Frontier Troops

Hippocrates (460-370 BC) called it karkinos. The earliest recorded evidence of it was found in Egyptian mummies and manuscripts from 1600 BC. Cut to 2018, and cancer is the second leading cause of death (according to WHO) killing about 9.6 million in a year. 

But the slow-moving healthcare industry is poorly equipped to deal with this challenge. Sensing an opportunity, a bunch of young Indian medtech companies stepped in to fill the gap. According to KPMG, global oncology spend may touch $162.9 billion by 2020 from $106.5 billion in 2015. Using emerging technologies, such as robotics and AI, the start-ups are innovating across treatment stages, from diagnostics to prescription drugs. 

Trying Times

It has not been an easy ride. When they started, the market was new, funding was scarce and there were regulatory rigmaroles. The scene is changing, but painfully slowly. Take the case of Bengaluru-based Panacea Medical Technologies founded in 1999. GV Subrahmanyam, co-founder of Panacea, realised the need for less expensive and technologically superior radiotherapy equipment. Today, its machine can treat about 70-100 people a day, and its lifetime (12-15 years) cost is 50-60% that of foreign players’ equipment. For the patient, it could cost anywhere between $2-4 per treatment. 

“We took about six years to design, manufacture and get a regulatory approval for the first product,” he says. Subrahmanyam admits that the current revenue of Rs.300 million has been “considerably lower” than expected. Post its launch in 2007, Panacea has sold 110 machines, 75 in India and the rest in neighbouring countries and Africa.

Their biggest hurdle was to counter the perception that imported technology is superior to Indian technology. Adding to that was test laboratories’ inability to evaluate the effectiveness of Panacea’s machines, says Subrahmanyam. The company had to invite overseas experts to evaluate and certify it. Investors, too, were ill-equipped to understand the product and the segment, he says. Panacea could raise money only in 2011 from early-stage private equity investor firm New Enterprise Associates. In 2016, IL&FS came on board. Subrahmanyam does not disclose the amount raised. 

Oncology start-ups, in all, have raised less than $150 million, according to data from Tracxn. Nilaya Varma, partner, government lead, KPMG India, adds, “Very few VCs in India will fund businesses with a five to 10-year timeline, where data collection and analysis comes first.”

India is not mature for the larger medtech segment itself, says Mohan Kumar, executive director, Norwest Venture Partners, which invested in Chennai-based medical devices company Perfint Healthcare in 2010. “Failure rates are very high in the segment. When you are trying to change the way doctors treat, you are competing against established pharma companies,” says Kumar. He adds that doctors’ openness to try out new technology is also poor. Ganapathy Venugopal, co-founder and CEO of Axilor Ventures, agrees that convincing technicians and doctors to choose a new procedure over a more familiar and tested one is a “hard battle to fight”. 

The government’s regulatory mechanism is not encouraging too, says Kumar. Bhaumik Sanghvi, co-founder and COO of medtech start-up UE LifeSciences, seconds that. “If you want to really make an impact in public health, it is difficult to do it without getting the government involved. That would mean going through the tendering process. It takes a lot of time, killing innovation,” he says.

Venugopal says that medtech start-ups must shift their focus. Most are intent on offering ‘more effective solutions’, he says, but they should instead go after prevention procedures. These start-ups do adapt to market feedback, like Perfint did. But, the results have not been wildly encouraging. 

Perfint Healthcare’s first product was ‘Robio’, a biopsy-only product. “The customers probably did not see much value in incorporating technology into a low-revenue yielding procedure,” says Nandakumar Subburaman, co-founder and CEO. So, Perfint moved from the fringes of diagnostics to the thick of things, helping doctors treat cancer. They now marry robotics with tumour ablation, a minimally invasive procedure, in which the cancerous tumour is heated or cooled using thermal energy. Their patented ‘Maxio’ has proprietary software that helps a physician see the tumour (with 3D volumetric reconstruction of its image), plan the treatment, use multiple electrodes for multiple tumours and verify that the tumour has been destroyed. 

The company evolved — from Robio to Maxio — but the market kept moving at its own sweet pace. “We had expected tumour ablation to grow much more rapidly in India — about 10x bigger than it is now,” Subburaman says. Tumour ablations are usually preferred for inoperable liver tumours, but incidence of this cancer is comparatively low in India. There was also an apprehension that this procedure — without proper imaging and navigation technologies — increased chances of recurrence given that hospitals did not have interventional radiologists, who could perform the ablation competently.

Besides lack of skilled professionals, the medical equipment market also suffers from a weak distribution network. Ranjan Pai of Aarin Capital, which is on UE LifeSciences’ board, says, “Software companies in this segment and e-pharmacies have been doing well. But for medical equipment start-ups, distribution remains one of the biggest challenges.” According to him, these companies need to have more products, to bring distribution costs down.

