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MDT to Enter Indian Dialysis Market

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Medtronic, Inc (MDT - Free Report) , a global leader in medical technology, announced its foray into the kidney dialysis business in collaboration with India’s Apollo Hospitals Enterprise Ltd., one of the leading names in healthcare in Asia.

The joint venture will enable MDT to commercialize an innovative, affordable and portable hemodialysis system in India. The portable system is expected to enhance patient access to Renal Replacement Therapy (RRT), particularly in the cases of End Stage Renal Disease (ESRD) patients.

Hemodialysis is the most widely accepted dialysis treatment, both globally and in India. More than 90% of patients in India undertake hemodialysis, as part of the standard dialysis treatment for chronic kidney diseases.

When a patient reaches the ESRD level, survival chances become low, with RRT being the only possible treatment option. The best treatment option for ESRD patients is however, renal transplant.  Yet studies show that only 5% of ESRD patients receive the much-needed transplant, due to a shortage of kidney donors. 

As a result, an increasing number of patients enter ESRD, for whom the next best treatment alternative to transplant is dialysis. It is a mechanism through which excess metabolic waste, toxins, and water are removed from the blood.

Medtronic’s portable and cost-efficient hemodialysis service is designed to use much less water compared with existing dialysis systems. Less critical features will in turn, help physicians and patients to respectively render and receive the otherwise difficult therapy. These special aspects were considered keeping in mind the various shortcomings previously faced with regard to dialysis treatment in India.

The collaboration will help MDT to focus on the emerging Indian market. Medtronic envisages high-teen growth in the near term and long-term growth of 20%. Emerging markets are expected to serve as positive catalysts for the company and provide a consistent source of revenue over time. Medtronic recently garnered growth of 15% from such markets.

On the other hand, the partnership with Medtronic marks an important step for Apollo Hospitals in the field of research-driven healthcare. Apollo Hospitals expects to accomplish its mission of delivering enhanced clinical outcomes through bench-to-bedside innovation.  

Medtronic plans to develop and manufacture key components of the system in India, with an investment of more than 150 crore rupees (US$25 million).  It is also establishing an India R&D team that will specifically focus on design, development and manufacturing of key components of the system in India.

The commercial launch of the product is expected in 2016. Hence, neither MDT nor Apollo Hospitals expect the collaboration to materially impact their earnings in their respective fiscal years.

Both companies foresee immense opportunities in the Indian dialysis market, as statistics show that nearly 10% of adults (nearly 7.5 crores or 75 million people) suffer from chronic kidney diseases, while another 200,000 ESRD patients require dialysis or kidney transplant annually.

The new portable hemodialysis system promises to change the entire dialysis experience, enabling patients to receive the treatment at home, rather than having to go to a hospital or a stand-alone dialysis centre, at lower costs than traditional dialysis methods.

Medtronic currently carries a Zacks Rank #3 (Hold). Other better-placed stocks that are worth a look include Bio-Rad Laboratories, Inc. (BIO - Free Report) , carrying a Zacks Rank #1 (Strong Buy), and Boston Scientific Corp. (BSX - Free Report) and ResMed Inc. (RMD - Free Report) , each carrying a Zacks Rank #2 (Buy).

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