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Corporate Report

Published on: Feb. 22, 2021, 10:35 a.m.
Healthium spreads its wings
  • Healthium’s real strength lies in its research and development activities

By Sumit Ghoshal. Contributing Editor, Business India

In a medium-sized hospital somewhere in Karnataka, an operation for gall-bladder stones is underway. As it reaches a critical stage, the lead surgeon stretches out his left hand for the Operating Room nurse, who places a forceps with a needle and thread mounted on it. Without turning his head to look at the nurse, the surgeon begins sewing up the internal wound inside the patient’s abdomen.

The needle with a suitable piece of thread, which began its journey from a Healthium Medtech factory, has reached its final destination. This is not an isolated event; it is repeated each and every day in as many as 18,000 hospitals all over India. Also noteworthy is that there are thousands of varieties of surgical needles used for different types of operations, most of which are produced at the Healthium factories.

The story began in December 1992, when two Bengaluru-based entrepreneurs joined hands to establish Sutures India, the earlier avatar of Healthium India. The two friends, L.G. Chandrasekhar and S. Subramanium, were both working in leading medical device MNCs; they quit their respective companies to start their own venture. Till then, Chadrasekhar was working with Smith & Nephew, while Subramanium was in Johnson & Johnson.

During the next two decades, Sutures India acquired the technological expertise to produce high quality surgical materials, mainly needles and sutures, and the marketing muscle to spread their wings in every part of India. Their success and consistency over a long period attracted the attention of major private equity players – TPG and CX Partners. In 2012, CX Partners invested Rs200 crore in return for a 30 per cent stake and the following year, TPG acquired a 23 per cent stake in exchange for Rs147 crore. Barely five years later, Apax Partners acquired its stake, along with the entire promoter’s stake, paying a staggering Rs1,900 crore, for a total 99.8 per cent stake. With the promoters having made a complete exit subsequently, Healthium is now a totally professionally managed company.

With these resources, Sutures India made a series of small acquisitions in the developed markets and expanded its product portfolio, to include a wide range of surgical and medical essentials as well as other consumable items. These products are marketed through an extensive network spread over more than 500 districts all over India. They are also exported to 70-80 countries in Europe, South America Africa, Asia and the Middle East.

In May 2017, the company’s name was changed to Healthium Medtech, because it was now offering many more products apart from needles and suture materials. “The rationale behind the rebranding exercise was meant to create a new identity to reflect the company’s evolutionary process,” says Anish Bafna, who has been the CEO of Healthium for the past two-and-a-half years. “The name serves to highlight our vision and ability to create solutions that serve the Operations Theatre (OT), which go beyond our existing portfolio to offer a much larger basket of products”. Before taking up his current appointment, Bafna was working in Japan with Baxter, a global MNC dealing in medical devices and equipment.

Healthium’s first purchase was in 2009, when it took over Truskin Gloves, which was renamed as Healthium OEM in 2018. This company was located at the Kochi SEZ and was manufacturing gloves for the export market. Healthium however shut down the Kochi factory and shifted the gloves manufacturing activity to their factory in Kunigal. 

In 2013, Healthium also established a joint venture with Mena Medical Manufacturing, to enable them to expand into the Gulf countries. A couple of years later, Sironix Medical Technologies, a Healthium subsidiary based in Amsterdam, gobbled up two UK-based companies, namely, Clinical Supplies Ltd (CSL) and Clinidirect Ltd (CDL). Both these companies therefore came under the Healthium fold. Finally in 2017, Healthium took over Quality Needles Pvt Ltd (QNPL), which was a subsidiary of TPG Growth.

Wide range of products

With all these moves, Healthium is now able to offer a wider range of products useful for doctors and hospitals. Among these are advanced surgical products used for completing surgical operations such as suture materials, special absorbable sutures for closing internal incisions, etc. Then there are staplers (that have made skin sutures almost redundant), pacemaker wires for use in the cardiac procedures and steel sutures for application in particular situations. In addition, there are meshes of approved biological materials for hernia repair operations and hemostats, which are pincer-like instruments to control mild to moderate bleeding.

