In-vitro diagnostics market and the clinical laboratory market have almost parallel growth path. Both these sectors have seen phenomenal growth in the past decade. However, while many entrepreneurs have invested in diagnostic laboratories converting them into profitable business spread across India IVD manufacturing has not seen similar enthusiasm. Only a handful of Indian manufactures dot the scene flooded by large foreign companies. However, there seems to be a ray of hope as few companies leading the path to success are inspiring confidence among newcomers.
The market
The IVD market in India has seen double digit growth in the past few years. The Indian IVD market is pegged at $500 million, and is expected to surpass $1.5 billion by 2018 growing steady at a CAGR of 20 per cent according to a recent research report by MarketReportsOnline.com.
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“IVD manufacturing in India is generally in areas of labour-intensive products such as rapid tests and low-technology.”However, Carl McEvoy, Partner, McEvoy & Farmer LLC , USA who specialises in market research for in-vitro diagnostics in emerging markets of Asia and Latin America, paints a different picture. “We estimate the market to be $760 million in 2014,” he says, providing evidence of the tremendous opportunity in India.
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“Indigenisation always leads to technology being made affordable. This assumes great significance in the Indian context.”The IVD market consists of both equipment and reagents for different segments such as immunochemistry, biochemistry, haematology, microbiology, blood gas and electrolyte, molecular diagnostics, urinalysis and coagulation analysis. “Of all the segments biochemistry occupies the largest share of the market,” says Suresh Chandrasekaran, General Manager – Marketing & Planning, CPC Diagnostics, Bangalore.
Growth drivers
Increasing investment in the healthcare sector is responsible for the growth of this market. Patient awareness and government impetus have both put IVD on an accelerated growth path. According to Transasia Bio-Medicals, the increase in the diagnosis of chronic lifestyle and genetic diseases, aging population, and rising acceptance of personalised medicine drive the in-vitro diagnostic market growth. Fast-paced economy, public screening initiatives, and increase in the investment in healthcare infrastructures are the other major factors that contribute to the market growth. Transasia Bio-Medicals also explains that the Government is also supporting new initiatives for promoting the growth of the Indian IVD segment. Public-Private Partnerships (PPP) prevail in Tamil Nadu and parts of West Bengal (especially for radiology), now the Government is encouraging the same in other states as well in order to pass on the benefit to the citizens. Moreover, the Government has encouraged Foreign Direct Investment (FDI) as well as indigenous research thereby promoting the sector. There has been a rise in the number of players entering the sector and offering quality products and after sales services.
Competitive landscape
Of the total IVD market in India, top 10 slots are occupied by global IVD companies with only one Indian company featuring among them.
The Indian IVD market is majorly dependent on global IVD companies. Global majors like Roche Diagnostics, Abbott, J&J, Siemens Healthcare Diagnostics and Beckman Coulter enjoy larger consumer base and mindshare in India. Companies from China and Japan have also started vying for a share of the pie with as many as five such companies opening its Indian subsidiary office in past few years. Mindray Medical and Sysmex are making its presence felt in India.
Notable Indian companies like Transasia Bio-Medicals, Lilac Medicare , Agappe Diagnostics, CPC Diagnostics, Bhat-Biotech are also emerging as preferred partners for clinical laboratories.In terms of market share global companies rule 3/4th of the market in India. “Of the total IVD market in India, global IVD companies enjoy almost 75 per cent share, whereas local players have 25 per cent share,” informs Chandrasekaran.
The total number of laboratories in India is not known, however, some experts estimated that India has more than 30,000 active clinical laboratories. Of these a very small number five per cent have achieved total automation, whereas 38 per cent have semi-automation and a large proportion 57 per cent still use manual methods.
