From designing the world’s first wearable battery powered pacemaker in 1958, to the world’s smallest pill sized pacemaker, Medtronic’s credo has been “Further, together.” But against the backdrop of the government’s firm stand to make healthcare more affordable, what will be Medtronic India’s strategy to remain commercially viable as well as provide patients access to the latest generation medical devices?
From co-founder Earl Bakken’s Minnesota garage in 1949, to 89 manufacturing facilities across the world, Medtronic today positions itself as the world’s largest stand alone medical technology company. FY2016 total revenues touched $28.8 billion, with the lion’s share (61 per cent) coming from the Americas, followed by Europe, Middle East and Africa (23 per cent), followed by Asia Pacific (11 per cent) and 5 per cent from Greater China.
In terms of revenue mix across the company’s four business divisions, in FY2016 the cardiac and vascular group led with 35 per cent ($10.2 billion), followed by the minimally invasive therapies (formerly Covidien) at 34 per cent ($9.6 billion), restorative therapies (25 per cent, $7.2 billion) and diabetes (six per cent, $1.8 billion).
Setting the pace
The Medtronic Medallion has three short directives inscribed on it: Alleviating pain, Restoring health, Extending life. The evolution of pacemakers is a good example of the transformation of medical devices, driven by patient need and made possible by continuous R&D. Medtronic co-founder Bakken is credited with the design of the world’s first “wearable” battery powered pacemaker way back in 1958.
Six decades later, Medtronic makes the Micra Transcatheter Pacing System, implanted directly in the right ventricle chamber of the heart. In terms of grammage, the pacemaker has shrunk from a 283 gm, external and wearable device, the size of a notebook to today’s 2 gm Transcatheter. Touted as the world’s smallest pill sized pacemaker, the world’s first leadless pacemaker was approved by the US FDA in April last year. According to reports, the miniaturised device topped US News & World Report’s list of 2016’s Biggest Achievements in Medicine. Clearly, R&D has been the cornerstone of such product evolution. (See visual: The evolution of pacemakers: From 1958 to today).
Micra seems to have done well in clinical trials. In November 2015, preliminary results from the Medtronic Micra TPS Global Clinical Trial, published in the New England Journal of Medicine, showed the Micra TPS was successfully implanted in 99.2 percent of patients and that the system met its safety and effectiveness endpoints with wide margins. This was followed up with more data in August 2016, when new long-term data presented in a late-breaking clinical trial at the European Society of Cardiology Congress continued to reinforce these results, demonstrating consistent and sustained outcomes from early performance through 12-month follow-up.
The Medtronic Singapore Operations (MSO) facility, a crucial part of the company’s cardiac and vascular group, the largest business group in terms of revenues, is reportedly Asia’s first pacemaker manufacturing plant, operational from 2011. It is also the only plant in the world able to make pacemakers, leads and diagnostics, which require advanced production skill sets.
According to MSO’s Salvador Aloma, CRHF senior manufacturing director, 600,000 units of the Reveal LINQ ICM will be made in FY2017 at MSO. The company has invested over $56 million in the MSO, which supplies to the Asia Pacific, Greater China, Europe, Middle east, Africa and Canada markets.
If R&D is the cornerstone, then a culture promoting quality has to be part of a company’s DNA. Medtronic has a unique initiative to link the work quality of employees to patient at the end of the production line. Archives show that the founder made it a point to meet patients who used Medtronic products while other patients were invited to tour the production facilities where their pacemakers were made. The company now has made this part of the Quality Day programme, where a member of the production staff meets a patient using a device made by him/ her.
“This meeting ensures employees have a real connection with the patient,” explains Darshan Shah, Quality Systems Director, at MSO. The “Quality begins with me” initiative started in 2016, with the realisation that assembly line jobs get monotonous and employees sometimes could lose sight of the bigger picture. Such interactions with patients ensure that all employees remember their role and responsibility to the patient. The initiative increases patient engagement too, with each patient leaving with a plaque and a duplicate of the device that this implanted in their bodies.
