SMTI Project Report

Netexplo Group 6
Acix-100 by Achira Labs
Submitted by:
Devendra Meel (Roll No. -1511171)
Sahil Makkar (Roll No. -1511202)

Table of Contents
1. The concept/Technology (Acix 100- Analyser & Fabric-based platform cartridges). .2
1.1 Societal value of the invention........................................................................................ 2
1.2 Locating ACIX-100 on the Gartners Hype Cycle
1.3 Mapping ACIX-100 on
Innovation framework:............................................................................................................ 2
2. Product Differentiation........................................................................................................ 2
2.1 Convenience of Low turnaround time-...........................................................................2
2.2 Low Cost.............................................................................................................................. 3
2.3 Product Design................................................................................................................... 3
2.4 ACIX-100 customer centric Delta Model:.......................................................................3
3. FabChip Manufacturing-........................................................................................................ 3
4. Industry Analysis and Competitive Positioning...............................................................4
5. Business Model...................................................................................................................... 4
5.1 Substance and Enactment in Achira Labs Technology Strategy:...............................4
6. Strategic Intent and core competence and Mapping activity system for Achira
Labs:.............................................................................................................................................. 5
6.1 Strategic intent:................................................................................................................. 5
6.2 Core competence:.............................................................................................................. 5
7. Potential market size:............................................................................................................ 5
8. Customers:............................................................................................................................... 5
9. Financial Analysis................................................................................................................... 6
9.1 Primary revenue stream................................................................................................... 6
9.2 Secondary revenue stream............................................................................................. 6
9.3 Accessing ACIX-100 on Appropriability, Dominant Design and Complementary
assets framework:.................................................................................................................... 6
9.4 Capital Investment and Costs-....................................................................................... 6
10. Long Term Exit Strategy:..................................................................................................... 6
Appendix....................................................................................................................................... 7
1. Product Acix-100 (Left), Fabric based cartridge (middle) & plastic based
cartridge for Acix-100.............................................................................................................. 7
2. New Product development cycle & S-curve...................................................................7
3. Fabchip weaving................................................................................................................. 8
4. Industry structure.............................................................................................................. 8

1. The concept/Technology (Acix 100- Analyser & Fabric-based

platform cartridges)
The product acix-100 and the fabric based cartridges called FabChips (Refer Appendix 1) by
Achira Labs are few indigenous products which were able to translate lab research into a
marketable product in the field of affordable diagnostic testing. The tests can also be done at
centralized testing labs (path labs, Hospitals), Doctors office, However, Acix-100 can do same
tests real time, at lower cost, and with less errors. It uses the patented microfluidics technology
using miniaturized-small sample volumes & low reagent volumes, Integrated- lab on chip
concept and automated real-time testing. Achira labs is first mover across the world in
developing and marketing lab on chip concept.
1.1 Societal value of the invention - There are millions of people in India that suffer
from a range of infectious diseases and this product tries to make a small difference in solving
that problem by screening people and getting the right diagnosis quickly at a low cost. Not only
does the material works better than plastic (threads can more easily direct the flow of fluids) its
also a far thriftier option for a country like India which is rich in textile manufacturing. Working
with local artisans, weaving is being integrated for the manufacture of fabric chips. This can
gainfully employ artisans and skilled weavers to create a differentiated product. FabChip
manufacturing technique has got a number of attributes that are relevant in the current context
of climate change. It is very eco-friendly approach as silk can be incinerated easily compared to
existing cartridges based on plastics.

1.2 Locating ACIX-100 on the Gartners Hype Cycle

1.3 Mapping ACIX-

100 on Innovation framework:

Achira Labs product has passed the R&D phase, technology trigger and is ready with the first
generation of product. Currently early adopters are in the process of investigations and it is
getting some traction in terms of media coverage. It will go through future rounds of funding as it
is getting prepared to launch the product in Karnataka later this year. After initial commercial
launch, in next two years, product will enter into peak of inflated expectations and
subsequently the Trough of disillusionment stage.
(Refer Appendix 2-product
development cycle & Acix position on S-curve)
Achira Labs has overturned the core concept of diagnostic testing technology by inventing
flow lithography which uses tiny hydrogel particlesthe bendy, absorbent stuff contact
lenses are made ofas sensing elements. At the same time, It has changed the linkages
between the diagnostic technology and feeding of samples along with reagents in the platform
by introducing FabChip- the fabric based cartridges. Thats why, according to us, ACIX-100 is a
radical innovation.

