Indian Stent Maker SMT is Taking the Battle to MNC Shores

Sahajanand Medical Technologies, or SMT, the Surat-based maker of cardiac stents is not content with what it has achieved in India. The management now wants to take the battle to foreign shores. Its latest move stems from the outcome of clinical trials that establishes the company’s flagship drug-eluting stent (DES) Supraflex on par or non-inferior to Abbott’s blockbuster stent Xience on safety and efficacy. A cardiac stent is a device used to unblock clogged arteries. DES are coated with medicines that help lower recurrence of an artery narrowing after corrective surgery. While SMT’s Supraflex is coated with immune suppressant drug called Sirolimus, Abbott’s Xience uses Everolimus.

The study called Talent trial was one of the largest ever clinical train conducted by an Indian company overseas to test a medical device. The study led by Dr Patrick Serruys, a globally renowned cardiology researcher, was conducted in seven European countries (United Kingdom, the Netherlands, Poland, Spain, Italy, Hungary and Bulgaria), spread across 23 centers with a sample size of 1435 patients. The study reported that Target Lesion Failure (TLR), or the rate of major adverse cardiac events like heart attack, after implanting the stent for 12 months was 4.9 percent and 5.3 percent for Supraflex and Xience, respectively.

Significance of Talent trial

To be sure, SMT’s Supraflex is already available in Europe and annually sells more than one lakh stents in India. But those things hardly move the needle in the company’s favor in the US and Europe as doctors there are averse to place a life-saving device as critical as a stent in patient’s arteries unless it is tested on humans for safety and efficacy. That means companies like SMT will be limited to fringes in their fight against medical device powerhouses like Abbott Laboratories, Boston Scientific Corporation, and Medtronics in Europe and US. But now armed with positive clinical trial data, SMT believes it has a fair chance to take on MNCs in their backyard and will also help it beat its rival Abbott in India.

“There remained a perception that stents produced outside of India were superior to homegrown devices. There were demands from Indian manufacturers to prove that their devices are comparable to those made elsewhere in robust clinical trials. Talent is the first such trial to yield positive results and stands out with a far better efficacy compared to competitors,” said Dr Upendra Kaul, one of the leading cardiologist from India, who was the co-chair of the Talent study. Both the US and Europe are lucrative markets with annual stent consumption of one million each.

SMT is now in the process of assembling a team in Europe to crack the tender market. “To choose a stent supplier, authorities in Europe offer 50 percent weightage to product specification and randomized clinical data and the balance to pricing,” said Ganesh Sabat, CEO of SMT. “We are very price competitive, but lack of clinical data used to be a hurdle to win contracts. Now with the data in hand, we have a higher probability to bag tenders,” Sabat said. To enter the US market, the company may have to wait for some more time as it has to extend Talent clinical trials by adding US patients to gain approval from US Food & Drug Administration – the final frontier for any medical device company.

NPPA boost

SMT was a major beneficiary of the Indian drug price regulator’s – National Pharmaceutical Pricing Authority (NPPA) – effort to rein in distorted trade margin of cardiac stents through price controls. NPPA in February last year has imposed pricing caps to lower prices of stents by as much as 85 percent to check unethical profiteering and exploitive pricing and to ensure fair, reasonable and affordable price for coronary stents. The most commonly used DES stent is now capped at ₹28,000 per unit, excluding taxes, from up to ₹150,000 earlier.

NPPA found out that the trade margin enjoyed by distributors for sale to hospitals ranged between 13 percent and 196 percent, while the margin earned by hospitals was as high as 11 percent and 650 percent. It also imposed an 8 percent trade margin cap that would cover margins across the trade channels working from the level of manufacturers to the end user, even covering hospital-handling charges. While the NPPA decision caused heartburn to medical device makers and private hospitals and shrunk the overall size of the pie, that policy intervention has helped SMT emerge as the second largest stent maker in the country with a market share of 22 percent, trailing narrowly behind market leader Abbott which has a 25 percent share.

“NPPA decision certainly helped us,” Sabat told. According to him, what helped SMT and for that matter even Abbott to survive intense pricing pressure is their own supply chain and formidable front-end sales presence to directly reach out to hospitals, unlike other US counterparts and some Indian rivals that relied heavily on distributor-led model for their business. “The distributor-led supply chain ecosystem which had an iron grip on hospitals and doctors has been crippled now. More than price ceiling of stents, it is the 8 percent trade margin cap that dealt a blow to the inefficient supply chain. This was meant to maximize revenues for hospitals and distributors over clinical or scientific outcomes,” Sabat said.

Diamond angle

It took the ingenuity of Dhirajlal Kotadia, SMT’s founder, who figured out that the laser cutting machines he is developing to help gem-cutters to improve productivity and efficiency could also be used in the manufacture of coronary stents. Cardiac stents are essentially tiny mesh tubes produced using stainless steel or an alloy of cobalt-chromium. The process requires the same equipment and skill-set as diamond cutting. All it needs is a laser to drill a hole with a diameter of 2.25 to 4.5 mm and a length of 8 mm to 48 mm. Thus, Sahajanand Medical Technologies was born in 2001. The company became one of the first companies in Asia to indigenously develop and manufacture coronary stents. The success of SMT helped Surat and Vapi emerge as a hub of India’s stent making.

Though metallic and cobalt-chromium stents are ruling the industry, the future is with stents that use biodegradable or naturally-dissolving polymers. To remain relevant with changing dynamics, SMT has developed a stent using biodegradable polymers. The company, which was in the red five years ago, had turned profitable and ended March close to ₹400 crore. SMT, which raised ₹230 crore from private equity investors such as Morgan Stanley and Samara Capital in January, has been delivering an annual revenue growth of 40-50 percent.

The management now plans use funds for clinical trials on its bioresorbable stents, build sales teams in Europe and expand its production capacity in India by setting up a new plant near Hyderabad at an estimated investment of ₹250 crore. Sabat said the Indian stent market is poised to expand from 600,000 per annum to one million stents over the next few years due to the Ayushman Bharat Yojana. The proposed plant with a production capacity of 1.25 lakh stents will help it meet demand accruing domestically and internationally. Sabat said SMT isn’t resting, the company has bought a small European company that is working on cutting edge research to manufacture stents to treat brain strokes. – Money Control