30 Minute Interview

'By 2012, the Indian Medical Devices and Diagnostic Market is Estimated to Reach 139 Billion'

With Arkray Piramal Medical Private Limited, NPIL and Kyoto, Japan based Arkray, Inc entered into a 49:51 JV to market diagnostic products, mainly SMBG (Self Monitoring Blood Glucose System) in the Indian market on December 9, 2007. The blood glucose system market in India is estimated to be more than Rs 1 billion in size and is estimated to be growing around 20 per cent p.a. Arkray, Inc is a market leader in the self-monitoring blood glucose market in Japan with a dominant market share. Its products are also distributed in over 80 countries around the world. Hidehiro Itokawa, Chairman and CFO, Arkay Piramal Medical Private Limited speaks to Sonal Shukla about the company's offerings and expansion plans for India. Excerpts:

Hidehiro Itokawa Chairman and CFO, Arkay Piramal Medical Private Limited

What growth potential do you foresee for Arkay in the evolving diagnostic market in India with products like Glucocard 01?

The Indian market has great potential for companies like Arkray and diagnostic products like the Glucocard 01. Glucocard 01 ensures a virtually pain-free testing experience for the diabetic patient. Glucocard 01 uses a unique combination of a Ruthenium-based mediator and thin film, carbon-coated electrodes, which makes the testing strips (all glucometers require disposable testing strips) free from temperature and humidity interference, thus ensuring accurate and precise results. In addition, the new glucometer provides automatic calibration (minimising chances of manual errors) and a temperature compensation mechanism (using an in-built thermistor). As the blood sample required for testing is minimal (0.3 microlitres) for Glucocard 01, this ensures a virtually error-free and pain-free testing experience for the patient.

By 2012, the Indian medical devices and diagnostics market is estimated to reach Rs 139 billion. India is also fast emerging as the diagnostic capital of the world, currently there are about 40.9 million Indians suffering from diabetes. Arkray Inc is a global leader in medical diagnostic products and over the years has developed a very broad array of medical diagnostic analysers, devices and services. As the Indian market matures, Arkray will look at expansion to further tap into the market in India.

How do you plan to penetrate and increase your share in the Indian diagnostic market which is already flooded with many small and few big diagnostic labs?

We have managed to penetrate the market exceptionally well, within three months of our launch we have captured six per cent of the market share. The superior technology, close to laboratory results and competent pricing has helped us to achieve this stand. A similar strategy will help us going forward. Diabetes care is the prime focus of the company at the moment.

Why is the concept of Self Monitoring Blood Sugar (SMBG) still not well-known in India as compared to the West?

It is a fact that the concept of Self Monitoring Blood Sugar (SMBG) is still not well-known in India as compared to the West. In India a meagre 0.3 per cent of diabetics use SMBG as opposed to almost 22 per cent in developed countries. Lack of awareness regarding complication of diabetes and benefits of regular monitoring are key factors for this.

What is the rationale behind entering into a joint venture with NPIL? How will this JV help towards attaining your vision? What will be both the parties' respective involvement in this JV?

Nicholas Piramal India Limited (NPIL) is India's second largest pharmaceutical healthcare company. It has a strong presence in the anti-diabetics segments through their medicines for diabetes care. Arkray would like to leverage the strengths of NPIL in this segment. Under the agreement, NPIL will transfer all its existing blood glucose monitoring business into the JV for a consideration of Rs 40 million. The JV will market these products and will also launch other blood

glucose-monitoring systems of Arkray Inc including new product in India. Highly advanced glucose self-monitoring device was our first launch together in April 2008. In the coming future the company plans to bring all the latest technology blood glucose monitoring products launched by Arkray to India.

Looking at the mounting presence of life style/chronic diseases in Indian populous, is there any other diagnostic product in the pipeline for India?

Currently, we are looking at strengthening our position in the SMBG space. However, since the Indian diagnostic market is still maturing, we will observe it closely and depending on how it picks Sup we will launch new products.

Please elaborate on the world-wide scenario of Self-monitoring devices market? What is your market share in this segment?

The increasing prevalence of diabetes, hypertension, respiratory diseases and obesity is driving exceptional growth in some consumer home-use medical device markets. As per forecasts this industry will reach over $5 billion by 2011. Since we have global presence it will be difficult to put a figure, however we are amongst the leaders in this space.

Which are the other countries apart from India, for which you have expansion plans? Why?

All markets offer different kinds of opportunities and our expansion plans depend on the prevailing conditions in each local market and is tackled accordingly.

What are the challenges in penetrating the Indian market?

There are several challenges when it comes to operating outside the home market but our joint venture with NPIL eased those out for us. Initial challenges are primarily the lack of awareness amongst consumers about diabetes and the importance of monitoring.

What is the kind of investment that you are looking for in the Indian market?

We aim to be a Rs 100 crore company in the coming five years, so our investments will be in tandem with out growth plans

How different are the demands of the Indian market as compared to other countries with respect to your products?

The basic need of every diabetic from a meter, wherever he may be, is to get accurate readings. The challenge is to provide accurate readings in an environment like India where weather can really fluctuate from a max of 450C to as low as 20C. To tackle this we have put an in-built thermistor (a temperature probe) in every Glucocard 01 which checks the environment temperature every time a test is performed and gives a temperature corrected reading.

How would you market your brand in India which is still not very well versed with the concept of SMBG?

Since unawareness or lack of education is the main hindrance when it comes to SMBG in India, we will be adopting the education route to tackle this challenge.

What is the company's overall expansion plans? Any new merger/cquisition in the pipeline?

Currently our priority is to make this JV in India a grand success.

sonal.shukla@expressindia.com