Fund Friendly

Perhaps, the most funded start-up in this segment is Bengaluru and Boston-based Mitra Biotech, which has raised around $76 million in four rounds. Mitra’s last round of $40 million, in July 2018, was from Northpond Ventures, Sequoia Capital, RA Capital Management and Sands Capital Ventures. 

Mitra’s CANscript — a combination of lab tests and algorithms — helps doctors rapidly zero in on the most effective treatment. Pradip Majumder, a former professor at Harvard Medical School with a PhD in cancer biology, is the co-founder of Mitra. He says, “When a patient goes to a clinic, drugs based on guidelines have to be administered to him. They are tried out to see which are the most effective for the patient, who will have to wait for three or four months to see if the drug works or not.” There is no tool to help doctors pick the best option from among eight or 10 alternatives. This is where Mitra comes in. 

Founded in 2010 by Mallik Sundaram, Majumder and Shiladitya Sengupta, who has since moved on and co-founded Invictus Oncology, Mitra tests drugs on tiny samples of tumour in a micro environment created in a lab. The results are passed through a proprietary algorithm, which generates an M Score. This score, which can predict which treatment works the best, is obtained in just a week’s time. Doctors can predict the right drug combination with 30% accuracy, says CEO Sundaram, but Mitra’s accuracy is at 90%.

Mitra has two revenue streams. In the first, patients would pay for the test — $600 — and may get reimbursed by the insurer. For this, they partner with hospitals such as HealthCare Global Enterprises, Apollo Hospitals and Fortis Healthcare in Delhi. The second is from the work with drug manufacturers such as Glenmark Pharmaceuticals to develop more effective and newer cancer drugs. As per Ministry of Corporate Affairs records, the turnover of the company for FY17 stood at Rs.15.41 million with a loss of Rs.54.06 million.

Mitra, which has a team of 110 in India and 60 in Boston, hopes to get listed on the Nasdaq by 2020-21. In India, it claims to be the only player. In the US, its competitors include Champions Oncology and Cancer Genetics, both of which are Nasdaq listed. The former, founded in 1985, saw a revenue of $20 million for year ended April, 2018 and the latter, founded in 1999, clocked a revenue of $29.8 million in 2017. 

Hopeful Newbies

Into these choppy waters of sluggish growth, and low investor and customer interest, newer boats continue to be lowered. These younger start-ups, of around three to five years, are going after emerging markets with affordable solutions. According to a 2015 analysis by the American Cancer Society, 57% of cancer cases and 65% of fatalities now occur in low and middle-income countries in Africa, Asia and Latin America. 

Sanghvi’s UE LifeSciences, founded in 2015, has introduced iBreastExam (IBE) a device to screen early-stage breast cancer. He says that mammograms done in India every year is just around 1-2% of the 40 million done in the US. The procedure is not popular due to a number of reasons, including high cost, limited radiologists, pain during the procedure and exposure to high radiation. Also, it is not very effective in detecting early-stage lumps in younger women. IBE offers a portable, non-invasive (done using sensors) and painless alternative. Most importantly, the team ensures that there is awareness creation by community health workers to increase its mass adoption. 

It took around five years for the team to come up with a commercially viable product, and it was introduced in the market in 2015. The patented device, which costs around $6,500-8,000, comes with proprietory software. The test takes about five to eight minutes and, if lumps are detected, the patient is referred to a diagnostic mammogram or targeted ultrasound.

The company has started operations in countries such as Nepal, Malaysia, Indonesia and Mexico, chosen based on the incidence of breast cancer, demographics, GDP and so on. In India, it has partnered with private hospitals such as Manipal and Narayana Nethralaya, and the state governments of Maharashtra and Chattisgarh. Globally, it has deployed 200 devices and has screened over 120,000 women. UE’s product excited Aarin Capital’s Pai because of the convenience it offers: “A solution that can be used for screening at an early stage and can be done remotely in people’s houses has great potential.” 

UE LifeSciences faces competition from US-based companies such as Orbital Therapy, Suretouch and Cyrcadia Health, and Bengaluru-based Niramai Health Analytix. Niramai is also into early detection of lumps in the breast, but with a different technology called thermal imaging and an AI-based algorithm. The company imports these screening devices from Sweden.

After two of her cousins were diagnosed with breast cancer, Geetha Manjunath, co-founder and CEO, Niramai, decided to address pain points in early detection. The team learnt that there is an infrared camera but, it is rarely used by doctors because it produces complex, hard-to-read images. Niramai decided to build on the camera, worked on it for two years and then started operations in January 2017. 

