Making India’s diagnostics click into place

While the stressed-out services end of India’s diagnostics sector is always in the public eye, the manufacturing backend remains mostly hidden. But this changed during the COVID-19 pandemic. A review of how India’s diagnostic manufacturers, spurred by the Make in India ethos, coped with fractured supply chains, fluctuating prices of key components, and unpredictable market demands to emerge more committed to R&D, technology, and a vision that India can transform into the ‘Medical Devices Factory for the World’

By Viveka Roychowdhury

While diagnostic service providers like Thyrocare Technologies, SRL Diagnostics, Metropolis Healthcare, and Suburban Diagnostics as well as scores of smaller regional path labs stretched to keep pace with waves of infection, fluctuating prices as well as high infection rates among their own frontline staff, the suppliers of diagnostics equipment and manufacturing back end was facing its own battles.

As Jatin Mahajan, MD, J Mitra & Co reminds us, 70 per cent of medical decisions and treatments are dependent on various diagnostics tests, and the SARS-CoV2 virus which gave rise to the COVID- 19 pandemic, has brought the backend diagnostics industry right to the forefront of the healthcare industry. His Mumbai-based company has been making in vitro diagnostics (IVD) kits since 1969.

Perhaps for the first time, India realised just how dependent we were on imports. Many essential lifesaving diagnostic test kits, key reagents and kit components were imported and hence disruptions in cargo and passenger flights, as countries went into lockdown mode, proved disastrous.

Key players in the global IVD market who have a leading presence in India include Abbott Diagnostics, Roche Diagnostics, Siemens Healthineers, Danaher Corporation, Bio-Rad Laboratories, Illumina, Thermo Fisher Scientific, etc. But the pandemic was a coming of age for many local manufacturers, who started out and continue to be importers for global IVD players as well as manufacturers. This is their story.

For Mumbai-based Suresh Vazirani, Founder Chairman, Transasia-Erba International Group of Companies the current spotlight on the diagnostics sector is vindication of his decision to turn entrepreneur in 1979, when he decided to fill the gaps in India’s IVD sector. As he puts it, “Until two years ago, who would have ever thought that specialised molecular tests like RT-PCR would become a household name and over 2500 labs in India would be doing these tests? This is what the pandemic has done to the diagnostic sector in India.”

But he rues the fact that before the pandemic, even though everyone acknowledged the crucial role played by diagnostics for prevention and early diagnosis of all types of diseases, the per capita spend on diagnosis in India remained one of the lowest in the world.

“It is unfortunate that the decision-makers in India forget the ancient wisdom of ‘prevention is better than cure.’ In fact, it is not only better but also much cheaper than cure. Prevention and early diagnosis can help India save billions of rupees spent every year on the treatment of chronic diseases. Hence, it is extremely important for every developing country like India to ensure that every adult gets basic diagnostic tests done, at least once a year.”

Diagnostic test manufacturers and the whole ecosystem that supplies materials, reagents, etc to them, within India as well as globally, kept pace with the increased demand for testing and had to do a lot of heavy lifting through the COVID-19 pandemic. Today, major domestic players, in step with their global peers and collaborators, are putting in place the building blocks for the next normal.

Structural shifts

Across the country, the narrative remains the same. Two decades after he established Kerala-based Agappe Diagnostics, MD Thomas John narrates how a total break- down in supply chains disrupted the productivity of essential testing in this pandemic era. High COVID- positivity in Kerala meant that critical departments and their functions were considerably affected.

Supply of sheet metal, plastic parts etc was affected due to supply chain disturbances due to COVID related downtime and price hike. He recalls how no proper supply schedule was maintained by any supplier, whether it was from the home state, other states or abroad. He is hopeful that once vaccination is complete and the spread of the disease controlled, productivity will increase by at least 20 per cent.

Thomas believes that the increased demand for in vitro diagnostics forced structural shifts that will have long-term implications for diagnostic manufacturers in India. Those companies concentrating on COVID-19 prognosis will have to expand the infrastructure since the impact of COVID-19 is generally expected to sustain for another two to three years, is his prognosis.

