Affordable Diagnostics
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Affordable Diagnostics

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    Affordable Diagnostics Affordable Diagnostics Presentation Transcript

    • Innovation driven “Affordable Diagnostics” Bala S. Manian ReaMetrix Inc BIO Conference May 7 th , 2007
    • Disclosure
      • Take what ever I say with a “dose of skepticism” because:
        • Every pre-conceived ideas with which I started my present activity in India turned out to be totally wrong.
        • After 40 years in the US, while I stilled looked Indian, I had lost my ability to think “Indian”.
        • I have learned that it is the ground reality check, that differentiates a good product concept from an academic exercise.
        • Therefore you are only listening to the experiences of a budding new entrepreneur from Bangalore, India
        • You will hear only the lessons of 3 years of burned finger experience and not the voices of silicon valley veteran.
    • Background
      • Diagnostics is an important component in disease management.
      • Diagnostics is not just about diagnosing “illness” but it is also about maintaining “wellness”.
      • It is all about “information” and diagnostics is an information business.
      • Information is generated to help the physician (and in some cases the patients) make better clinical decisions.
      • It is about cost per unit of information and the local macro-economic environment to support that cost sustainably.
    • Anatomy of the Cost of Goods Sold (COGS)
      • Many components contribute to the costs per unit of information.
        • Cost of the acquisition of the sample.
        • Cost of the transportation of the sample.
        • Cost of processing of the sample – Tech labor + assay reagent costs.
        • Amortization Cost of the capital equipment investment.
        • Laboratory infra-structure overhead cost.
        • Distribution, field service & support, etc, etc.
    • How the costs are influenced?
      • In most developing countries, the diagnostic methodologies used are parachuted from resource-rich countries.
      • During development, the cost economics of these methodologies were highly influenced by the local macroeconomic environment prevailing in those countries.
      • Macroeconomic impact on product design decisions and process developments can be subtle and indirect.
      • Design criteria optimized for one environment may not be the right solution for another.
    • Different priorities in different environments
      • In the developed countries:
        • Labor costs dominate the COGS.
        • The emphasis is on reduction of labor both in manufacturing and in process.
        • Less emphasis on material conservation.
      • In the resource-poor countries:
        • Material costs dominate the COGS.
        • The emphasis has to be on material recovery – more of the raw material has to end up in finished goods.
        • Labor component has a small contribution to COGS.
    • How to change the paradigm?
      • Leveraging local resources to solve local problems is the only way to achieve economically sustainable solutions.
      • Define “the affordability index” in the context of local macroeconomic environment.
      • Affordability index does not necessarily mean cheap solutions.
      • Affordability index drives the appropriate technology that can deliver the good and services within the affordability index.
      • It is often that no new technology development is required but a new approach to solving the problem – locally with local resources.
    • Diagnostics – ReaMetrix experience
      • ReaMetrix has been able to translate these concepts to diagnostic solution development in India.
      • Five fold cost reduction in price while retaining greater than 60% gross margin.
      • Elimination of cold chain for transportation & storage not only reducing cost but allowing the development new business models.
      • Development of hardware platforms with dramatically reduced costs but designed for easy deployment and local service & support.
      • The technology focus is more on local economic sustainability rather than on just peer reviewed publications in scientific journals.
      • ReaMetrix is all about creating the ethos and the ecosystem to drive entrepreneurial solutions that are economically sustainable.
    • The hard lessons learned:
        • One has to look at “diagnostic information generation” holistically, not just as a set of assay reagents and hardware platforms.
        • It is more about economics and less about technology. Technology development in the absence of a viable and sustainable business plan is like “sculpting fog”.
        • “Import the science” but not the implementation of the science – great to think globally but sustainable innovations are all local.
        • Rather than just focusing on cost arbitrage, one has to use the cost arbitrage to generate sustainable value arbitrage.
        • Using this model, one can not only address the unmet needs in resource-poor settings but change the way diagnostic information is leveraged globally.