Medtech in India – the sad reality

The AACC (American Association of Clinical Chemistry) conference, now rechristened ADLM (Association for Diagnostics and Laboratory Management) is the largest conference and trade show in North America for laboratory medicine. SigTuple has been attending this conference since 2022, with a stall at the medical lab expo showcasing our products. The 2023 edition of this conference concluded last week.

The medical lab expo is a stage for the who’s who of medical technology to show off their current and upcoming products. All global med tech majors in the laboratory medicine space – Sysmex, Beckman Coulter, Siemens, Roche, Abbott to name just a few – compete to outshine one another. The show also hosts a huge number of smaller companies from all over the world – reagent and device manufacturers, engineering services companies specialising in medical equipment, design firms and contract manufacturers for point-of-care microfluidics technology, and so on.

In the two editions of this conference that I have attended, I have noticed something which has been a source of immense pain and concern for me. The participation of Indian companies in this world stage is abysmally low. In both editions, I have seen fewer than five companies of Indian origin putting up a stall. In an expo with thousands of stalls filling up 4 immense halls, having only a handful of companies that can be termed Indian doesn’t speak highly about the state of med tech in India. Aren’t we known as a tech powerhouse the world over? The diagnostic equipment and reagents industry rakes in well in excess of $100B per year. Why is India’s contribution to manufacturing or innovation in this industry so low?

Contrast this with the participation from other countries which are known for their tech prowess. A small country like Israel has a significant presence, including 3 companies which I consider to be worthy competitors of SigTuple . Same goes with South Korea. Chinese companies are literally everywhere. Two of the largest players in the laboratory tech space are Japanese, including the undisputed market leader in haematology.

While India has produced many unicorns in the consumer tech space, its contribution to the deep tech space remains far behind. True med tech (not just consumer facing e-pharmacies or doctor appointment apps) falls in the deep tech category, and is languishing. Many causes can be attributed to this. However, I think the one of the biggest factors which is hampering growth in this segment is the lack of venture investments.

Venture capital inflow into consumer tech in India was also low at some point of time. But fortunately, we saw a few runaway successes in this field, starting with the likes of Flipkart and InMobi. This fuelled investments into this area and led to a virtuous cycle. Enthusiasm has definitely tempered in the recent past, with a few high profile failures, but overall this space continues to see growth. One of the reasons for investor interest in this space is the ability to scale quickly. Unit economics continue to bleed for many of our unicorns, but they are able to grow the top line fast.

Deep tech, on the other hand, is fundamentally different. There’s a long gestation period. Developing and perfecting the technology itself takes a considerable amount of time. Revenue growth doesn’t start from day one. But when it starts, the unit economics are typically positive, and the growth curve is usually hockey stick. The limiting factor is the gestation period. Is there enough patient capital in India ready to wait through this period and support the company? If we look at the US, for instance, there is a huge number of VC firms specifically focused on deep tech. But in India, even the healthcare focused funds usually invest into cash flow businesses only. The investor community evaluates a deep tech startup through the lens of consumer tech. During the gestation period or the early commercialisation stage, valuation and investments cannot be based on revenue multiples.

A few runaway successes, as in the consumer space, will change investor outlook. Fortunately, we have seen signs of this happening lately, with a large PE deal into a prominent point-of-care device company from India. However, till the time it happens more regularly, the space will be caught in this vicious cycle – lack of investment, causing limited success, which in turn limits the amount of investment.

We at SigTuple have been fortunate to have very supportive investors right from the beginning. But many others, probably with ideas as good as ours, haven’t been as lucky. Until this changes, we will be destined to have only a handful of Indian firms rubbing shoulders with the top med tech companies from all over the world in global forums. For a country representing roughly one sixth of humanity, this is sad.