Through their Consumex division, Healthium provides powder-free surgical gloves, catheters, surgical garments, bandages, etc. Just a few months ago, Healthium launched a range of Anti-Microbial Gloves (AMG) to protect the healthcare workers from catching the Covid-19 infection from one of their patients (see Business India, 15-28 June 2020).

Likewise, Sironix Medical Technologies, a Healthium subsidiary, has a leadership position in the arthroscopy for the knee and shoulder joints, which enable patients to return to an active lifestyle even in an advanced age group. This company also has a range of instruments to be used in Minimally Invasive Surgery, also known as key-hole surgery. While the endoscopes used for MIS procedures are made by some European companies, Sironix makes an important contribution through its circular staplers, linear cutters and other such implements.

With these products under its belt, Healthium has been able to achieve an impressive growth trajectory over the past two-three years. Thus, the company’s consolidated revenues in 2016-17 were Rs489.6 crore (EBIDTA: Rs117.01 crore), which increased to Rs639 crore (EBIDTA: Rs135 crore) in 2019-20. For the current financial year, the company’s topline is expected to touch Rs700 crore (on an annualised basis) representing a 9.0-9.5 per cent growth, with its EBIDTA in double digits as well. Sometime in 2018, there were news reports that Healthium had a target of Rs1,000 crore topline by 2020-21. But, at that time, no one had any idea of the Covid-19 pandemic and its impact on global business.

“One must therefore appreciate that our revenue in the current financial year was against the background of the Covid-19 lockdowns, in which planned or scheduled surgeries were down by almost 60 per cent,” explains Bafna. “Thus, the demand and consumption of needles, threads, other suture materials and various other gadgets were also down in the same proportion”. Further, while the countrywide lockdown began in March 2020 and most other companies resumed their activities by July or August, Healthium’s five factories did not shut down even for a single week. Also, they were back in the market by the beginning of May, at a time when the products of most others had vanished from the market.

Growth plans

However, the management is not about to rest on its laurels. Instead, Bafna and his team, including chief financial officer Vishal Maheshwari, have chalked out aggressive growth plans for the next one or two years. They have also brought in rationalisation of various kinds. Thus, before the present management team took control of the company, they had outstanding receivables equal to 90-150 days of sales. Now, it stands at an impressive 65 days, thus bringing down the debt on their books as well as the carrying costs. Similarly, their inventory stands at 180 days of sales, which is much smaller than the stocks they would maintain earlier.

Another part of Healthium’s marketing strategy is to concentrate on the really small towns, which have a population of about 500,000 and avoid the metros as well as the Tier II cities. In the semi-urban settlements, there would be relatively few hospitals offering secondary and tertiary care. Secondary care involves dealing with routine surgical problems, while tertiary care includes more complicated procedures, such as cardiac bypass and angioplasty, kidney and liver transplant, joint replacement, etc. This approach enables the company’s marketing department to cover the entire country, with just about 350 sales people (out of total of 2,500 employees).

To deal with the more sophisticated gadgets used for complex surgical operations Healthium has set up a clinical affairs department within its marketing set-up. The people in this department are put through an exhaustive training programme, with the help of highly qualified specialists, some of whom are teachers in medical colleges.

The company’s real strength, however, is in its research and development activities, which enables them to come out with highly complex implements for the community of surgeons. In addition, Healthium owns more than 50 global patents for its arthroscopy (bone and joint procedures) and urology range of products.

One of the purposes for which the company was started back in 1992 was to make in India what was needed in Indian hospitals. This was considered better than buying imported products offered by the MNCs. Today, Healthium has created a reverse trend with its exports to several continents. For them, it is a sure sign that the organisation has finally become mature.

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