Dec 20Interview

Innovation and foresight are important for the survival of any business

Jatin Mahajan, Managing Director, J Mitra

Jatin Mahajan, Managing Director, J Mitra talks about the key learnings from the COVID-19 pandemic, the challenges faced at the company’s manufacturing unit and the way forward in 202, with M Neelam Kachhap

How did the COVID-19 pandemic affect medical device manufacturing?

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The initial two to four days of the lock down were very difficult and challenging. Everything came to a stand-still. The manufacturing units were closed; staff and workers were unable to reach offices and and essential supplies were completely disrupted. While we fall under the essential services category, and therefore exempt from the restrictions, we had to arrange passes for our staff, and in the ensuing chaos and melee, this took a lot of time and energy.All forms of transportation and logistics were severely affected. Raw materials in transit were held up along the route. No new orders for raw materials could be placed in the embargo situation. So, we were forced to handle the double whammy of human resource crunch and supply-side stress – the two most critical aspects for any manufacturing unit. Also, the scenario created a reduced cash flow and liquidity issue which is very detrimental for the smooth functioning of any industry.

What were the challenges faced by the medical devices business?

Unlike us, most players in the medical devices industry heavily bank on import of raw materials from abroad. The logistics and import-export embargo created an immediate flux for the industry – a scenario where they did not have enough raw material to sustain production.

The prevailing inverted duty structure favoured finished products (imported IVDs) over raw materials (made in India IVDs) – consequently leading to an unequal playing field for all domestic producers of IVD devices.Another key impact was the overall negative sentiment created – the fear created because of the corona pandemic created an environment of fear and mental stress for all, impacting workers morale which had a direct bearing on attendance as well as productivity.The most critical challenge that continues to plague the diagnostics industry, especially concerning COVID-19 testing has been the export embargo that has been imposed by the government on Indian manufacturers. There is sufficient manufacturing capacity within the Indian medical devices manufacturers for COVID-19 test kits to cater to the domestic demands. The government, however, continues to source from international manufacturers, creating a situation of surplus stock for all Indian manufacturers. We are being forced to undertake production and related costs, and then sell in a restricted market. We are being forced to store these finished products which in many cases require a specialised temperature-controlled environment. This negatively impacts the shelf life and leads to a situation of near-expiry for the kits which affects the pricing and sale-ability of the products. This is severely hurting the bottom-line of the entire industry and needs to be addressed urgently.

Could you tell us about the innovations during this time?

Innovation and business foresight are important for the survival of any business. Innovations do not necessarily have to be technical – it could be in the overall work and management style itself. While we were not majorly impacted, we could see many industry counterparts struggling to maintain business continuity because of their over-dependence on China for raw materials. A robust business continuity plan is a must to mitigate the negative impact of large-scale disruptions. Flexibility and adaptability must be incorporated in the business ethos. But most importantly, while we may be a for-profit organisation, we have learnt the most critical aspect is humanity, compassion and social consciousness. It was critical to creating an environment devoid of fear, and as a company, we were able to create that mindset for the staff at work. We were able to keep the motivational levels high by meeting all legitimate financial needs while providing the safest and most sanitised work environment.

As a company, we understood the significance of human qualities as a driving force for professional and technical qualities which contributed to keeping the entire team together.Together, as a team, we went ahead to innovate and create/manufacture two of the best Covid-19 test kits –

• COVID-19 [IgM, IgG, IgA] MICROLISA – Our state-of-the-art test kit based on the Double Sandwich Elisa technology is a serology-based total antibody (IgM, IgG, IgA) detection assay for the indirect diagnosis of past exposure to COVID-19. It has a sensitivity of 94.04 per cent and specificity of 100 per cent.

• J Mitra also manufactures the ICMR-NIV developed COVID KAWACH IgG MICROLISA COVID-19 test kit which tests for IgG antibody in human serum/plasma and has a sensitivity of 96.33 per cent and specificity of 100 per cent.

How are things currently?

At J Mitra, things are almost back to normal. The production of the two COVID-19 test kits has kept us busy, in addition to the other test kits that we manufacture.The current scenario has drawn a lot of focus on the healthcare industry and its contribution. Its criticality and yeoman services are being re-established, recognised and appreciated. The world recognises the need for early warning systems in the healthcare segment, especially for COVID-19. There is an expectation of phenomenal growth for the diagnostics industry. Being a leading exporter of IVDs to the global market, we are likely to enjoy a sizable chunk of the global buyers seeking these test kits apart from our other existing product lines. But this will only be possible if the Indian government lifts the embargo on exports of COVID-19 test kits.

How do you see the situation improving in the next year?

India is the third-largest producer of pharmaceuticals and related products. The country has the potential to become the alternative supplier to global drug manufacturers replacing China due to growing distrust and possible sanctions. There is a possibility of the world focus shifting to India as the primary producer and supplier of APIs, IVDs and generic drugs, provided we act fast. The Centre has taken cognisance of India’s potential and need for self-sufficiency in APIs, IVDs and generic drug segment. The Central Government is actively looking at various possibilities and opportunities, and if all goes well as envisaged, India could end up being a major winner from the corona disaster.Recent developments indicate a concrete step in the right direction.

• Government announcement of Rs 140 billion fund for the establishment of three drug manufacturing hubs.

• Government allocation of Rs 3,000 crore to promote bulk drug parks in India along with a production-linked incentive scheme of Rs 7,000 crore.

• The government has identified 53 elements and APIs which will be the initial thrust in phase 1 of the government planning and will be promoted on priority.

The Indian government recognises aspects critical for winning this race – ensuring a cost advantage over China, faster government permissions and single-window clearances, ease of doing business, adequate financing, competent infrastructure, soft loans with longer repayments – these are aggressively being looked at.Speed is critical – If India has to succeed in capturing a significant portion of the market up for grabs, they have to display aggression and garner the first mover’s advantage.

What are your recommendations for the future?

Yes, there are some key aspects that I would like to communicate with the policy-makers.There is a need to cut down import duty on raw materials and hike import duty on finished goods, which is the lowest in India amongst the BRIC countries. This is very critical. Just to cite an example, ELISA finished products (HS Code – 38220019 List 4 Sr. No. 32) have 0 per cent duty and 5 per cent IGST, whereas the raw material for ELISA kits under the same HS code attract 5-20 per cent import duty plus 12 per cent IGST – creating a price differential of 20-25 per cent, and tilting the balance away from the home-grown manufacturers.Aspects critical for winning the Make-in-India race are – ensuring a cost advantage over China, faster government permissions and single-window clearances, ease of doing business, adequate financing, competent infrastructure and soft loans with longer repayments.Other key governmental focus areas should be – the creation of large clusters with a common infrastructure, facilities and subsidies for technological upgrades so that there are higher sustainability and economies of scale.

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