Decentralising Diagnostics

Imagine your baby’s burning up with fever. You don’t know if it’s something serious or just the flu. What if instead of rushing to a doctor and conducting a sequence of cumbersome tests at a central lab, you could diagnose the ailment yourself at home within half an hour? A device with a ‘fever of unknown origin’ panel could tell if it’s malaria, dengue, typhoid or just a viral infection. If Achira Labs’ work on building a marketable, cost-efficient lab on a chip goes according to plan, that day may not be very far away.

Established in 2009 by Dhananjaya Dendukuri, a PhD from MIT and a BTech in chemical engineering from IIT Madras, Achira Labs (‘achira’ means swift in Sanskrit) is one of the few microfluidic companies outside of Western Europe, US and Japan. “We use microfluidic platform technology to build diagnostic applications, specifically point-of-care, which involves taking blood testing closer to the patient and the doctor; using portable technology requiring small quantities of blood,” explains Dendukuri.

What is microfluidics? Simply put, it attempts to miniaturise, integrate and automate, helping realise the lab-on-a-chip concept. But it’s not so simple in practice. “Even in the West, there are very few, if any, demonstrated, marketed microfluidic lab-on-a-chip products,” says Dendukuri. An example is Opko, which develops microfluidic immunoassay products, but the market remains negligibly small. Investors largely back the commercial, centralised lab model, so it is not easy to displace this with new technology,” adds the founder. 

At a prick of a finger

That’s probably why for the first 2-3 years of its existence, Achira focused on R&D. It has invested Rs.20 crore here so far thanks to the backing of investors such as Narayana Murthy’s Catamaran Ventures, a mini-PSU called Biotechnology Industry Research Assistance Council (BIRAC) and Indian Council of Medical Research (ICMR) among others. “Achira is an innovative start-up that’s building a high technology product that’s also affordable,” says Satya Prakash Dash, head, strategy partnerships and entrepreneurship development, BIRAC. 

The company’s focus on research has indeed paid dividends. It has around 24 international patents to its name. And come October, it may launch its first product — a disposable microfluidic plastic cartridge and a tabletop reader — that enables small labs and doctors to conduct a variety of tests in their premises itself, instead of outsourcing it to central labs.

Moreover, multiple tests can be performed on just one chip, making it a potentially disruptive technology that could bring about decentralisation in diagnostic testing. Abishek Laxminarayan, investment director, Catamaran Ventures says, “Results for up to 10 tests are provided in 20 minutes from a single pin-prick of blood. And the accuracy is the same as with ELISA and automatic analyzers that cost up to 10 times more.” 

The product focuses on a type of test called immunoassays, which constitutes 30% of the tests done to detect ailments. Achira right now is focusing on thyroid, fertility and infectious disease tests, which constitute 70-80% of frequently asked for immunoassays in the country. “The initial application for this technology is fast and accurate thyroid and female infertility panel testing for leading IVF chains and laboratories, before expanding into small labs and diabetologist facilities,” adds Laxminarayan. 

How does it work? “There’s a matrix of different spots on the chip, which help perform different tests. In the central labs, there are lots of samples, one test; here, we have one sample, lots of tests. We call this multiplexing. The sample flows through and upon reacting with other reagents, these spots glow with fluorescent lights: the brighter the glow, the more the presence of the analyte. Reading each spot you can tell whether you have the assigned disease,” explains Dendukuri.

Achira has already started pilot manufacturing for both cartridges and instruments in its microfluidics manufacturing facility in Bangalore, India’s first, set up at a cost of Rs.3 crore. 

Test universe
Diagnostics today is a Rs.10,000 crore industry, with more than 100,000 labs across the country. According to Achira’s business development head Sendil Kumar, the industry is highly unorganised and fragmented, wherein more than 90% of customers are catered to by small labs. The bigger pan-India diagnostic chains such as Thyrocare, Dr Lal PathLabs, Metropolis and others cater to just 10% of the market.

When it comes to Achira, it has two main revenue streams as of now. First, it provides custom-made microfluidic chip services to around 35 institutional research labs across the country including IIT Bombay, IIT Madras, IIT Guwahati and others. These chips may not necessarily be used for diagnostic purposes — some professors may be developing an organ on a chip, some may be working on a sperm separation device for IVF applications. Besides, it also has product partnerships with a couple of MNCs for developing new diagnostic tests on its platform. “The idea is that we’ll sell these tests at some point in the future. The financial details are still being worked out but there will be some product revenue for Achira,” says Dendukuri. 

The second and primary revenue stream will be the microfluidic product sales, for which Achira will work with local distributors. Already, Dendukuri says, “We are going to start invoicing people next month. There are about 10-15 customers lined up, mainly small labs and doctors’ offices.”

