S. Nandakumar, co-founder, Perfint Healthcare, wants to build a Rs. 100 crore company by FY15 by revamping its
“We have finished more than 150 procedures using MAXIO,” says a proud S. Nandakumar, CEO of Perfint Healthcare (Perfint). The Chennai-based Perfint, which provides interventional oncology assistance solutions, revealed MAXIO, an integrated planning, navigation and robotic targeting system for CT (Computed Tomography) Guided tumor ablation, to the market in May last year. It sent out its first commercial shipment in June 2013 and has exported about 25 units so far.
Incorporated in 2005 and run by a team of four healthcare professionals, S. Nandakumar, K. Guruswamy, K. Puhazhendi and V. Gnanasekar, Perfint focuses on the development of robot-assisted technologies that simplify complex procedures and improve the standard of care provided to patients in need of interventional therapies. The company is now developing its next product, SONIO, a system which will help perform ultrasound guided procedures, in association with Robarts Research Lab (Ontario, Canada). In fact, Perfint has received a grant to the tune of US $600,000 from the Canadian and Indian government for the development of SONIO and expects to launch the product in a year.
Perfint has also added pain care procedure to the features of its other product, ROBIO. It is a system used by radiologists around the world for biopsy, drug delivery, ablation, drainage and fine needle aspiration. So, ROBIO can now deliver a pain-eliminating drug at the point of pain, which gives instant relief as opposed to a drug or an injection. In the last one year, the company has developed packages around pain care and has done over 100 procedures in this area. It has shipped over 70 units of this product, so far.
When The Smart CEO featured Perfint in May 2012, it had closed the FY 2012 with Rs. 14 crore in revenues. For the FY 2013, its turnover reached Rs. 21 crore and it aims to be a Rs.100 crore company by FY 2015.
Reaching out to the right market
Almost 80 per cent of the company’s turnover is from the export market. However, Nandakumar agrees that their export market strategy was not quite right. “We wanted to get our revenues and we chose the easy route of spreading thin,” states he. In every country, the company sold few equipments, which perhaps worked from a revenue perspective. But, the CEO agrees that it is not the right thing to do if a company has to sustain its business as there has to be a minimum critical mass. So, Perfint is now concentrating on specific countries and customers. Apart from Dr. Riccardo Lencioni of University of Pisa, Italy, (who has supported Perfint for a long time), the company has approached other top interventional oncologists like David Breen, National Health Systems (NHS), Northampton, UK and Dr. Zongos / Dr. Thomas Vogl, University of Frankfurt, to handle its systems.
While Perfint has a presence in countries like Australia and Europe (Frankfurt, UK and Netherlands), it is awaiting approvals in China, Japan and the U.S. In Latin America, it is focusing on consolidating its operations in Brazil and Mexico.
Nandakumar regrets not focusing enough on the domestic market and has made it the company’s agenda this year. In India, so far, Perfint has been focusing only on tertiary hospitals, private hospitals and diagnostic centres. It now plans to focus on teaching hospitals and the Government.
“Investors will not be interested in us because of our revenues alone. Our products should be used by a large population of interventional oncologists and the patients should benefit from it.”
With this revised focus, the company has pruned its headcount to 80 people from 95 six months back. “We have trimmed the organisation, but, we are spending more as we are targeting expensive countries like the U.S. and Europe,” declares Nandakumar.
Playing the Robotic game
Perfint uses robotic guidance for needle placement while many other players use electromagnetic guidance. Nandakumar says, “We did not enter Robotics as a first choice. We evaluated all the solutions we had at various points of time before deciding on Robotics.” The company also had a few requirements given by the users of the equipment. One, the procedure should not add to the overall cost, either to the hospital or to the patient. While capital investment was acceptable, disposable heavy products or solutions were not welcome. The electromagnetic solutions, which are optical-based solutions, were disposable heavy. “It costs around US $300 to US $600 per procedure. And in a market like India and China, just the procedure cost is around US $100 to US $200. So it did not make commercial sense to use this method,” states Nandakumar. Two, the users also did not want any extension to their current procedure time. And an electromagnetic process or other technologies added another 10 minutes to the overall procedure time. Third, it was necessary that no changes had to be made to the CT scanner. Based on these requirements Perfint decided to develop electromechanical or robotics procedures.
The company has collaborated with some of the best research laboratories in the world like Stanford Research Institute and Robarts Research Lab (Ontario, Canada) for some of its new product programs. It has also has an Advanced Technology Laboratory (ATL) in the U.S. ATL has a research team focusing on creating technologies for its products in the interventional oncology space. Perfint has created a proof of concept for a potentially path breaking smart sensor working closely with scientists from NASA and has successfully conducted animal trials for this concept in the animal laboratory of NASA. “We are waiting for limited human procedures which will be anytime now,” says Nandakumar.
Charting a new path
Perfint got its Series C funding (to the tune of US $6 million) from Norwest Venture Partners (NVP), IDG and Accel Partners in January 2012 and Series D funding (to tune of US $11 million) from NVP in January 2013. It plans to raise a last round of funding of about US $20 million in the next few months.” And most of it will be used for market expansion and not for technology,” shares Nandakumar. With its new launches, revised export market strategy and renewed focus on the domestic market, Perfint is all set to reach its Rs. 100 crore turnover target for FY 2015.
