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Dedicated department to boost med-tech sector growth
Thursday, September 18, 2014, 08:00 Hrs  [IST]

Indian medical technology sector is still in a nascent stage as 80 per cent of the devices and equipment are imported.Since medical technology is not looked after by any separate ministry it was being continuously ignored making it more and more import dependent. A dedicated department recognizing med-tech as a separate industry will enable it to come out from import clutches in about 10 years, Dr. GSK Velu, Founder and Managing Director, Trivitron Group of Companies tells Nandita Vijay.

How do you envisage the growth of medical technology industry in India?
India’s medical technology industry is still in an infancy stage compared to the buoyant pharmaceutical sector. This sector which is valued at around Rs.30,000 crore accounts for 80 percent of imports. Now the China's medical technology industry is almost seven times larger than that of India. Hence our domestic med-tech market should grow substantially as there is no diagnosis or treatment possible in today's world with technology intervention.

How many units are there in the country and what is your view on their capability?
There are hardly any large -scale initiatives from the local market and the sector is still dominated by imports. There are probably only two companies of Indian origin with over Rs.500 crore revenues. There are more than 900 small medium enterprises (SMEs) which dominate the landscape of manufacturing med-tech products in India.

What are the key strengths of Indian small and medium medical devices companies?
Hard to say now as the price seems to be the only differentiator for companies in the country and these are being cornered from all sides by top global multinational companies and low cost Chinese manufacturers.

Going by the new government efforts to boost manufacturing, could Indian med tech startups take a lead?
If the inverse duty anomalies, proper fiscal incentives, preference in government procurement and manufacturing besides local innovation create an ideal ecosystem to propel growth prospects, then there is no doubt that the Indian med-tech start-ups could take a lead and be successful.

How keen are venture capitalists, private equity and financial institutions to fund this sector?
There is considerable interest by private equity players to infuse funds for the industries which have made a mark in this space. However, there are hardly any angel investors to fund start ups. Banks do not consider the medical technology research-manufacturing as a priority sector and hence there is no special treatment accorded to the medical technology industry.

What are the kinds of high-end medical devices that can be developed in India by local players?
Due to a vibrant pharma and biotech segment, implantable medical devices and In Vitro Diagnostics (IVDs) reagents offers high potential for growth in India compared to China where electronics instruments have a great eco system.

Are the medical technologies and diagnostic devices capable of transforming Indian healthcare space? What are the visible trends that are emerging?
Right now there are only early signs that Indian medical technology industry could transform the healthcare sector. However, all this would depend on the government policies encouraging local manufacture and R&D creating positive trends in the future.

What are the key challenges which hamper the growth of the sector?
There are several factors which deter the growth of the sector. These include inverse customs duty structure, excise duty and VAT (value-added tax) anomalies, lack of favourable import policies and lack of trust even within India on the ‘Made in India’ label!

In your Union budget comments, you had mentioned the need for a department of medical devices to encourage R&D initiatives. Has Trivitron communicated this to the government?
We are trying to reach out to the new government but no success yet. We have communicated that though the Government has shown its willingness to focus on healthcare in its Budget 2014-2015 more comprehensively with more inclusive strategy, it was disappointing again to note that the med-tech segment was ignored. As medical technology is not looked after by any separate ministry, it was being continuously ignored making it more and more import dependent.

What would be the key advantages of a dedicated department?
The big benefit would be that there will be parent ministry or department which will recognize the med-tech as a separate industry and provide focus to bring it out from import clutches within about 10 years.

Trivitron has chosen the inorganic route for growth and this has catapulted the company in terms of technology infusion among other benefits. Would you look at buying out international companies?
We have already acquired group of three companies in Finland. These are Ani labsystems, Ani Bio tech, Orgenium which has combined to form Labsystems OY Finland. This facility is focused on providing IVD (In Vitro Diagnostic/devices ) products to the advanced countries like USA, Europe and Japan. The technology from this company is being brought to India and new factory is under construction for commencement next quarter to produce variety of IVD products to meet emerging market needs including India.

In your opinion are  global companies looking at India to make a presence?
There is no doubt about this and there are international companies looking to make a presence in India.

How has the Trivitron Medical Tech Park initiative fared so far?
Right now, two companies: Hitachi Aloka Trivitron and Biosystems in a joint venture with Trivitron are fully functional producing and exporting imaging and IVD products. In addition, Trivitron's has two manufacturing facilities are under construction and one of the units will be operational next quarter with Labsystems Finland Technology.

In 2008, your company had received a capital infusion of US $11 million from HSBC Asian Ventures Fund Ltd. Would there be any more efforts to raise funds as part of the growth strategies in the coming year?
Both of these companies mentioned above have fully exited now and we now have Fidelity USA and India Value Fund as the new investors which have just come in. We have adequate funding to fuel our growth for the next two years.

What is the five-year game plan that you have devised for Trivitron ?
The five year game-plan is to achieve a revenue target of Rs. 2,500 crore plus with predominant focus on emerging markets where the product portfolio would constitute IVDs, imaging, critical care, operation theatre devices, ophthalmology and implantable devices We are also looking to go in for an Initial Public Offer in about a three to five year time frame.

How easy is it for the med-tech sector to attract trained and qualified human resources here?
We need more skill training and development institutes and Trivitron is looking at entering into this segment to fill the skill gap to create teams in technical operator categories.

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