Allied Medical, a Gurugram-based family run company, has been manufacturing and distributing critical-care equipment like ventilators, anesthesia machines and defibrillators for close to 40 years.
In March, after India was hit by COVID-19, there was a huge shortage of ventilators, a mechanical breathing device that can blow air and oxygen into the lungs. Ventilators are critical for those affected by lung failure — one of the major complications suffered by patients with severe COVID-19.
Estimates that time were India would need 1.1-2.2 lakh ventilators by mid-May. But only 19,398 were available in the country then. Subsequently, the government earmarked Rs 2,000 crore under the PM CARE Fund to procure some 60,000 ventilators from domestic manufacturers.
Companies like Allied jumped into action, seeing the once-in-a-lifetime opportunity. “The government sanctioned 60,000 ventilators in March. In fact, the target was 1,00,000 and the first lot was 60,000. They (government) asked people how much you can supply, and released orders with a condition that it has to be supplied before June 30,” said Aditya Kohli, Director, Sales and Marketing, Allied Medical.
Allied took an order for 350 ventilators, and delivered them well before deadline. The other, more ambitious new entrants such as Agva signed up to supply 10,000 ventilators, public sector undertaking BEL agreed to supply 30,000 and Andhra Pradesh’s MedTech Zone (AMTZ) 13,500.
The price of each supplier differs, but the average is around Rs 4-5 lakh. “We have been in the business for 40 years, but we still did not have the courage to supply tens of thousands of ventilators overnight. It isn’t something doable, given the level of quality control,” Kohli said.
Allied says it has ISO 9001 and ISO 13485 accreditations and its ventilators have European CE certification.
Nevertheless, hopes of rising demand spurred the company to increase capacity — from a few hundred ICU ventilators before March to 3,000 per month by June.
In three months, India jumped from having a capacity of just 3,300 ventilators per annum to 4 lakh. An extraordinary feat, experts agreed.
The auto industry, PSUs, defence laboratories, all joined hands to help ventilator manufacturers overcome supply issues of components and funding. Before COVID-19, ventilator makers were relying on imports of upto 80-90 percent components. It is now less than 50 percent for companies like Allied. For other companies, indigenisation is as high as 70-80 percent.
The situation changes
Then, the scenario changed. By mid-April, it was found that most patients would require only simple oxygen delivery through nose prongs, using non-invasive ventilation (NIV) or BiPAP mode. Only a small percentage will need full-blown ventilators that provide invasive ventilation.
Medical bodies recommended avoiding ventilators as much as possible for coronavirus patients.
“In hindsight, it would have been much cheaper. In March, people never knew how the disease is going to transpire, people thought ventilators are required, and then in April, people came to know that putting patients on ventilators is actually causing harm,” said Rajiv Nath, Forum Coordinator, Association of Indian Medical Device Industry (AiMeD).
“A BiPAP machine, which costs about Rs 40,000, would have been sufficient,” Nath said.
With this, the government started asking manufacturers to update ventilators with new specifications, like asking for BiPAP mode and a high-flow nasal cannula (HFNC) with a flow rate of 100 percent. Costs went up further.
Companies had already invested money and expanded capacity, anticipating demand. Kohli says his company is in a “fix” now.
In fact, according to AiMeD data, AgVa had expanded its manufacturing capacity to 60,000 units per annum; Trivitron Healthcare, 60,000 units per annum; Skanray, 120,000 units per annum, and so on.
“We have surplus capacity, but we have nowhere to go,” says Kohli. “There has been an export ban since March, and the government is not giving new orders. They argue that we have already given orders for so many ventilators. At the same time, they are not allowing states to buy directly from us,” he explains.
“The government is aware since April that there isn’t such a big need for ventilators. They should have told manufacturers that they don’t need them anymore. Many would have stopped investing in capacity expansion,” says Nath of AiMeD.
“Now, they are not lifting stocks and cash flows are stuck. The government is not in a hurry. They should at least allow companies to export,” he suggests. “There is a good export market for ventilators, especially for ones with CE-certifications. If the government doesn’t allow exports, even that potential would be gone,” Kohli said.
Meanwhile, sources told Moneycontrol that one of the leading manufacturers is contemplating filing a writ petition against the government for not opening up exports in the absence of further procurement orders. – Moneycontrol