By Gunjan Bagla, Amritt, Inc.
For decades, much of the innovation among American and European medical device companies has been driven by the hope of getting approved for reimbursement by Medicare, Medicaid, or other third-party payers. But now, there is strong pressure to control costs from these payers, as well as pressure created by large employers’ new healthcare initiatives — most notably, the radical new joint venture by Amazon, Berkshire Hathaway and JPMorgan Chase. At the same time, globally aware CEOs — such as Medtronic’s Omar Ishrak and Baxter’s Jose Almeida — are looking beyond rich country patients for long-term growth.
How to Win Everywhere
The concept of using India (or other countries) as a test bed to expand into new markets is not new, as evidenced by NY Times best-seller Reverse Innovation: Create Far from Home, Win Everywhere — whose ideas have been praised by Ishrak — and Conquering the Chaos: Win in India, Win Everywhere, which also touts a disruptive pathway. While we use India as the primary test case in this article, the concepts discussed are equally applicable to learning from any emerging market, including China, Indonesia, Eastern Europe, Latin America, and member states of the Association of Southeast Asian Nations (ASEAN).
American medical device companies are dominant, by revenue, in India’s growing market. Their legacy approach to enter and expand in India or other such countries — address the higher socio-economic segments of society via top private hospitals and high-end physicians in major cities — has worked well for decades. Some companies also introduce older technologies into emerging markets, but at prices that consider American overhead costs.
Exceptions exist, such as GE Medical’s low-cost ultrasound machine and the disposables manufactured by Becton Dickinson (BD), but most benefits of American innovation in medical technology have impacted the richest five or ten percent of residents in emerging countries. Billions of patients, and the doctors who serve them, have unmet needs that have been overlooked.
This article highlights a pair of startups attempting to bring innovation these large, under-served populations, and analyzes the effectiveness of their approach.
Accessible Breast Cancer Screening For Millions
In developed countries, most women over the age of 40 receive periodic mammograms to detect breast cancer. Yet, less than four percent of women in developing countries undergo any screening — at all, ever — for this potentially deadly disease.
POC Medical Systems of Livermore, Calif., has invented a sub-$2,000 device that can screen for breast cancer in less than 15 minutes, at a cost of less than $10 per test. CEO Sanjeev Saxena explains that the MammoAlert device is a multiplexed, microfluidics-based, immunoassay test that leverages big data to address a market that has been underserved by the major players. The company expects to perform millions of breast cancer screenings in western India over the next two years.
The MammoAlert test runs on POC Medical Systems’ Pandora CDx, a microfluidic platform for point-of-care screening based on a very low-cost disposable microfluidic disk. The platform replaces laboratory ELISA-based screening technology with a simultaneous molecular test for the presence of up to 48 serum markers. At just eight pounds, the device is portable, can run on batteries, stores data up to several months before needing to upload to the cloud (via an app that runs on a tablet or a cell phone), and requires minimal field training. While the disks need to be refrigerated at 4°C, the device itself can survive the rigors of rough roads, remote clinics, and unreliable electric power that are commonplace in emerging markets across the globe.
The effectiveness POC Medical Systems’ approach is further reinforced by the Indian government’s embracing its device: “…a woman succumbs to breast cancer every seven minutes in this country. With this innovation, we can aspire to save so many precious lives. This technology makes cancer screening within the reach of common man across geographies, which already is a big goal for the Government,” stated Hon. Dr Deepak Sawant, health minister for the state of Maharashtra, when the device was unveiled last year.
Slashing Patient Monitor Costs By 85 percent
Los Angeles-based Stasis Labs recently won business from a major hospital chain in India for its vital signs patient monitoring system. The Stasis Monitoring System alerts nurses to deteriorating patients and allows for clinical intervention before a critical event happens. Indian hospitals simply pay for usage of the Stasis Devices. Installation and maintenance are handled by Stasis, so customers are not tied into capital or lease commitments — unlike competing legacy products from GE Healthcare, Philips, and Welch-Allyn.
The system includes a custom hardware monitor, a tablet bedside interface, a remote monitoring app, and artificial intelligence software for identifying at-risk patients. It tracks heart rate, 3-lead EKG, respiratory rate, non-invasive blood pressure, peripheral capillary oxygen saturation (SPO2), and skin temperature. Costs were slashed by converting many functions from hardware to software, and by utilizing off-the-shelf electronic chips (such as a Cortex ARM processor, also used in billions of mobile phones).
The monitor shows patients and family members the doctor's interpretation of the patient’s status, and the tablet bedside interface allows for monitor configuration. Information gleaned by the system also is available on the Stasis App, allowing clinical staff to remotely monitor patients. Stasis can monitor 100 beds at an Indian hospital for just $6 per bed, per day, and the hospital pays only for the days the monitor is used.
“We built something incredibly simple and it doesn't require any resources from our customers except for an outlet for power. If the location has intermittent electric power, there is battery backup. Humidity, dust and so on, it's also protected from that. Intermittent cellular and Wi-Fi connection, that's ok. It still works,” said Stasis President Michael Maylahn. “Designing with these in mind were critical for the Indian market. We also built it with enough robustness and scalability that it can meet more intense customer demands that can work in a small town in India, or a bustling Indian metro.”
Dr. Manish Mattoo, Zonal Director of Fortis Hospitals Bangalore, said the Stasis system “helps round-the-clock care and treatment to the patients with extra precision,” as well as “reduce costs, as several patients can now be closely monitored outside ICU settings without compromising on care and supervision.”
Join Them — Or Get Ready To Fight Them
Upstarts like POC Medical and Stasis are not burdened with high-cost sales forces and distributor models. Their products leverage technology and software that benefit from prior or current use in high volumes of consumer electronics. Their devices are built to provide rich patient data that can be used to derive better outcomes for patients, providers, and researchers. While these and similar companies are proving the worth of their approach in resource-constrained economies, it is much easier for them add features and costs — and to enter Western markets in the future — than it is for the legacy players to reduce costs and adjust features to dominate emerging markets.
Just as smartphones and their apps have transformed the computer industry landscape, the new breed of medical device companies holds promise for the entire world. Large and established medtech companies, therefore, need to pay close attention to such competitors, and to carefully consider partnerships, acquisitions, and their own product strategies in the context of this market approach.
About The Author
Gunjan Bagla is managing director of Amritt Inc., a California-based consulting firm focused on helping American companies to succeed in India. His clients include Covidien (now Medtronic), Roche Diagnostics, BD, Lifenet Health, Johnson & Johnson, Gojo, and many more. For his India expertise, he has appeared in The New York Times, the Los Angeles Times, and the Washington Post, as well as on Bloomberg TV, BBC Television, and Fox Business News. He also writes about India for the Harvard Business Review. Gunjan has an MBA from Southern Illinois University and a mechanical engineering degree from the Indian Institute of Technology (IIT) Kanpur in India.