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Frugal Innovation: Revolutionizing The Medtech Landscape

In a world of endless innovation and incessant technological progress, who can we really call a pioneer?

1Jun

Consider Dr. Sandek Ruit. An ophthalmologist from the Tilganga Eye Centre in Nepal, Dr. Ruit has restored vision to tens of thousands of people across the country. How? By working with lab technicians to develop an inexpensive acrylic lens - called the intraocular lens – which is almost $100 cheaper than its imported counterpart, he and his team have been able to reduce the average cost of cataract surgeries to just $115, compared to an estimated $3,000 in the West. The Centre produces and sells approximately 350,000 intraocular lenses across the globe annually at a cost of roughly $4 each, and Dr. Ruit also trains foreign surgeons to replicate the procedure in their respective home countries. He and his team embody the ‘frugal innovation concept’, having restored eyesight to thousands at a very affordable cost.

Frugal innovation, defined

Put simply, frugal innovation is the process of reducing the complexity and production costs of a product in a scalable and sustainable manner. It can be achieved through redesigning products, implementing new business models, and re-configuring value chains, although ultimately consumers should always be the beneficiaries of such a development. By reducing the cost of product significantly, it immediately becomes available to tens of thousands of users who could barely afford the product earlier.

The industry that stands to gain the most from the concept is medical technology, which historically has been the preserve of high-income, developed nations. Currently, 76% of the world’s medical devices are being used by only 13% of the global population, with many inapplicable in developing nations due to a lack of skills, training, and environments in which to utilise the technology. Most are not designed to cope with the harsh environment, humidity, and dusty conditions typical to the developing world; in sub-Saharan Africa for example, 70% of the medical equipment purchased is idle according to the World Health Organisation.

Using frugal innovation to tailor products to different markets

As recently as 2014, between 70-75% of medical device sales originated in developed economies at a growth rate of 4-6%, but in the past few years original equipment manufacturers (OEMs) have begun to focus on some of the world’s developing economies – and with good reason. Some of the world’s fastest-growing economies, including the BRIC countries and others in Asia and Latin America, are exhibiting even faster growth rates of 10-18% year on year. As a result, Medical device OEMs are beginning to realise the importance of developing different products for different markets. By extension, this is helping drive frugal innovation as OEMs turn away from premium product production towards value-based devices, which they manufacture in emerging countries and tailor to the economic, infrastructural, and environmental conditions of the product’s target market. It’s a trend that some of the biggest names in MedTech are beginning to cotton onto, including GE, Siemens and Medtronic, to mention a few.

GE for instance has experienced great success in emerging economies with its ‘MAC I’ portable ECG machine, which at a price of $535 costs just 20 cents for each use. Medtronic meanwhile is working on cost-effective implantable devices such as pacemakers, which it is seeking to market at between five and ten times lower than the current cost. These exciting developments have the potential to revolutionise healthcare in emerging economies, where the infrastructure is not as advanced, and provision not as affordable, (as a percentage of disposable income) as in developed economies.

Putting the concept into action

We’ve talked at length about the underlying aspects of this concept, but putting it into action is an altogether different matter. Engineering service providers (ESPs) in particular have a pivotal role to play in the widespread adoption of frugal innovation. By encouraging companies in the MedTech sector to pursue collaborative business models, ESPs can now create agile ecosystems that are significantly more conducive to innovation than the clearly defined but often rigid confines of OEMs.

Implementing a programme of frugal innovation is not without its challenges, nonetheless. Its success depends heavily on different stakeholders creating the conditions for it to thrive. Major technology companies, for example, need to nurture a culture of innovation within the industry and encourage OEMs to experiment with their products in order to find optimal solutions for developing markets. End-users should also be co-opted into the product design process to ensure that MedTech products are effective and easy to operate. And large OEMs should be encouraged to collaborate with innovators (who are often small service providers) to move these potential MedTech innovations from the design phase through to production.

This represents a difficult challenge, but not the biggest one – that continues to be prohibitive government legislation across the globe, which isn’t currently sufficient to regulate the MedTech industry and guarantee the quality of the products on the market. By instituting definitive regulations to safeguard against this, governments can ensure that frugal innovation doesn’t end up as a means to merely cut costs at the expense of product quality.

And herein lies the issue. Rapid technological advancement in recent years means that developed nations need no longer be the sole beneficiaries of innovation in medical care. OEMs of all sizes now possess the means to pursue frugal innovation and produce new forms of medical equipment at a far lower cost than ever before. Provided sufficient legislation and regulation is implemented to protect product quality, the concept possesses the potential improve the lives of citizens across all parts of the globe.

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