They have basically trained their algorithm — by feeding thermal images of several cancer patients and non-cancer patients — to catch any chance of a person developing a cancerous tumour. Doctors can then go through the scores this algorithm generates, and do not have to refer to thermal images as much, says Geetha. Niramai’s solution has an accuracy level of over 90%.

The company trains nurses to use the device, which is only as big as a one litre bottle and issues a report within two days of the test. The hospitals pay upfront for the device, and they share the revenue they earn from patients. “Currently the hospitals are charging Rs.1,000-1,500, around one-third the cost of mammography. The device cost is one-tenth that of a mammogram,” says Geetha. Niramai has so far done more than 4,000 screenings in hospitals across cities such as Mysuru, Bengaluru, Dehradun, Delhi, Mumbai and Hyderabad. 

“Niramai’s solution is privacy protected, completely safe, inexpensive and painless. These factors make it a powerful and easy-to-adopt solution,” says Venugopal of Axilor, which has invested in the start-up. He also commends Niramai’s cleverness in getting a faster approval. “When it comes to clinical protocols, most founders struggle with the long gestation period to get the solution approved. Niramai, smartly, used the equipment which was already approved and worked only on the software and image-recognition feature,” he adds.

While people are keen on early detection, they are also deeply concerned about recurrence. Bengaluru-based OncoStem Diagnostics predicts the chances of that with AI. Dr. Manjiri Bakre, who holds a PhD in cell biology from Indian Institute of Science, founded OncoStem. “Our goal was to assess which early-stage breast cancer patients are at higher risk of cancer recurrence. The patients who have low risk can forgo chemotherapy and try other treatment courses, as recommended by the doctor,” says Bakre, who has seen many close friends and relatives bearing the side effects of chemotherapy. 

OncoStem’s flagship solution, tests the tumour sample that is surgically removed from the body. Passing the results through an algorithm, a risk score is tabulated. The report is sent to the doctor who, along with the patient, makes the treatment decision. Bakre acknowledges that similar diagnostics tests do exist in the West but, she adds, the cost is prohibitively high and the turnaround time is longer. OncoStem’s solution costs only one-fifth. “We have managed to keep the cost down (by following a different methodology) and by developing the entire test in India,” says Bakre, who thinks affordability is key. 

The company, which commercially introduced its product two years ago, has partnered with 10-12 hospitals in India and a couple in the US and Europe. These hospitals refer the tests to OncoStem’s lab, which is capable of doing about 20 tests at one go and has done over 500 tests so far. Each test costs Rs.60,000. The start-up plans to tie-up with multiple distributors in India and work with state and central governments’ insurance schemes. 

Big Guns

The cancer-diagnostics segment has been seeing interest from biggies such as IBM, Google and Microsoft too. While Microsoft has launched Healthcare NExT, a research initiative to cure cancer with the help of industry experts and AI, Alphabet has DeepMind Health that looks at applying machine learning to develop solutions for health problems such as breast cancer. According to data from KPMG, Apollo Hospital in Bengaluru and Manipal Hospitals in six of its centres have adopted IBM Watson for oncology, to help doctors work out data-driven cancer care. 

Varma of KPMG says, “The adoption of technology in delivering health services, especially in oncology, has been propelled by big technology companies such as IBM, Google and Microsoft. A few start-ups have ventured into the space, but they have not been able to scale up due to various factors such as lack of funding over an extended period of time, low adoption in technologies such as predictive analytics and AI, high resource cost, low awareness and low intensity of research.”

Would the stalwarts be a threat to the smaller players? Varma feels, “Presently there are a lot of opportunities for both. In the long run, the sector can witness collaboration between these companies.” Start-up founders, too, agree. In fact, in November 2017, GE Healthcare entered into a distribution partnership with UE LifeSciences to take it across South Asia and Africa.

Smaller companies are scaling up too. Panacea’s Subrahmanyam wants to double his installation base over the next three years. He has received approval for two more products, both linear accelerators (used for external beam radiation treatments), and these will be out in the market in four months. Perfint, two years ago, commercially launched its product in China, where it now has 15 customers. It hopes to take that number to 50 in the next couple of years. In India, between PIGA-CT (the earlier version of Robio), Robio and Maxio, the company has 80-odd customers. 

Investors that have committed monies are ready for a long-haul. Slow growth is no cause for worry, says Kumar of Norwest. “Medtech is not for every investor, be it in the US, India or anywhere. It takes seven to eight years for the product to mature,” he says. Kumar sees China, India, Korea and Japan as a huge market, and that is cumulatively worth $30 billion-35 billion.

Awareness about the Big C is fast growing, but there is no magic pill in sight. Perhaps, the market might evolve with patient investors, skilled professionals and a supportive regulatory mechanism.