The move to control prices of stents and knee implants “made us nervous” and “was worrying”, but talks over India-US trade deal “infuse optimism”, the global head of American medical device giant Stryker Corporation told News18.com.
In an exclusive interview with News18.com, Kevin Lobo, one of the lesser-known, India-born CEOs of the global corporation, said “regulatory clarity” is something that global companies expect from India for designing their business plans and Stryker is eagerly waiting for the successful completion of the trade deal.
“Indo-US trade deal is an encouraging move and a step in the right direction,” Lobo said. “It’s been on hold because the deal involves many other sectors, outside of medical devices. But every day, it feels like it’s getting closer and closer,” he said, quickly adding: “I am optimistic that it will happen soon.”
And once that happens, he said, it will give the company more confidence to bring other products to India.
Lobo was on a visit to the recently opened Stryker’s Global Technology Center (SGTC) built in the middle of the Special Economic Zone area of Gurugram.
Ranked among the top 10 medical technology companies across the globe, Stryker offers innovative products and services in medical and surgical, neurotechnology, orthopaedics and spine with global sales of more than $17 billion. In India, Stryker began its commercial operations in 1999.
Sitting on the fifth floor of the SGTC, which houses over 25 state-of-the art products and clinical labs spread across a 45,000 square-foot area, Lobo sounded excited about the concept of trade margin rationalisation.
“If trade margin rationalisation (TMR) gets adopted as part of the new trade deal, it will be very good news for medical device innovation and for bringing great technologies to the Indian market,” said Lobo, who was visiting India after a gap of three years.
“TMR has been agreed upon bilaterally… So the US government and the Indian government have agreed that this is going to be the new way of price control in India.”
Price controls made us “nervous”
Lobo said the challenge (in the Indian market) is price controls that affected product categories such as cardiac stents and knee implants, which led to a fall in the pricing of the latter by around 75%.
He was mentioning the move by the government in 2017 and then in 2018 to introduce price caps to reduce the costs of stents and knee implants.
“It was very drastic but then they stopped after that. And there’s been no other product, which is good news. But now that they stopped and they haven’t gone to other categories, I feel more confident about bringing creations to India. When you have that type of uncertainty, it made us nervous.”
However, Lobo said, he is “optimistic” now. “I was nervous about it three or four years ago, and I’m becoming more optimistic. We’re still under a little bit of a cloud. But meanwhile, India is a great market and has a huge potential.”
Latest innovation by Indian team for Indian market
One of the purposes of Lobo’s visit was to check the progress of an upcoming product — Smart Medic.
“It is the first product that’s completely designed in India, manufactured in India, and will be sold in India… that’ll be our first product that’s dedicated to India.”
Smart Medic is a device that partially converts the bed into a smart bed. It is a platform that goes under the mattress and can be put on any bed. Mainly targetted at bed-ridden patients, the technology will give regular updates about the weight of the patient, helping doctors decide the medicine dosing accurately instead of eye-balling. It also provides alerts to the nursing staff for when the patient needs to be turned to avoid pressure ulcers and bed sores.
“It is designed completely by the Indian team, and it’s going to be sold in the Indian marketplace first, and then maybe it’ll become a global product later,” Lobo said, claiming that this kind of solution does not exist in the market. The company is working towards launching the product very soon in India.
“We are excited about India as a tech innovation,” Lobo said as he sipped on his coffee.
The company has already brought some of its best innovations to India, said Lobo as he recalled the top products. “An example is Mako, a robot which assists in knee and hip-replacement surgeries and neurovascular interventions. There’s also a new 1688 generation camera with fluorescence imaging for surgeons which lights up the area and helps see the anatomy clearly. It’s amazing, and it’s very safe; surgery becomes safer,” he explained, while discussing several other tech-innovations in India.
No plans to bring manufacturing to India soon
While the company is focussed on bringing its latest innovations to India and also start innovating via Indian R&D labs, it has no plans to bring manufacturing to India anytime soon.
“We haven’t been focused as much on bringing manufacturing to India,” Lobo said as he sat with his India sales and R&D heads.
At present, he said, the company wants to bring the latest technologies to India. “Eventually, we may do more. But these high-technology products that we have, we manufacture them in very few locations across the globe,” he said.
For instance: Mako robots are made in Florida for the world as it’s very high-tech, he said. “We can’t think of changing the base because of the regulatory process and everything, it takes a long time. And now you have this global chip shortage, which is a nightmare. So this is not the best time for us to be building new factories when we already have factories in place.”
He added: “Hence, I would say in the longer term, we’re not against bringing manufacturing but in short term, there’s no big incentive for us to do it.”
He reiterated that the company is looking for “regulatory certainties” to take such long-term decisions. “We need regulatory certainty with trade margin rationalisation, which is important so that we know if we’re going to bring manufacturing here.”
He added: “I have to be sure that I can get good value for the products that we are selling. But once that happens (decision on TMR), I think we’ll be much more open to bringing the manufacturer in here.”
Pricing of Indian products ‘tricky’
Pricing is a very tricky subject, Lobo confessed. “I’ll be honest and it’s been a challenge for us.”
Explaining why affordability and latest technology doesn’t go hand in hand and how prices can be lowered in the future, he said: “Will our high-tech products be available for the masses? Probably not in the first phase. So, let’s bring the best technology here and let’s make it available to people who can afford it. That’s step one.”
After that, he said, “we can look for masses because that gives us a certain size or market presence as a company”. “Once you get to a certain size, then you can start figuring out how we bring variations of the product to lower the prices,” he insisted.
“Smart Medic is a good example. So that’s innovation at a very low price as it doesn’t require a new bed, and is custom-made for it to solve problems for India at a low price.”
He recalled that the company was “not even thinking” about a project like that five years ago. “So we are now trying to find new solutions that can be more affordable.”
In an honest admission, Lobo said the company’s priority is to bring great innovations to India. “And then after we do that, we will also try to find ways to make it more affordable. But we can’t do both at the same time. It’s very difficult.”
Pinning his hopes on the latest product which is nearing launch in India, he said: “If this Smart Medic works, that will inspire us to launch something at lower prices and be successful.”
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