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Affordable Diagnostics


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Affordable Diagnostics

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