Talking about the future, Nandakumar aims to either get the company listed in the bourses or make it a good acquisition target. However, before that, he wants to increase the product acceptance, get patient relief, regulatory approvals and necessary patents. “Investors will not be interested in us because of our revenues alone. Our products should be used by a large population of interventional oncologists and the patients should benefit from it,” concludes Nandakumar.
|Rs. 14 crore turnover for FY2012||Rs. 21 crore turnover in FY 2013. Aims to be a Rs.100 crore company by FY 15|
|95 employees||80 employees|
|Spreading thin in the export market||Consolidating and concentrating on specific countries and customers|
|Announced MAXIO in May 2012||Shipped around 25 units of MAXIO so far|
|Got its Series C funding (to the tune of US $6 million) from Norwest Venture Partners (NVP), IDG and Accel Partners in January 2012||Got Series D funding (to tune of US $11 million) from NVP in January 2013. Plans to raise a last round of funding of about US $20 million in the next few months|
STARTUP SCHOOL WITH S. NANDAKUMAR, FOUNDER AND CEO, PERFINT HEALTHCARE
Perfint Healthcare operates in a niche space of providing interventional oncology assistance solutions. It has had many firsts to its credit and some unique challenges that can serve as a lesson for many entrepreneurs. Nandakumar shares with The Smart CEO some of these experiences
This seat is taken!
The company received its first patent for its Robotic Technology in March this year after a wait of six years. As it operates in a niche space with its technology being the first of its kind, its experience will help entrepreneurs understand the nitty-gritties while applying for a patent:
One, decide whether you want to play in a space that is commercially viable or in a space which gives you a scientific edge. Sometimes, not having a protection for your business may be sufficient. You can run your business without a patent as long as you will not be sued for infringement. As an organisation, we wanted to focus on areas that are patentable from a commercial perspective. In the process, we have also come up with a scientific patent.
Two, before filing a patent, identify if you have an opportunity to even play in that space. If you have a unique idea, then apply for a patent.
Three, do not go for a jumbo patent. For example, it took us six years to get our patent as it had several claims to it. On hindsight, we realised that each one of these claims could have been an independent patent application. If we had an independent patent, we may have received the grant faster.
Four, take advice from experts in this space. A very nice idea can get stuck in the process if it is not drafted well and you do not know how to handle objections from patent officers.
Getting a makeover
Perfint has transformed itself from an R&D services company into a medical equipment manufacturer. From providing diagnostic tools with ROBIO, Perfint now offers complete care system with MAXIO. Understand what it takes to transform your business model
It is important to be married to your conviction, but you should also be ready to part ways with your own idea if you see that it is a suboptimal thought. We believe that the time has still not come for independent R&D services. Our idea was to work with larger companies, identify possible areas of opportunity that exists for them and build a prototype. This means we should have been a part of the client organisation’s product road map. But, that time is yet to come.
So, we put together a prototype of one of our ideas – PIGA’s concept. We found the right people to back it and quickly shifted from being an R&D player to a product player.
When you are going through the change, you need a lot of mentors. In our case we had a good set of mentors who helped us navigate the changes.
Cross border learnings
The company exports to the global markets, including the highly regulated US market. What does it take to make your mark in the global market?
Initially, we did not get our export strategy right. We spread thin and sold very few equipments in every country. While it worked well from a revenue perspective, it is not the right thing to do to sustain the business. There has to be a minimum critical mass. Today, we have our installations all over the world map. But, driving product adoption is a bigger challenge than getting a customer. So if we were to redo whatever we did, we would focus on a few cancer specific markets. We would have advanced our entry into China faster than entering Malaysia, Vietnam or Australia, where you cannot sell more than few units.
While it is nice to have installation and presence in multiple markets, it is not that critical. What is critical is your ability to serve customer population more effectively, getting them to use the products and see the benefits for the end user. And for that you have to establish well in your home base.
If you want to evangelise your product, do it yourself. Remember distributors have very little interest in your product, particularly if it’s outside their country. While distributors can be our partners, we need to make our initial investment in the market. In our kind of equipment, we need to find the key opinion leader, put the equipment there, get them to use it, show the value and create the prospect funnel before the distributor takes it on commercially.
Breaking out of the cocoon
Product development in the medical devices industry is time consuming with it being research driven. Please help us understand this cycle.
The first half of the product development cycle is to create a product road map and define the product. A typical cycle for us is about five years. First year is spent on realising the roadmap, which is a part of the business strategy. During each year, we understand how we convert the roadmap into a definitive product requirement. We convert the voice of the customer exercise into a market requirement document. The conceptual prototype is then developed and after identifying the gaps in it, gets converted into a market requirement document. With this the engineering team starts work.
The actual product development cycles starts then. The time taken to complete it depends on the complexity of the product. If one is developing a CT scanner, it will take about five years while an accessory could take two or three years.
The product requirement document becomes the superset for the engineers. The architect converts it into a subsystem document (systems development requirement specifications) for mechanical, software and electronics departments to work on. Once, everyone has done their job, the architect puts them all into a prototype, which will be the first, time you touch and feel a product. We started our ultrasound project in April last year, which got cleared by the board for development in May 2012. In September this year, we could touch and feel the fully integrated prototype. This is the second prototype. The first prototype was ready in May, which we fine-tuned, based on inputs. For us, the SONIO program was faster because we had the MAXIO and we were reusing its planning system.
The engineering group tests it for safety, apart from functional requirement. We will then take it for a clinical evaluation by which time we would have the necessary approvals. We then launch the formal clinical study and have a few clinical papers ready. By the time we launch, the product clinical trials will be completed. Do a pilot launch before the formal launch to understand the commercial usability of the product.