advanced technology and Compliance to India but rarely develop core
technology or products from concept to end of life in India. There is another
breed of “Make in India” Champions who import full modules and components from
China and other countries and sell them directly or package them in Indian Sheet
metal enclosures to show them as made in India. Many of these have mastered the
art of managing government tenders and have a good portion of their revenues
coming from government sales. Putting everything together, Indian medtech
manufacturing is less than 10 percent of the $4 billion medtech buy.
Here is the story of COVID ventilators: Skanray has
been manufacturing and exporting Advanced ICU ventilators since 2014. The GoI
and the state governments have been buying ventilators from China in large
quantities while Skanray sold in the premium private sector or exported to
developed countries. The popular European and the US brands too sold to the
government but in much smaller quantities.
Come COVID-19 and the only choice before the
Government was to scout for domestic manufacturers and Skanray/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
the public domain. Many start-ups, JV, cheap imports, second-hand machines,
scams, accolades, theories and metaphysics emerged during this period. Our netas
congratulated each other for creating products for COVID-19 in a short time.
The truth was that we always existed and exported
while the successive governments slept over this critical health sector and
imported for reasons best known to all of us dealing with the government.
On the March 18, 2020 we got a call from Niti Aayog,
Health and defence ministries requesting for 100,000 ventilators for the
national calamity. The underlying story here is that the states and centre
couldn’t import from China or elsewhere during COVID since these countries had
domestic shortages and compulsions of their own. China chose to cater to the
European and American markets first since they could realise almost double the
price that they could get in India. China had started dismantling COVID
hospitals in April and had lots of sparingly used machines ready to export. Not
many know that imports from China have grown significantly since march 2020 in
medtech while we all have been screaming "Atma Nirbhar" and "Make in India" from
our rooftops. Most Indian manufacturers believe that cheap imports may replace
the domestic buy once life is back to normal. This rush for Make in India may
last just as long as the COVID virus that came from China followed by their
products that helped combat the virus.
For us, it was a cruel comedy to watch all kinds of
hype peddled in the name of Atma Nirbhar Bharat. Even in a national calamity,
many state governments indulged in large-scale Chinese imports, corruption and
scandals in COVID treatment and the Indian banks never lent anyone on time. It
was the CDC that is owned by the UK Government that came forward quickly with an
offer for working capital, not the Indian banks nor the state or central
Governments.
We have payments as old as 3 years from the Andhra,
Telangana and Chhattisgarh Governments that never comes with any amount of
follow up or legal notices. The funny part is that these same governments are
asking us to set up facilities in their state promising crores in grants. Our
legal system will take decades to deliver justice. This is the story of hundreds
of companies working with the governments.
Unless this is fixed, we will never have an Atma
Nirbhar Bharat with self-respect and dignity.
The only silver lining was the speed at which the
PMO, BEL, DRDO, the Ministry of External Affairs, Commerce, health and defence
worked round the clock to help us deliver the 30,000 units the GoI placed for
the Skanray CV 200 advanced ICU ventilators on BEL. It was a clean GoI to GoI
transaction with no scope for middlemen or graft.
It would be misguiding the public if we didn’t
bring out the positive changes, we see with the GoI in the last few years.
The central government and a significant chunk of
the bureaucracy have changed for good. We find the GoI spending long hours on
key policy matters and long term plans for the nation that may not bring rich
electoral dividends. Compared to the past where we had a very little talk on
long-term policies and lots of debates on sops, freebies, subsidies, minority,
majority, backward, forward issues linked strongly to the electoral politics of
the country.
Corruption in the central Government has reduced
significantly while most state governments cutting across party lines continued
to be as corrupt and bureaucratic as ever. The decisions and execution may not
be always right, they may not have delivered the results expected, but at least
there is a sincere effort towards transparency, towards transforming the nation.
It’s time to capitalise on this leadership and good intentions of the Centre.
Here are some concrete steps to build a robust and self-reliant med-tech
industry.
1) Atma Nirbhar in medtech is local R& D and
innovation with a min of 70 percent value add manufacturing in India. Assembly
or labeling of Chinese/ imported kits is not Make in India.
2) A 10 year undisturbed R&D, manufacturing, global
compliance plan is the foundation of Atma Nirbhar Bharat. We just can’t have
“Make in India” products that can’t be sold in the US, Europe, Japan and the
rest of the world. A successful Atma Nirbhar should also get us significant
exports.
3) Backward integration and quality supply chain is
the core of creating a manufacturing ecosystem. We are far away from what the
world expects from an alternative to Chinese capabilities as a global supplier.
Our democracy and English speaking population are nice for poetry, not enough
for companies to move away from China and set base in India, but we can surely
get there. There is an urgent need for predictability in government policies.
Political parties need to look at long term collaborative work so that the
successive governments won’t overturn earlier policy decisions. There is a need
to relook at the political system and policies to reassure global companies and
investors that there is continuity of policy and time-bound approvals. Its time
to stop talking and start executing.
4) Law of reciprocity should be applied by the
Indian government to countries that impose a high tariff on Indian goods and use
the regulatory route to delay or block the entry of Indian products. We have
some countries that have 67 percent tariffs on Indian products while the Indian
government buys large volumes from these same countries levying 5 percent import
duties. There are free trade agreements that the GoI signed several years ago
with countries that never let Indian goods on their shore. Blocking imports or
levying high import duties will be detrimental to the Indian manufacturing
sector since cheap, unsafe, substandard products will be sold in the Indian
market in the name of Make in India and Atma Nirbhar. It is a balanced step that
the MEA, Commerce ministry and the Finance ministry has to take looking at all
aspects of business, trade and neighborly relations.