Mahajan highlights that on the local manufacturing front, most organisations have ramped up their technologies and production aspects, to cater to the growth in demand for all aspects of corona-related tests, including secondary tests that are carried out when a person tests positive, e.g. bio-marker tests like D-dimer, Ferritin, CRP etc.

Rajesh Patel, CEO-IVD India, Trivitron Healthcare, a Chennai-based med-tech conglomerate set up in 1997, recalls, “The diagnostic industry started observing the shortfalls and took necessary steps to streamline the process of diagnosis and is continuously playing an active role to develop and improve testing procedures.”

For example, he points out that at the start of this pandemic, COVID infection was diagnosed using basic testing solutions but now a variety of molecular assays and immunoassays are in use to detect COVID-19, which provide faster and accurate results. As a majority of healthcare manufacturers converged their resources to develop COVID-focused products, newer and more advanced kits made inroads into the market, giving an impetus to R&D within the field of IVD, analyses Patel.

Dr Veeraal Gandhi, Chairman & MD, Voxtur Bio, a Mumbai-based IVD player incorporated in December 2012, adds that high-precision diagnostics and shorter turn- around time have become priority focus areas for companies as they leverage technology to develop high-end diagnostics tools and products. For example, Dr Gandhi says that Voxtur Bio, with a state-of-the-art in- house R&D lab approved by the Department of Scientific and Industrial Research (DSIR), was the first company in India to receive a manufacturing licence for developing antibody-immunoglobulin M (IgM) and immunoglobulin G (IgG) – based rapid test kits.

This came after the company had already manufactured and launched ELISA (enzyme-linked immunosorbent assay) test and VTM last year in the market for enhancing the accuracy of COVID-19 testing. Dr Gandhi informs that the company has plans to expand its product portfolio with the development and manufacturing of advanced diagnostic tools which will be introduced in the market soon.

Technology milestones

From the perfect storm of the COVID-19 pandemic, arose the realisation that a systems over-haul was long overdue at the user end. Vazirani explains many labs and hospitals today are   considering upgrading their systems to integrate features such as AI, remote access and digitisation of the entire re- porting process. Similarly, there is a greater inclination to- wards switching from semi to fully automated analysers because of their reliability, ease-of-use and speed.

Thomas too highlights the unprecedented technology milestones that India’s diagnostics sector has achieved in the past year. For instance, the pre-ponderance of point-of-care (POC) testing in molecular biology, in response to higher demand for faster on-site screening. He predicts that faster and shorter test duration kits like RT-LAMP (30 minutes for confirmatory results) will gain momentum now. He stressed that the molecular market expands in leaps and bounds and multi- fold investments in that sector is imperative and need of the day.

But he also cautions that market strategies are subjected to frequent and abrupt changes in terms of COVID and non-COVID reagent tools, especially as higher demand is triggered by a sudden surge in infective rate. “There is always an element of uncertainty in the judgment of these categories, in terms of demand and inventory values incurred. Sup- ply chain strategies are also subjected to drastic changes, due to delay in productivity in raw materials and transportation. In import cases, paucity of cargo flights and passenger flights affect our normal supply schedules. Price hikes in steel, plastics affect trade very much,” explains Thomas.

Acknowledging the same challenges, Mahajan mentions that India’s diagnostics manufacturers are looking at countering all the challenges that they had faced during the initial phase of the pandemic – shortage of raw materials, supply chain and logistics, and further automation to counter the threat of manpower short- age and issues. There is a renewed focus on hygiene, quality and safety standards (which are already quite high for the industry) in line with the need for risk mitigation possibly arising due to the possibility of infection.

Future proof strategies

Given that no one can predict with absolute certainty how the coming variants of the SARS-CoV2 virus will impact the human race or the long COVID complications, how are India’s diagnostics manufacturers preparing for their post-pandemic future?

Taking a macro view, Vazirani makes an important point when he says, “We are all hopeful that the pandemic will see the end soon, but on the other side of the tunnel are various other communicable and non-communicable clinical conditions that require immediate attention and need to be brought to centre-stage. The pandemic has shined the spot- light on the fact that control of an infectious disease outbreak demands not just faster but also high volume testing. For example, while immunoassays will continue to be the gold standard for infectious diseases, the surge in COVID cases has expanded the market for molecular testing and rapid test kits.”