2. Product Differentiation
2.1 Convenience of Low turnaround time- The product can help diagnose a fever of
unknown origin and identify if its malaria, dengue, typhoid or any viral infection with a single
finger-prick of blood within 20-30 mins compared to centralized labs taking at least 24 hours. The
convenience of having real-time results is important, especially for critical conditions like heart
attack and in cases like TB where every infected patient can spread the disease to his/her
community. Real time testing helps doctors as well as the patients. Doctors benefit from low
leakage of patients while the patients save on bundled costs associated with visiting the doctor
in city from far off rural areas - the cost of overnight stay, etc.
2.2 Low Cost - Acix-100 is a low cost diagnostic testing
solution compared to existing centralized labs. For example,
results for up to 10 tests are provided at 1/10 th of the cost
charged by automatic analyzers like ELISA. The low cost testing
is possible because Acix-100 uses fabric based strips (FabChips)
costing about 1/3rd the price of commercial testing kits. These
chips are 1/10th the size of normal chips and are cheaper
because of the low cost of raw material i.e. yarn. This can bring
down the cost of glucose test to Rs 5/test from current market
cost of Rs 25/test.

Achira Labs is trying to shift the productivity

frontier (State of best practice) by providing differentiated product at low
cost.

2.3 Product Design Achira labs has used Design thinking for making its product very
simple to use which is extremely critical in order to achieve scale. The product can be used by
any untrained person (no requirement of trained technicians) and the results can be
comprehended easily. It consists of microscope slide size cartridges (size of a credit card) and a
desktop reader. It takes a small finger prick of blood sample and then does battery of tests (at
this point of time ~10 tests/ protein tests along with thyroid tests).

2.4 ACIX-100 customer centric

Delta Model:
For any new startup or venture, at the
earlier stage, developing system lock-in
and total customer solution is really
difficult. That is why, most of them focus on
providing the Best product to customer.
There are primarily two ways to have the
best product, differentiation or cost
leadership. However, Achira Labs have best
of both these worlds with the new ACIX-100
platform by having giving low cost differentiated product.

3. FabChip Manufacturing-

FabChip- Silk based strips are made using woven fabric

instead of current paper based polymeric membrane. Paper based strips can
be used only for glucose and home pregnancy tests while fabric chips
can perform variety of basic tests.
This (Figure on left) is white serpentine microfluidic chip against gold
background. The sample fluid flow (blood, urine sample) will happen
along white serpentine path and in between there are little blocks reagents created by weaving
yarn dipped in reagents. In the cartridge they use a hydrophobic base (zari saree yarn) and on it
make pattern with hydrophilic yarn. This allows the liquid to remain constrained in the hydrophilic
portion only. There are multiple spots on the chip and when sample flows and reacts with
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reagents, these spots glow with fluorescent lights: the brighter the glow, the more the presence
of the analyte. Reading each spot, we can identify the disease.
Chip Manufacturing India has places like Kanchipuram where very intricate millimeter sized
repeatable pattern woven over a saree (Refer
Appendix 3). Silk has interesting properties-it is a
polypeptide, one can do a number of interesting
conjugation with silk. Silk yarn is coated with reagents
then put on a handloom and weaved. The use of silk
allows everything to be sourced locally- the fabric, the
looms, the weavers. This process is extremely scalable
in terms of manufacturing (involves low capex) and
cheap & efficient distribution. Fabric is woven in a
single eight-hour-shift, by a single hand-operated loom,
could be used to make 100,000 sensors. With a mechanized loom, the company could turn out
ten times as many. And then, it could drive down costs even further by setting up specialized
units closer to the populations that need them, and cutting out cost-inflating middle-men. ACIX100 is in preparadigmatic design phase and process innovation has yet to be started.

4. Industry Analysis and Competitive Positioning

Characteristics of the Diagnostics industry: (Refer industry structure in Appendix 4- Pathology &
radiology)
Indian diagnostic market is highly fragmented and
unorganized. The diagnostic market consists of 3 types of
players - unorganized standalone centers, unorganized
hospital based centers and organized diagnostic chains
with relative size as depicted in figure. Out of the
diagnostic chains, 35-40% are pan India chains (Dr. Lal
Path, Thyrocare, Metropolis, SRL) & rest are smaller
regional chains. If we leave metro cities along with major
tier-II cities there is an abysmal lack of testing facilities
and accessibility. Further, the number of tests that are
being done will be increasing in future. For example,
glucose test is a very crude marker for diabetes and there
are many more tests that are needed to classify the type
of diabetes. Achira labs will help to miniaturize these
tests by performing a lot of test with few mm3 of blood.
Achiras product Acix-100 is trying to capture the share of standalone labs (48%) and small
hospitals/doctor clinics (37%) by providing affordable, real-time, miniaturized and automated
testing or Point of care diagnostics

