Earlier this month, Niti Aayog, the Indian government’s think tank, held a high-level meeting, with the secretaries of all stakeholder ministries—including the Ministry of Health—present. The agenda was simple. Boost the local manufacturing of medical devices—currently a $10 billion market.
India’s medical devices market is the fourth largest in Asia—after Japan, China and South Korea—and is projected to grow to $50 billion by 2025, as per industry estimates. However, while there are over 6,000 types of medical devices available worldwide, barely one-sixth of them are made in India.
You see, in India, imports rule. About 80-90% of the medical electronics/equipment in the country are imported, according to the industry body Association of Indian Medical Industry (AiMED).
So import-dependent is the sector that AiMED submitted a seven-point agenda to the Pharmaceuticals Secretary this month in a bid to ‘revive’ it. Among other points, AiMED suggested increasing the import duty to incentivise domestic manufacturing.
One would think this pro-indigenous manufacturing move would be celebrated by the likes of Vishwaprasad Alva, founder of Indian medical device company Skanray Technologies Pvt Ltd. After all, Skanray launched commercially in 2011 with the aim of manufacturing devices such as X-ray machines, ventilators and patient monitors from the ground up in India. Years before “Make In India” became fashionable.
But now, eight years later, the Mysuru-based company is yet to fulfil its potential. The rampant imports have hamstrung Skanray, and Alwa does not mince words when asked about the AiMED’s push for local manufacturing. “I can’t sit with these so-called Indian manufacturers with outdated technology and push outdated tech into the market. But I also don’t want to be seen as somebody who is hostile to Make in India. So it’s a very tricky situation,” he says.
Skanray’s financials over the years do not make for pretty reading. It has been profitable in only two years, and its revenue growth has been erratic—spiking only when Skanray made acquisitions.
The biggest jump came in the year ended March 2014, shortly after the company made multiple acquisitions, most notably that of engineering company Larsen & Toubro’s (L&T) medical technology business in the end of 2012. Skanray’s revenue surged to Rs 115 crore ($16 million) in the year ended March 2014 from a meagre Rs 0.49 crore ($68,200) three years prior. It was a statement of intent. Skanray had acquired a business with Rs 145 crore ($20 million) in revenue—20X its own turnover. “But in terms of valuation, we were 1.5 times higher,” Alva says, looking back.
