Surat-based SMT (Sahajanand Medical Technologies), the number 2 player in the Indian market for stents after Abbott Healthcare, hopes to capture the pole position in two to three years.

The company is banking on a randomised clinical study conducted over 1,500 patients in Europe (in which half of the patients used Abbott stents, while the rest used SMT's. Doctors were not given a break-up) to boost its credibility and reach out to more cardiologists in the Indian market. The results of this study, done by a global clinical research organisation, will be out in September.

"It would give us ammunition to reach out to cardiologists who prefer foreign stents," said Ganesh P Sabat, chief executive officer of SMT, adding that if things turn out well, SMT aims to become the No.1 player in two to three years.

The stent maker has already gained market share in India — from 11 per cent about a year ago to 18 per cent now. Abbott is estimated to have 22-25 per cent share and is the leader for about seven years (same could not be verified with Abbott).

SMT also believes that the price cap on cardiac stents has opened up a level-playing field and will help them with their goals.

Meanwhile, having raised Rs 3 billion from PE firms such as Morgan Stanley and Samara Capital, the company is also aiming to be among the top three players in Europe in the next five years. It is planning to set up another stent-making facility in India that will produce a million stents a year (three times the current capacity). SMT plans to use one-third of the funds to meet working capital expenses and for R&D (its centre is in Ireland) and two-thirds to buy a company in Europe.

Sabat said they were looking for a company that had some market presence in Europe and could bring in new technology. "We are debt-free and have been clocking a 40-45 per cent compounded annual growth rate since four years. We would fund the new facility in India through internal accruals," he said.

The company is scouting for 70-80 acres in either Telangana, Uttar Pradesh or near Surat. It has invested close to Rs 250 million to expand its manufacturing capacity to 500,000 stents per year (achievable over a year) from 300,000 a year.

Abhishek Kabra, director, Samara Capital, and a director on the board of SMT, said, "What we like about SMT is that it is a technology-focused, professionally-run company.

It also has a significant exports business and this de-risks the business from policy uncertainties. Moreover, with the cap on stent prices, it is gaining market share in tier-I cities, which were strongholds of MNCs."

But things were quite different for the company, which claims to be the first stent manufacturer in Southeast Asia, a few years ago. SMT was a loss-making company — in 2012-13, it posted a loss of Rs 60 million on a turnover of Rs 320 million.

In FY13, they decided to tweak their business model after they realised they were unable to reach out to tier-II and tier-III cities through the distributor model. Of the 700 cathlabs in the country in 2013, it was only present in 100. More than 70 per cent of turnover was coming from tier-I cities. So, it decided to go for a direct-distribution model to hospitals and clinics, with a quick replacement guarantee.

This helped. SMT is now present in 800 of the 1,200 cathlabs and draws 60 per cent of India revenues from tier-II and tier-III cities. It posted a profit of Rs 20 million on a turnover of Rs 480 million in FY14. "Many players lost distributors as a result (when the NPPA capped trade margins at 8 per cent for stents in February 2017) and their reach reduced considerably. But we had already moved to the direct-distribution model," Sabat said.

It was also the year when SMT entered the European market. Exports started with three or four countries in FY14. SMT now exports to 70 countries and draws 40 per cent of its turnover from exports.