5) Development of the Indian industry is not just
providing land. Most of what state governments do is focus on acquiring fertile
agricultural land and sell to the industry at subsidised rates. This has led to
land hoarding by industrialists and real estate mafia largely controlled by
politicians. Disallow change of use of industrial land pan India and bring in
strong laws to reacquire industrial land not fully utilised in 3 years. Millions
of sq kms of land will be freed in days. It is worthwhile to go back and check
the story of the SEZ, ESDM, tech parks, clusters that came up since 2000 and see
what happened to all these schemes. The truth will be out. For a medtech/core
manufacturing sector, land is the last thing to worry about. Skilled engineers,
quick and reliable IMPEX policies and clearances, friendly and consistent tax
laws, matured, honest, researched IT, GST laws sans activism and harassment are
more important than just land and sops.
6) Fab facility for semiconductors is something
that India lacks to become truly Atma Nirbhar in Electronics and medtech which
has a forex impact higher than that of petroleum imports. India had a
semiconductor complex in Chandigarh that got destroyed in a fire and we never
have been able to get semiconductor Fab in India even after decades of meetings
and discussions. It’s time we look at this on a top priority. BEL had a
semiconductor transistor and IC manufacturing unit which is now decommissioned.
7) Vibrant domestic market and healthcare/medtech
market is the basis for new investments and growth. The MNC's came to India at
the same time they set base in China. Indian medtech market and healthcare
penetration have been dismal while China grew a hundred times. Companies that
brought in R&D/manufacturing lost money and interest to invest due to poor
domestic demand, corruption in tenders and high attrition in trained R&D staff.
China provided a strong supplier base with the government supporting them to
gain domestic market and exports. Of course, China used this to build its own
local skills, its own Atma Nirbhar China and inhouse technology disregarding
international IP laws.
Currently, the healthcare delivery penetration in
India is less than 20 percent in its huge 1.4 billion population. Increasing the
healthcare delivery and insurance cover to 40 percent of the population will
spurn a 500 percent growth in healthcare delivery, medtech, pharma, consumables,
health tourism, telemedicine, homecare and help India become a global healthcare
hub. The government should keep off in pricing matters of education, healthcare
and the farm sector unless it provides a sustainable market and stability.
Growth and competition will regulate the price anyway more effectively than
government in the long run. The government has no role in pricing for a 100
percent privately funded sector that is alive inspite of the government and not
because of the government or its policies.
It was European/Scandinavian technologies that
China scaled in the mobile market to make cheap cell phones and services to the
entire world. India has a unique opportunity to do the same in healthcare. With
its versatile and strong tech base, with its strong democracy, with its value
systems, respect for IP, 80 percent lower cost in core research budgets, 70
percent cheaper in engineering, V&V, testing, SW development costs, 50 percent
higher productivity in labour costs, healthcare is above $500 billion forex
earner for India if the government and industry work with speed, oneness and
seriousness.
Medtech in specific has nothing in common with
pharma, healthcare delivery business, consumables and services even though they
are all bracketed as healthcare and brought under the pharma regulators.
China which is usually compared with India has more
than 16,000 medtech companies and 300 of them sized above Rs. 1000 crore, while
India with a similar population, potential in technology and manufacturing
capabilities, lower cost of R&D and manufacturing has very few companies in
medtech core technology. This is excluding the few multibillion-dollar MNCs
operating in India. Thanks to the hostile ecosystem, corruption, opaque
tendering processes, weak quality vendor base and the pathetic Indian banking
sector.
8) Atma Nirbhar is not just “Make in India”. There
is no country in the world that is self-reliant in technology, raw materials and
market. The same holds true for India as well.
If China sheds its expansionist policies and
fosters a long-term relationship based on equality and territorial integrity,
India, China, Pakistan, Bangladesh, Afghanistan, Myanmar, Nepal, Bhutan, Sri
Lanka and other neighbours can form an Asian union with a common currency,
shared economy and an open border. We can together be self-reliant to a large
extent and keep a healthy balance of trade with the US, Europe, Japan and the
rest of the world. It’s just that we have to keep religion and beliefs private,
stop expansionist attitude in territory or religion, stop cross border terrorism
and shun violence in all forms.
If Europe that fought bloody wars just a few
decades ago can dissolve the borders and become one large economy, why can’t we
create an Asian Union? Commerce, Finance and Foreign affairs ministries need to
be tied up closely for the long term good of the nation. Foreign affairs is the
enabler of Atma Nirbhar.
9) If this can’t happen in a reasonable time,
India, Israel, Japan, the US, UK, Italy, the Middle East and few others can
create a larger economic alliance of barter and sharing to cooperate in food,
healthcare and knowledge sectors that are core to well being. COVID has shown us
that if the borders are shut permanently in this global economy, the entire
human race will be affected and destroyed eventually. We are at risk with skewed
globalisation and blind nationalism.
10) There is this new thinking that needs research
and public debate to develop consensus within the nation.
Can we do away with GDP and consumerism based
economy? Can we look at a sustainable minimalistic society to focus on just food
self-sufficiency, health and happiness and rural empowerment with a common
spiritual awakening than religious fundamentalism? The time has come to reset
and restart. Else nature will reset us for sure.
- Vishwaprasad Alva is the
founder and Managing Director of Skanray Technologies. The views expressed are
personal
https://www.cnbctv18.com/healthcare/view-untold-story-of-indian-medtech-and-how-to-make-it-atmanirbhar-7039601.htm/ .
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