Kerala medtech firms rise despite headwinds

Search the internet, and you will come across an array of studies stating that India has the potential to become a global powerhouse in medical device manufacturing. New Delhi is now pushing ahead with policies to turn this into reality.

This is inevitable as economic growth is opening up a vast market for healthcare products, while India still imports 70 percent of its medical equipment requirements. This means our import bill stands at a hefty 70,000 crore rupees annually.

The encouraging sign is the growth of medical device manufacturers in India, though New Delhi only introduced a clear-cut policy for this sector in 2017. Until then, it was clubbed with the Chemical and Fertiliser Ministry, which handles pharmaceuticals, while regulations came from the Health and Family Welfare Ministry.

Despite these initial challenges, the domestic sector has made significant headway, with 30,000 crore rupees worth of medical devices now manufactured locally. Perhaps less known is the role played by Kerala-based firms, which contribute 20 percent of this total, manufacturing equipment worth 6,500 crore rupees.

Despite such robust activity in the sector, medical device manufacturing remains fragmented, with no platform to bring together practitioners, researchers, industry leaders, and regulators for interactions that could give the sector a much-needed boost.

This is likely why New Delhi's recent survey did not identify even a single medical device cluster in the state, with most of the 21 clusters being located in North India.

On a slow track

The Kerala state government had also announced grand plans for a research and development park for the sector, but the progress of that project remains sluggish due to a financial crunch slowing things down.

Despite these major headwinds, Kerala firms appear to be doing remarkably well, if you go by the announcements made during the second Bio Connect Summit, held recently in Trivandrum.

Industry leaders from Kerala who participated in the summit revealed that they have managed to generate business worth crores, both domestically and internationally. They also expressed confidence that there is ample scope for more firms to enter the field in various capacities.

During a panel discussion on ‘Enhancing the Medical Device Industry Ecosystem’, Pius Varughese, COO of Vinvish Technologies, revealed that his company is hard-pressed to meet market demand, despite plans for a 3.5 lakh square feet mass production facility in Trivandrum, at an estimated cost of around 200 crore rupees.

His fellow panellist, Thomas John, MD of Agappe Diagnostics, shared that his company shifted to Kerala from Bombay 19 years ago, despite receiving some negative feedback about the state. Since then, it has grown into one of the leading players in the medical device sector in India, with an expanding overseas presence.

New Entrant

Such encouraging results are attracting business veterans like Harrison Malayalam, a company with a 150-year presence in the agribusiness sector, to enter the medical device space.

Santhosh Kumar, CEO of Harrisons Malayalam, said that under the guidance of the Kerala Medical Technology Consortium (KMTC), a government body responsible for promoting medical technology, his company is exploring several opportunities by leveraging their experience in the rubber industry.

“As rubber is a component widely used in the medical industry, this was an ideal fit for us,” he pointed out. He also mentioned that rubber waste contains many biochemicals, and studies are underway to explore the extraction of proteins from it.

“Every tonne of natural rubber produced releases 2.5 tonnes of oxygen into the atmosphere and captures 3.5 tonnes of carbon dioxide. No other tree in the world captures this much carbon, not even those in forests,” said Santhosh Kumar, highlighting the added environmental appeal it could bring as a replacement for synthetic rubber, which is widely used by the global drug industry.

Though the current growth is encouraging, industrialists say it is far from what the state can truly achieve. They believe the state and central governments can boost the sector by setting up testing facilities, facilitating industry-academia interactions, and streamlining regulatory processes. Similar sentiments were raised during the inaugural Bio Connect organised last year.

“A big requirement in Kerala is testing facilities, as medical devices need to undergo rigorous testing, and it is impossible for companies to purchase their own testing equipment. There are government facilities in other states that offer these services, and we have to rely on them. However, since similar industries in those states also use the same facilities, Kerala manufacturers often have to wait for longer periods,” said Thomas John.

More opportunities

The lack of a robust supply chain is another major challenge for Kerala-based companies. Seventy percent of the components in the medical device sector are made by auxiliary manufacturers, and this remains an underexplored area for local producers.

“This offers an excellent opportunity for newcomers to enter the sector,” says Pius Varughese.

Moreover, it adds to the burden on device manufacturers, who must spend extra time sourcing components. Even PCBs, which are used in many devices, have to be obtained from other states or foreign countries.

“When I am making a hematology system, I cannot focus on making the cover or the semiconductor needed for it. There should be a cluster where the device manufacturer can dedicate time and resources to the product, rather than worrying about component manufacture,” says Thomas John.

California Model

If anyone needed a picture of how a medical device cluster works, it was provided by Dr Usha Thekkedeth, a programme director with the UCSF-Stanford Pediatric Device Consortium. The consortium is one of the few programmes funded by the FDA, the regulatory authority in the US.

“Institutions like the University of California and Stanford are joined in this consortium by leaders in clinical care, students as well as technology and industry experts. The programme supports innovators in the paediatric device sector by providing seed funding, mentoring, and connections to various resources and investors in California,” she explained.

The consortium hosts a weekly innovators' forum, where individuals seeking support or feedback can present their ideas. Attendees include clinicians, engineers, business leaders, and regulatory experts, all under confidentiality agreements.

“This allows them to openly discuss their innovations, receive feedback, or get support to find the necessary resources for prototype development, which could also lead to access to a manufacturing facility,” she added.

While this may sound like a dream we can only hope for in India, the panel moderator, Padmakumar, Special Officer, KMTC, hit the nail on the head when he explained why this isn't happening in the country.

“The problem in India is that there is hardly any forum where academia, industry, medical practitioners and regulators can interact about their needs. Everyone works in silos and is unaware of what others are doing,” he said.

Usha Thekkedeth says that such efforts cannot happen overnight. “It requires very good planning and can only be achieved in a phased manner. The state has a strong healthcare delivery system, and the physicians here are highly skilled, while patients are both demanding and open to accepting modern technology in healthcare,” she said. “So all favourable factors are there.”

Global Interest

She also revealed that during talks with established global players, like Medtronic, Boston Scientific, and Johnson & Johnson, they were open to the idea of looking at Kerala as a device manufacturing base.

“It's not that they’re going to rush in with plans for a centre here, but they are willing to consider it in the coming years if Kerala is able to develop the necessary ecosystem,” said the California-based doctor.

In the newsletter last February, we summed up the Kerala medtech scene with these words: The soil is fertile, and the seeds are there. All the authorities need to do is figure out how to draw from the pool of expertise and goodwill to build a suitable environment.

That still holds true.

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