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IDGVI News: Media Coverage 2009

Opportunities for healthcare in India
Venture Intelligence PE Pulse Healthcare & Life Sciences

Venture Intelligence Report – July 2009

Introduction

Today across most parts of the globe be it developed countries like the US or in the most populous country China the “older” population is the fastest growing segment. Couple this with the growing pricing pressures from governments and third-party insurers for medical treatments, the medical world hangs on a balance.

In emerging countries like India with 50% of the population not having access to healthcare we are still grappling with the issues of quality of basic healthcare, our ability to distribute it effectively across while still keeping it affordable. Over the next half-century, these trends will drive fundamental changes and the impact the way companies that primarily design and manufacture medical technology equipment and the ones that are into drug development and distribution.

It is no more in the realm of taking an existing technology from the developed markets and repurposes it for the emerging markets. Companies will need to go back to the drawing board to develop newer technologies that are cost effective but at the same time maintain global standards in delivering quality healthcare. This is an opportunity for younger companies in the emerging markets who understand the requirements better to develop technologies to address these issues.

Perfint- Perfect Example:

Cancer is amongst the top reasons for death worldwide and among them Lung Cancer being the number one. Globally reported cases are 11M in ’00 expected to grow to 27M in 2030. Suspected cases that are investigated are usually 50% more. Early stage cancer detection can improve one’s chances of survival by about 70%- 80%. IDG Ventures India invested in Perfint based in Chennai started by a team of Ex GE professionals. The founding team of Perfint had spent considerable part of their career in building healthcare products at GE.

Their first product PIGA-CT, a tool positioner that can help a regular radiologist do interventional procedures which were hitherto not possible (lesions of less than 20mm) because of lack of guidance tools. This will be of tremendous help in a country where there is a definite shortage of expert radiologists. Given that tool helps in intelligent planning it results in no repeat passes which means less pain, less radiation & less post-procedure complications. It also reduces time of procedure improving clinical productivity and lesser risk of pneumothorax.

The fact that the team has been able to design and develop a diagnostic platform, taking it through clinical trials to installations at hospitals in under $5M is a testimony to the innovation in product development and manufacturing. With customers across the country today including prestigious names like the AIIMS, Jaslok, etc PIGA is well positioned to take a leadership position in this space. The platform that the company has been built to address early stage cancer procedures and other Minimally Invasive and guided procedures like drug delivery, pedicle screw, radiation etc, which are estimated to grow from under 10% of total procedures done to about 60% by ’10.

Opportunities – Our View:

At IDG Ventures we are focused on the healthcare domain. Our focus has been to look for companies that have some disruptive technology that can change the way healthcare is delivered. Another important criterion for us is that the company must address the Indian market and have the potential to dominate this market.

Apart from medical devices space we are also exploring opportunities in the lost cost hospital network that can address the rural requirements. According to recent estimates, there are only 4.48 hospitals, 6.16 dispensaries and 308 beds for every 100,000 of India ’s urban population. In rural areas, the situation is worse, with 0.77 hospitals, 1.37 dispensaries, 3.2 Public Health Centres and just 44 beds for every 100,000 people. There is an opportunity here a few people are beginning to address.

Very little R&D happens in India with respect to new drug development. But given the huge patient population that India has and the more number of trials that are required by FDA, this is an opportunity for CRO’s to capitalize. Growing from the traditional BA/BE studies to conducting Phase II,III trials will be the new growth areas for CRO’s. Some of the blockbuster drugs going off patent soon and with the regulators working on the proposal of allowing Phase I trials in India for global drug firms the prospects for this industry looks brighter.

Of the many challenges the critical one has been the lack of talent which can build medical devices that meet global standards. But it is encouraging to see teams from majors like GE , Phillips who have been here for a long time now, having the necessary expertise starting companies to address emerging markets.

Bottomline:

Today we have the global healthcare device makers like GE, Siemens and Phillips looking eastwards to fuel growth. Phillips has already made a few acquisitions in Alpha X ray and Medtronics.

Building a medical devices company from India takes lot of time, involves high risk and definitely requires more capital. If we can build a company addressing the emerging market requirements and meeting the global standards we not only expect to make good returns but can also make a difference socially.

Ranjith Menon:
Mr. Ranjith Menon, is a Senior Investment Advisor at IDG Ventures India, a US$150 Million early-stage technology venture capital fund backed by IDG, the world’s largest IT-focused media company. He currently serves on the Board of Directors at Perfint and is a Board Observer at ConnectM and Myntra.

He can be reached at ranjith_menon@idgvcindia.com

IDG Ventures India

Formed in September 2006, IDG Ventures India manages a US$150 Million venture capital fund focused on helping entrepreneurs grow innovative companies on a global basis.

IDG Ventures India focuses on early-stage investments in technology and technology- enabled companies. We typically invest between US$0.5 Million to US$5 Million in early-stage companies and opportunistically up to US$10 Million in compelling growth-stage companies. These companies will cover a wide range of sectors such as outsourced services, design engineering, electronics and hi-tech manufacturing, consumer internet and digital media, software products, semiconductors, telecom infrastructure, consumer mobile services, retail financial services, healthcare and other emerging technology-enabled sectors.