Transasia’s post-pandemic playbook consists of reaching out to COVID patients with as comprehensive a suite of COVID testing solutions as possible during the first wave, and more recently during the second wave, donating free BiPAP-ventilator machines and 2000 oxygen concentrators to various COVID-dedicated hospitals all over the country, especially in rural hospitals.

Secondly, with 70 per cent Indians yet to even get their blood tested, Vazirani stresses that the need for affordable, Made in India diagnostic solutions is a given. The company is expanding manufacturing capabilities to provide to rectify this gap.

Other key aspects include adopting digital technologies, technological advancements for enhanced patient care like molecular tests for HIV, TB and cancer, as well as expanding their distributor network and regional penetration to ensure easy access to lab solutions.

For his part, Thomas opines, “Diagnostic players should think of reverting to normal pre-pandemic strategies, once COVID scenario sub- sides. The challenge is to sustain the market with the changing scenario and market vulnerability. Those players who were concentrating on COVID testing tools will find it difficult to manage once the scenario reverses to normalcy. Those who neglect their normal biochemistry market these days will find it suicidal afterwards.”

His company’s focus will be on developing molecular biology platforms at a faster pace than pre-planned. Basic diagnostic tools for post COVID complications shall be emphasised and marketing strategies based on virtual platforms and other media-dependent communications need to be resorted to.

Becoming a Medical Devices Factory for the world

The more established players are now gearing up for bigger battles, having been scarred by shortages during 2020. But the industry has realised that calls for self-sufficiency are not sustainable in the long run.

Alluding to one of Prime Minister Modi’s headline campaigns, Vazirani opines, “AtmaNirbhar   Bharat is a good goal but it’s still at a nascent stage, as even today almost 80 per cent of the medical devices continue to be imported. While it is good to aim for self-reliance at least to the extent of 50 per cent, we cannot become self-reliant unless we also become a global factory for the world and aim to achieve in the next seven years at least 20 per cent share of the global market which today is worth $500 billion.”

Thus he says that the medical device industry looks forward to crucial government support that is needed to help this industry grow and become a Medical Devices Factory for the world.

In the same vein, Thomas too stresses that technology shall be developed to have in-house production of many imported ones to have self- dependency in pandemic times, alluding perhaps to the non-availability of ventilators, oxygen concentrators in India in the second wave.

Mahajan too emphasised that localisation would be a key focus area, mentioning that as an industry; we will strive towards the creation of more vendors for raw material in India as dependence on foreign supplies has to be reduced.

Another aspect of Mahajan’s post-pandemic strategy is to focus more on the government-industry interface because they realised that their industry is still not well represented during most policy aspects, as they continue to be clubbed under pharmaceuticals. Also, harking back to the past year, Mahajan felt that foreign players had a better interface with the government while most of the credible work was being done by the domestic players.

At a corporate level, Mahajan is planning a focus on the international markets for driving revenues and growth, as the healthcare industry and market sentiments are likely to gain momentum in other countries well before India (on account of our sheer population and thus the time needed for sizeable management of the pandemic concerns).

How government could help

Vazirani comments that the Government of India is beginning to recognise the importance of diagnostics in preventing and treatment of diseases, pointing to the allocation of Rs 64000 crores in the budget for FY 2021-22, with a focus on preventive healthcare. He feels this should aid in boosting local manufacturing of diagnostic equipment and test kits in India.

Thomas opines that government policies on the import of essential lifesaving diagnostic tests shall be more liberal, with fewer GST schedules. Secondly, he believes that the Government should announce a Preferential Purchase Policy with Preferential Pricing, and also take a look at pricing and procurement mechanisms, advocating that indigenous players should have a priority over MNCs, especially in COVID related testing tools.

In the same vein, he proposes that IVD companies that have invested in Make in India need to be recognised better, for their innovations and incremental innovations. Expenditure in R&D incurred by domestic IVD companies should be considered for rewards and more incentives should be extended to research and developmental expenses and new technology developments.