Medtronic in India
Country wise revenues are not available but going by Medtronic’s FY2016 figures, Asia Pacific region’s 11 per cent slice of the global revenues pie, it is evident that there is a huge growth potential. India’s medical devices segment, estimated at $ 4.2 billion in 2014, is expected to grow at a CAGR of 16 per cent during 2014 – 2018, according to a FICCI-QuintilesIMS paper, Medical Technology Sector in India – Enabling Swastha Bharat.
Medtronic, like its peers in the med devices sector, are crafting new strategies to increase their visibility in these markets as well as cope with evolving regulations like India’s recently released Medical Devices Rules 2017.
Also worrying such manufacturers is the government’s determined efforts to cap the prices of life saving technologies like heart stents. Two months after the National Pharmaceutical Pricing Authority (NPPA) capped heart stent prices, Medtronic India asked permission to withdraw its Resolute Onyx stent from the India market on the grounds of “commercial unviability post fixation of ceiling price.” Abbott and Boston Scientific sent similar requests to the NPPA.
Quick facts: The Healthy Heart for All initiative
The Healthy Heart for All (HHFA) initiative was launched in Durgapur, Bengal in September 2010. Under this scheme, the company, through a third party financier, helps qualified families and needy patients implant heart devices such as stents, pacemakers, ICDs and CRT-P, heart valves, and aortic grafts by partnering with hospitals.
According to the company, these patients pay as low as 15 per cent of the cost upfront and the rest through equated monthly installments over a period of time. Over 700 loans have been disbursed through the HHFA initiative as of March 2017.
- Launched in Durgapur in September 2010
- Currently present in over 30 cities in partnership with over 120 hospitals
- Over 1450 camps conducted
- Over 175,000 patients screened
- Over 91,000 patients counseled
- Over 15,200 patients adopted therapy
- 1600 physicians trained Over 700 loans disbursed through third party (as of March 2017)
On April 26, the NPPA rejected Medtronic India’s application for the withdrawal of Resolute Onyx on the basis of incomplete paperwork. The Medtronic India management intends to resubmit the application, and will continue to supply this stent until it is re-submitted and approved. The company’s statement reiterated that, ”All decisions to withdraw or introduce products to the market are made only after taking into consideration all guidelines and norms set by the government and applicable legal and regulatory requirements. Medtronic remains fully committed to work with the Government helping patients and their physicians in India gain access to innovative and high quality cardiovascular therapies.”
Given these realities, what kind of a future does Medtronic India see for itself? Price restrictions will obviously impact revenues, which in turn will influence further investments from the parent company into the India operations. The company is no stranger to India, having set up base here in 1979. With an employee head count of over 1100, the company has a sizable footprint, with more than a dozen offices, R&D centres in Bengaluru and Hyderabad as well as an IT solutions centre in Bengaluru.
Medtronic is conscious that price often over shadows value and the company has taken efforts to ease the price burden of its products through many programmes like the Healthy Heart for All initiative, through which patients are provided financing options. This is in addition to global initiatives through the Medtronic Foundation and philanthropic efforts like HealthRise, HeartRescue, RHD Action, etc. (See BOX: Quick facts: The Healthy Heart for All initiative)
Future options
The NPPA’s April 26 revert also points out that Medtronic had not complied with other requirements of its February order, namely to submit weekly reports of heart stents manufactured and distributed, along with the weekly production plan. The regulator is doing its best to ensure there is no shortage of heart stents but companies will obviously be wary of disclosing sales and production schedules.
The government’s order in February invoked Section 3 of the Drug Price Control Order (DPCO), 2013 which requires companies to continue to supply stents for six months after the order. Thus it is quite likely that Medtronic will re-apply for withdrawal two weeks before the expiry of Para 3 requirements, i.e. in August. Or will it heed the NPPA’s suggestion and explore options of price revision provided under certain clauses of DPCO, 2013 before exercising an exit route? The coming months should see some answers on this front.
(The author visited Medtronic’s Singapore Operations on the invitation of the company)
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