Affordable Diagnostics

© 2005 Reametrix, Inc. All rights reserved.

Innovation driven“Affordable Diagnostics”

Bala S. Manian

ReaMetrix Inc

BIO Conference

May 7th, 2007

© 2005 ReaMetrix, Inc. All rights reserved.

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.

Affordable Diagnostics

Business

Transcript of Affordable Diagnostics