He rues the fact that the government does not promote faster testing protocols and faster kits for COVID confirmatory testing, though such technology is available in the country. He reasons that such technology can save the golden hours in serious patients with breathing difficulties, with cardiac serious complications. He points out that while the RT-LAMP confirmatory COVID test takes only an hour for test results, the current gold standard RT PCR takes more than six hours.

Mahajan flags his concerns on the pricing front, especially for the vast population that is either rural or below the poverty line. He feels that if we have to encourage more people to get themselves tested during possible symptoms, the cost of the test will have to be reduced, and he suggests that this can be done by probably doing away with the GST being levied.

Adding to Thomas’ suggestions for Government’s support, Vazirani lists speeding up the implementation of the Preferential Purchase Policy for locally manufactured medical de- vices, not only for Central Government departments but also for all State Government purchases.

Crucially, he feels that the government should also support R&D by introducing a Development-Linked Incentive (DLI) Scheme to encourage companies who are investing in R&D in India and filing design and project patents in India.

And lastly, he would like the government to introduce export incentives which would help manufacturers take care of the high investments in cost of land, labour, financial and R&D cost and this can then be used to encourage their growth engine and boost up their sales in export markets.

Seismic shifts in marketing strategies

Vazirani flags other aspects of the post-pandemic playbook. “There have been many interesting seismic shifts in the marketing strategies implemented by diagnostic players. COVID-19 has led businesses to recalibrate their messaging and the means to deliver it. Companies have now become flexible with their strategies to approach customers; investments are now routed more for digital campaigns. Although nothing can replace the one-on-one physical interactions, companies are making sure they sustain digital engagement with their customers through webinars, virtual trade shows, etc. Medtech manufacturers have so far relied on marketing a product’s features, however, the focus now is also on the benefits it can provide to clinicians particularly during the pandemic.”

A rising tide lifts all boats and so it is with the IVD sector. Dr Gandhi narrates how the pandemic has led to a change in marketing strategies, with small IVD manufacturers also being the beneficiaries of this change as they have expanded their product portfolios and are being directly approached by distributors, dealers and end-users.

For Voxtur Bio, taking care of employees to ensure that they maintain optimum productivity and do not suffer from depression, burnout and PTSD as well as increasing the headcount of the company will be key focus areas on the human assets side, says Dr Gandhi.

On the business strategy side, the company will be thinking ‘out of the box’ to leverage its research competencies to develop advanced diagnostic tools and products. They will also concentrate on implementing the right manufacturing practices to reduce manufacturing cost and ensure that it is not a hindering factor for the general masses to access most affordable testing solutions. Automation and expanding their pan-India market presence are the other prongs of their post- pandemic game plan.

Trivitron senior leadership has laid a strong, post-pandemic playbook and plans as to how the business will function once the COVID-19 lockdowns are lifted. According to Patel, the first fundamental aspect of the post-pandemic playbook is to take care of employee needs through communication and HR support, followed by ensuring health, safety and security of the workplace. The introduction of new technologies for producing cost-effective medical technology products and services and making their solutions avail- able and affordable across the globe are Trivitron’s business strategic goals.

Heeding the wakeup call

But Patel warns that as India continues to fight against COVID-19, even while the availability of vaccines is a ray of hope for all of us, to completely win this battle it is necessary to make continuous improvements in diagnostic solutions, availability of healthcare infrastructure, vaccines etc.

Many companies speak of the lessons learnt from the COVID- 19 pandemic. It has certainly been a wake-up call across sectors but more so for the diagnostics segment of the healthcare sector. Because diagnosis comes before treatment. This is the sector that will have to be the most alert to detect changes in the direction of this virus as well as read the first warning signs of future pandemics. Let us hope therefore this sector is never again caught sleeping on the watch. And as importantly, may India’s diagnostic manufacturers succeed in making India self-reliant as well as a vital part of the global diagnostics industry.

Agappe DiagnosticsCOVID-19 diagnosticsELISA testingIVD diagnosticsJ Mitra & CoPOC testingRT-LAMPRT-PCRTransasia-Erba International Group of CompaniesTrivitron HealthcareVoxtur BioVTM
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