5. Business Model
Diagnostic industry currently works on printer and cartridge model. Equipment providers make
money on consumables/reagents. They provide bulky analyzers to lab at no-cost in return for
agreement to buy minimum fixed amount of reagents at pre-agreed price. This kind of model
forces centralization since only the large labs can afford to take testing analyzers due to their
ability to have high test volumes/business while the smaller labs become the sample collection
centers of these large labs. There are more than 100,000 labs in India but only 200 of them are
accredited by national regulator NABL which clearly shows that majority of these labs are sample
collection centers. So, patient submits sample to doctors office or lab, then it is sent to
centralized lab which performs tests and shares the result. In this model there are a lot of
problems such as sample storage issues (cold chain logistics), high waiting time (minimum 24
hours), labelling errors. Multiple tests can be performed on a single chip using Achiras product
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which makes it disruptive technology that could bring about decentralization in diagnostic
testing

5.1 Substance and Enactment in Achira Labs Technology Strategy: The

company wants to be the first mover and market leader in point-of-care diagnostics by
committing resources, management bandwidth towards product development and internal
technology sourcing.

6. Strategic Intent and core competence and Mapping activity

system for Achira Labs:
6.1 Strategic intent: Achira labs
aims to become market leader in
Point-of-Care clinical testing in India
6.2 Core competence: Achira
labs
has
cutting-edge
research
capabilities in the field of advanced
microfluidics-based
solution
for
applications in diagnostics. It has an
asset base of 25 international patents
and Indias best researchers/PHDs in
the field of microfluidics.

7. Potential market size:

The global IVD (In-vitro/ sample based diagnostic) market is

currently $60.5 billion. IVD industry is growing at 8% worldwide and 15% in Indian & China. The
Indian diagnostic industry is valued at $7.56 billion as of 2016-17 which is expanding at rate
of 15-16%. Indian Point of care diagnostics is rapidly emerging segment in India with a market of
about Rs.800 crore and a CAGR of roughly 20%.

8. Customers: Achira is initially focusing on thyroid tests and female infertility panel testing
which can be used by leading IVF chains. After this small standalone labs, doctors and
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diabetologist facilities will be targeted. This will enable them to conduct a variety of tests in
their premises itself, instead of outsourcing it to central labs.
The end users can also be hospitals which can be convinced easily due to weak regulatory
environment. Indian government no clear regulation is there in diagnostics instead more
regulations in good manufacturing practices. Hence they check more the facility making the
product rather than sample test results. Many times the MNCs also release product without any
approvals under RUO- research use only sale. This helps to convince the customers many
hospitals like Apollo can chose to use such new technology as legally they dont need to comply
with any regulation. They need to find the key opinion leaders i.e. physicians who believe in the
technology and then can take it forward.
8.1 Crossing the chasm: We analyze the Achira
Labs microfluidic point-of-care medical test platform ACIX100 on the basis Technology Adoption Lifecycle (TALC)
model. The ACIX-100 product has been received quite well
by the innovators or technology enthusiast, however, there
is little money to be made from this segment of customers.
The next segment in TALC model is early adopters or
visionaries who are the tech investors and look for higher
returns. In the current scenario, ACIX-100 has received
investments from
Catamaran, various government
institutions etc.
The biggest challenge for ACIX-100 is to cross this chasm between Visionaries and
Pragmatists (~34% of total market). The chasm here is too big as most of the doctors and labs
have a relationship with centralized large pathology labs. The biggest hurdle for Achira will be
breaking the cozy doctor-lab nexus in which doctors gets a 30-40% cut for every lab test(s)
recommended. Below are some of the recommendations that will help Achira Labs to make ACIX100 a mainstream product:
In healthcare business the trust is most critical factor. Hence there is a need to find the key
opinion leaders i.e. physicians who believe in the technology and then can take it forward.
After 6 months of launch Achira will have to work with local distributors.
As ACIX-100 is a low-cost, low-turnaround solution, it will be really useful in rural India. Hence,
Achira Labs should partner with central & various state governments to make this platform
available in such areas. After our discussion with the founders, we have found out that they
are already in talks with Karnataka government to launch the ACIX-100 platform in rural
districts of Karnataka. Subsequent to this launch, founders are planning to take this initiative
to various other states and eventually the goal is to make it Pan India solution.