Not many in the diagnostic space buy the equipment upfront. What works is the reagent-rental model. Under this model, the lab signs a fixed tenure contract with the equipment manufacturer, and assures him a fixed monthly amount in consumable sales. Consumable here refers to the (usually imported) reagent. “Our reagent rental model for the analyser will be under Rs.25,000/month, which is lower than competition,” says Sendil. 

For Achira, the consumable is the disposable microfluidic cartridge loaded with the reagent. 

When it comes to diagnostic equipment manufacturers, the consumable is vats of reagent poured directly into the machine. It accounts for around 80% of their monthly rental-reagent costs. Achira uses just around 1/1000th of the usual reagent. Its thyroid panels are priced at Rs.150, while fertility panels are for around Rs.300-400. 

Ashok Kumar, director, Healthcare Diagnostics, says, “Currently, I buy around Rs.30,000-35,000 worth of reagent to conduct around 100 thyroid tests a month. If I buy Achira’s chip at Rs.150, this will come to around Rs.15,000, allowing me to cut costs by 50%, not to mention the quick results it delivers.” Kumar also mentions the logistical hurdles involved in refrigerating the reagent and allowing it to reach room temperature to conduct the tests, an issue that Achira’s reagent-loaded chip will solve. 

Despite the obvious benefits, achieving scale is an issue here. And probably the biggest hurdle for Achira will be breaking the cosy doctor-lab nexus in which doctors gets a 30-40% cut for every lab test(s) recommended. 

Small is big
The big central labs have gigantic diagnostic machines that can achieve cost-efficiency only when thousands of samples have been collected. Hence, Sendil says, indirect costs for big labs are much higher than direct costs of running the machine. Labs have to dispatch men on motorcycles to quickly collect samples on a first-come-first-serve basis from small labs across the city in order to reach full capacity. That is the reason centralised labs take a couple of days to come out with results. Theoretically, big labs could run their machines on a single sample and give results within an hour, but the reagent costs and wastage makes it prohibitive. 

That’s why the biggest opportunity for Achira lies in small towns. Competition in bigger cities is cut-throat and small labs are a pampered lot, with big labs constantly courting them for samples. In smaller towns, the promise of instant results and competitive rates could do wonders for Achira. The company recognises this. “There is going to be market expansion outside of tier 1 cities. The bigger lab chains don’t exist there; logistics is very hard, expensive,” says Sendil.  

Also, complex diagnostic equipment requires skilled staff. Small labs could save on employee costs with Achira’s device. They could also shave off working capital besides becoming self-sufficient. “At the start of the month, small labs pay say Rs.20,000 to the big labs as an advance. Each sample the small labs provide, the amount chargeable gets deducted from this. It’s like a Paytm wallet,” says Sendil, explaining how Achira could eliminate costs for the small labs. 

Spreading the fabric  
But like labs, Achira too had to struggle with getting the right people on board. “Our capabilities in the space are quite shallow. When you talk to people outside India, they know we can figure out IT. The moment you say I’m doing something like microfluidics, there is still some scepticism,” says Dendukuri. 

The company has on board 35 employees today, with seven involved in R&D. Besides its lab-on-a-chip, Achira is planning to tap consumer diagnostics with its fabric-based platform called FabChip. “Here, we use woven fabric as a medium to do tests instead of polymeric membrane like paper. As of today, the only home tests are glucose tests and home pregnancy tests. Fabric is a platform to do a variety of tests — blood grouping, rotavirus test for infants, as well as a number of clinical analytes for liver and kidney disorders,” explains Dendukuri. 

It’s a late stage R&D product but FabChip can do a lot of basic tests. “It has some real consumer use considering it’s much cheaper. If our normal chip is for Rs.100-500, this is Rs.10-15. It is also ecofriendly, and very scalable in terms of manufacturing,” adds Dendukuri. The reason it’s so cheap is because of the low cost of raw material i.e. yarn. “Compared to other products, the capex cost is low due to existing textile infrastructure.”

Achira is planning to commercialise FabChip by the end of 2016, at a cost of $3-5 million. While it is developing more test panels on the platform, it’s questionable how much consumer demand there is for such diagnostic products considering the business model hasn’t been established in the United States. The US is usually at the forefront of testing out new business models and has a strong awareness level when it comes to preventive healthcare. Nevertheless, Achira is in the process of becoming ISO 13485 compliant under the European standard. 

There is little doubt that Achira could help improve India’s health quotient. There is significant opportunity in the rural markets, where lack of timely diagnosis and poor public healthcare causes many deaths. Achira’s decentralised model would work well there. But it would require enlisting the support of various state governments considering health is a state subject. “Our focus as an early-stage commercial company is on the private market. Once we have a little stability there, we will go to the state government for support,” says Dendukuri, adding that they are planning to do so by FY18. 

Besides, the company is also planning to expand to South East Asia, Middle East, Africa as well as other markets in South Asia, many of which face similar issues like India. Irrespective of how its commercial future pans out, Achira’s cutting-edge diagnostics technology has the potential to positively impact the well-being of many.