Collateral Medical: Disrupting the medical device industry by technological solutions
The health care industry is one of the fastest and most innovative sectors in terms of employment and impact. Technological advancements in the medical field over the years have helped develop several medical devices to aid patients and medical professionals for excellent medical services. Although the history of medical devices is as old as human history, the modern form of industry traces its roots to the mid-19th century of the post-Industrial revolution period. The medical tourism, prosperity and GDP growth of the health care market has given rise to the incorporation of high-tech medical equipments. India relies on the import of medical technology for its healthcare system, which tantamounts to 80% of total sales.
The medical equipment, because of the multi-tier distribution network along with supplier-driven market, and the lack of information becomes very expensive. The only source of cheap medical equipment is unregulated Chinese products. Around 70% of the medical device market is comprised of small hospitals, clinics, and nursing homes that have less than 100 beds per location and underserved by the current system. These underserved entities make up the majority of the market, thereupon end up paying higher prices due to the margin markups along the multi-layered supply chain.
The GOI overhauled the regulatory framework in 2017 for medical devices giving a fillip to the industry by introducing the concept of ‘risk-based’ regulation. It also allowed 100% FDI in the sector giving a long-desired boost to the medical device industry. The Indian government’s 2017 national health policy espouses progressive universal health care for citizens, envisioning equitable and well-being for all sections of society.
Handling the commercial activities of medical devices requires a significant and distinct kind of expertise. In 2010, the duo of Nikhilesh Tiwari and Dr. Ashutosh Raghuvanshi came up with an idea to establish an online platform to supply medical devices pan India. The idea turned into a reality in the form of Collateral Medical (ColMed), headquartered in Mumbai. In a conversation with Nikhilesh, he narrated the whole idea of online platform in an interview with Start-up City magazine. He implied that the reach of medical devices and healthcare is very limited citing the weak institutional framework of the supply chain. They have employed IT to transform the industry by mitigating the overall supply chain cost. The organization is adding more value to its offerings primarily through a group purchase facility. ColMed later added another jewel in its crown when Sanjay Jha joined the firm after learning about the productivity of Group Purchase Organizations and large US-wide distributors during his long stint with GE Healthcare and Johnson & Johnson, in the US.
The online platform Colmed.in brings benefits to the Medical professionals and hospital purchase managers serving through direct mail, industry-specialized support staff, field sales representatives and use of the Internet and mobile technologies. Developing nations largely has been dumping ground for cheap quality products of different MNCs. According to a global health technology report published by prestigious medical journal, The Lancet, around 40% of healthcare equipment in third world countries is out of service. The firm aims to target these unmet opportunities as a market leader with innovative technology, bringing customers and manufacturers at proximity.
Inside the organization
Col Med’s journey has been slow but steady. It has grown 100% YoY benefiting 15,000+ with over 40% repeat customers. They are now 100+ strong in numbers and expects to triple its account in the coming year through internal references. The firm caters to the requirements of Nursing homes, NGOs, UNDP programs and various corporates across the country. It is the only medical equipment supply firm using technology to save 25% cost and 50% time of its clients. The product offerings of ColMed include Stethoscope, Diagnostic, Medical Equipment, Surgical Supplies, Chronic Care, Furniture & Lights, First Aid & Safety, Dental to name few.
Col Med is not only involved in the supply of medical devices but also help small nursing homes and hospital partners in their inventory management. The company is increasing its disease and specialty focus. They are following the innovative route of internal partnership with logistics firms instead of sticking to old methods like other companies. ColMed partnered with 3M Healthcare for the supply of medical devices on a transparent platform. Now ColMed successfully sources medical devices from firms like Johnson & Johnson, Boston Scientific, GE, Philips, Bard, Nipro and others after becoming, their all India distribution partner. The online platform provides a wide range of products, over 10,000, and adding thousands new each month along with multiple payment options such as Debit/Credit cards, EMI, COD, Digital Payments or bank transfer. The sector is quite a niche and very unsaturated; hence, ColMed doesn’t face stiff competition in the market for the online platform. The firm’s culture of collaboration ensures full customer satisfaction by going the extra mile.
The road ahead
The total spending on medical services in India is a little over 1% of the total GDP. The size of the Indian medical device market is around USD 5.2 bn. It is expected to reach USD 50 bn by 2025 at a CAGR of 15.8%, vis-à-vis a CAGR of 4.1% for the Global medical devices industry.
Collateral Medical plans to mark its footprint in the tier -2 and tier 3 penetrating the multi-tier distribution set-up in India. They are also looking to raise equity in the coming months. The firm plans to redefine delivery of its offerings to provide a satisfactory end-user experience. ColMed’s team of Biomedical Engineers is identifying the unsatiated demands of their clients. To enhance their customer understanding and purchase strategies, ColMed hired VP (supply chain) from a leading hospital chain. The R&D team plans to develop few in-house products to decrease the cost significantly. ColMed plans to use the Series A funding that it received from Carpediem Capital to lead the making of structural changes in the distribution set-up of medical devices, scale up the business and bring innovative technology further reducing the price of its offerings.
Currently, they are developing IT solutions to connect hospitals with ColMed platform directly in real time through SAS based inventory systems, removing the need of placing orders online. ColMed initiated working on smart devices that can be connected to cloud-based systems making healthcare accessible to patients in remote areas. The firm aspires to be a one-stop solution for the purchasing needs of hospitals and small clinics, covering the primary care sector and now planning to enter the secondary care domain as well.
The guiding force
The firm’s executive operations are handled by Nikhilesh Tiwari who is also the Director of the firm. He has over a decade of medical device industry experience. He is a Post Graduate from IIT Delhi and MBA from London Business School respectively. He has previously worked with various medical-device and healthcare companies in the U.S., UK, Germany and India.
Sanjay Jha is the Director with over a decade of the medical device and IT experience. He is an IIT Kharagpur Graduate and Postgraduate in management from INSEAD.