9. Financial Analysis
9.1 Primary revenue stream will be the microfluidic product sales to small labs and
doctors. Nearest comparable product available for small hospitals and labs costs 9 lakhs. Even
though Achiras product would be priced at a much lower level, still not many of these small-labs
will buy the product upfront. They prefer reagent-rental model in which lab signs a fixed tenure
contract with the equipment manufacturer, and assures product manufacturer a fixed monthly
amount in consumable sales. In case of Achira labs product for example, endocrine test/thyroid
will cost around Rs100-150 compared to Rs 500 in pathology labs. Currently, a small lab
performing 100 thyroid tests a month pays pathology labs ~ 70% of 500*100 = Rs 35000/
month. However, if they switch to Achiras product they will pay only ~150*100 = 15000/month
rentals to Achira. The second set of customers i.e. small hospitals would fetch a revenue of 3-4x
of a small standalone lab resulting into a rental income of Rs 50,000/month. According to our
estimates, Achira will capture 4% of 100,000 labs and small hospitals/doctors (1/10 th the no. of
small labs) in next five years.
9.2 Secondary revenue stream- Achira provides custom-made microfluidic chip
services to institutional research labs across the country including IIT Bombay, IIT Madras, IIT
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Guwahati and others. These chips may not necessarily be used for diagnostic purposes some
professors may be developing an organ on a chip, some may be working on a sperm separation
device for IVF applications. Besides, it also has product partnerships with a couple of MNCs for
developing new diagnostic tests on its platform.
Financial year
2017-18
2018-19
2019-20
2020-21
2021-22
No.
of
labs 500
1000
2000
3300
4000
paying~15000/month
No. of hospitals paying 50
100
200
330
400
~ 50000/month
Primary revenue
12 crores
24 crores
48 crores
79.2 crores 96 crores
Secondary revenue (% 40%
30%
20%
15%
10%
of primary)
Secondary revenue
4.8 crores
7.2 crores
9.6 crores
11.88
9.6 crores
crores
Total Revenue
16.8
31.2
57.6
91.08
105.6
crores
crores
crores
crores
crores

9.3 Accessing ACIX-100 on Appropriability, Dominant Design and

Complementary assets framework:
The innovating firm or being the first one to launch a innovative product might not be the most
profitable firm in the market. We use a framework having three building blocks (The
Appropriability, Complementary Assets and The Dominant Design Paradigm) to identify who wins
from ACIX-100.
1. The Appropriability: The product ACIX-100 is protected by 25 international patents and
hence, providing a safety net against the imitators and competitors and giving a certain
guarantee to capture profits at least in the short run.
2. Complementary Assets: The biggest complementary assets for ACIX-100 are the well
developed textile manufacturers and existing last mile standalone diagnostics centers. Textile
manufacturers are specialized assets as it needs to be tailored according to the innovation,
while, standalone labs are general purpose assets.
3. The dominant design paradigm: ACIX-100 is in preparadigmatic phase where the design
is getting evolved towards a dominant and mature version of the same.
In summary, The ACIX-100 is in preparadigmatic phase with a sound product concept, well
developed complementors and tight appropriability regime and well placed to harvest market
value in near future.
9.4 Capital Investment and Costs- We couldnt get much details of costs through our
interaction with founder. They have raised 20 crores from Catamaran Ventures Nadathur
Raghavan. This amount is sufficient for them till 2017 end including all product development
costs already incurred and will also include the commercialization of Fabchip. Antibodies are very
expensive- minimum is 10,000 rupees a milligram. We are unable to accurate project the costs
due to lack of data.

10. Long Term Exit Strategy:

Achira is funded by a long term investor- Nadathur

Raghavan of Catamaran Investments (co-founder Infosys). Further the business model is quite
lean, cash rich and self-sustaining. Hence, there wont be much capital requirement as far as
Indian Market is concerned. If the company expands globally then it may need partnerships or
may enter into licensing agreements as the product is backed by strong intellectual capital of 25
international patents for six unique inventions. According to our analysis, Indian business path
would logically go towards the IPO route once the product gets some traction and picks up
growth.

Appendix
1. Product Acix-100 (Left), Fabric based cartridge (middle) & plastic
based cartridge for Acix-100

2. New Product development cycle & S-curve

ACIX-100 has gone through the entire new-product development cycle; it has taken almost three
years to each commercialization stage from the initial Idea generation stage.

S-curve-Explaining how innovations start slow, accelerate and then hit a ceiling requiring the
companies to jump to a new technology. Achira labs product has just past the fermenting stage
where initial performance might not be up to the mark and was improved. Now the product is
ready for commercialization and Take-off stage.

3. Fabchip weaving
Weaving of repeatable patterns in saree at Kanchipuram (Left), Weaving and dyeing
of yarn with reagents at Achira Labs facility (Right)

4. Industry structure
There are 2 segments of the diagnostics industry In vitro diagnostics/Pathology- where one needs to take a sample (blood,urine,stool,etc)
and diagnose the proteins, DNA, metabolic.
In vivo diagnostics/Radiology- where one needs to get a full body scan in person e.g cancer
monitoring, X-ray, Ultra-sound, tumor, bones, eyes scan.

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