Indian manufacturers turning a new leaf
Traditionally, Indian manufacturers have not ventured into high-tech products but with local companies taking a lead this trend is changing. “IVD manufacturing in India is generally in areas of labour-intensive products such as rapid tests and low-technology items like packaging chemistry reagents,” says McEvoy. Chandrasekaran elaborates saying, “The earliest phase of manufacturing involved replication of technology of what was available in the western countries. Over a period of time, with the advent of sophistication in man power, availability of required raw materials and implementation of Good Manufacturing Practices, organisations have been able to venture into manufacture of high technology products.”
“Many organisations have been able to sail into an odyssey into unchartered waters, like how CPC has been able to successfully launch the indigenous haematology analyser for the first time in India,” he adds.
“Transasia is a notable exceptions with its partnership with Sysmex and their new group of international companies they have acquired over the past few years. The Tulip group with their new small molecular system is also an exception,” informs McEvoy.
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“Indian manufacturers do not have the technology and the segment is highly capital intensive.”Reiterate his thoughts, Dr Shama Bhat, Chairman and MD, Bhat-Biotech India says, “Indian manufacturers do not have the technology and the segment is highly capital intensive. Now the trend is changing and companies like Transasia and several other companies like Bhat-Biotech have started making many instruments.”
Indian advantage
Cost-effectiveness provides an edge to indegeneous products as the market in tire-II and tier-III are more sensitive to cost. Transasia Bio-Medicals says that Indian IVD products are recognised for their quality. The latest technology is used for the development of the products. Indians enjoy the reputation of developing and offering advanced softwares and IT solutions. And so, we have an edge over others,as most of the analysers are technologically advanced, incorporating the latest softwares. Moreover, the Indian IVD products are also recognised for their cost effectiveness.
Challenges
The low number of Indian players in this market definitely point towards the hardships faced by the Indian manufacturers. From technological knowhow to precision engineering and poor regulatory and tax focus have all impeded the growth of Indian manufacturers in this industry.
“India’s manufacturing is dramatically held back by poor infrastructure and a tax system that makes moving parts and final products between states time consuming and expensive,” explains McEvoy. “Credibility and ability to market our products are the main challenges. Even though the IT industry was able to overcome this stigma, we are still lagging behind in this respect,” says Dr Bhat.
Explaining further Chandrasekaran says, “While India has made significant strides in the field of heavy engineering and automobiles in the past couple of decades, progress of indigenisation has been minimal in the field of medical electronics. One of the major reasons could be attributed to the scarcity of precision engineering components which are critical to the making of IVD instruments.”
“Indigenisation always leads to technology being made affordable. This assumes great significance in the Indian context where a vast majority of the population does not have access to affordable healthcare. Expanding healthcare infrastructure being the topmost priority for government today, there should be incentives to organisations engaged in indigenisation which ultimately should motivate more companies to look at this as a lucrative option,” he adds.
In addition, consumers expect more from their vendors today in terms of better features and prompt after-sales service. For example an on-board laundry facility is a much desired facility for all biochemistry analysers as well as the presence of a refrigeration system, to ensures the storage of reagents in the analyzers overnight.
In-build quality control feature is also much sought after. While all customers need efficient after-sale services and reduced down time; not all companies have the manpower or reach to deliver this.
While product registration and certification is fairly easy in India, to operate in international markets Indian products have to pass through stringent international regulatory processes. This needs to be incorporated in the DNA of the product development process.
Finding new buyers
Indian manufacturers have gained ground on foreign shores with many exporting their products. “I believe the local companies are very aware of the world market and its opportunities,” says McEvoy. Indian IVD products receive a welcoming response from European, Asia Pacific, Russian and the Latin American markets opines Transasia Bio-Medicals.
“Products manufactured in India have started gaining acceptance in the Middle East, South East Asia, Eastern Europe and African countries. Once we are able to prove that the products score equally on quality as much as the already available products, the products manufactured in India will have a greater acceptance in the global market,” explains Chandrasekaran.
Market in India is far from saturation. IVD driven by informed consumers is unlikely to see a downswing. What is required is for the Indian manufacturers to rise to the situation and claim the market. Is it possible? Yes. However, only time can tell how this story will unfold.
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