Innovation: Revolutionising dialysis

This article first appeared in Enterprise, The Edge Malaysia Weekly, on August 13, 2018 - August 19, 2018.
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Loke Khing Hong has invented a portable peritoneal dialysis machine. He thinks the device will not only revolutionise the process and allow those suffering from kidney failure to travel but also turn Malaysia into a player in the  dialysis industry and give the other device manufacturers a run for their money.

Now, he is looking for an early investor to put in RM8 million so he can manufacture the machines and the medical solution that goes with it.

Loke is a director of Medical Devices Corp Sdn Bhd. An accountant by training, he stumbled upon the strange new world of dialysis machines when he was manufacturing flexible bags for the medical device industry.

“While I was making these generic bags for export, I came across a product called CAPD (continuous ambulatory peritoneal dialysis). It uses a twin bag system with a wide connector and extension tubing that can help the patient carry out dialysis at home,” says Loke.

The technology itself was old and had been around even before World War II.

But he noticed there were only two companies providing both the machines and the solution — US-based Baxter International and Germany-based Fresenius Medical Care.

“Since 1980, the market was locked down by these two global suppliers. But when we looked at the product itself, the twin bag CAPD, we realised it was not rocket science. It is a bag and we knew how to make bags. As for the formulation, it is just like a recipe — the pharmacy can actually produce it,” says Loke.

When he looked at the bags, he realised that there had not been much innovation for years. He also learnt that the Malaysian government had been importing the twin bag CAPD from the two players since 1980.

Loke saw an opportunity to not only localise the production of CAPD bags but also innovate to improve on what was currently available in the market. He came up with a multi-chamber CAPD system and filed for a patent with the World Intellectual Property Organisation (WIPO) in 2011. It was granted in 2013.

A conventional CAPD bag consists of one solution bag and one drain bag. The solution is a combination of three different solutions, which when mixed together is highly unstable. The multi-chamber bag that Loke developed allowed the solutions to be kept separately until just before use. It was a simple but effective innovation and when Loke got his patent, it gave him the confidence that he was on the right track.

He contacted the Performance Management and Delivery Unit (Pemandu) about setting up a manufacturing hub in Malaysia to produce the CAPD bags and solutions. In 2011, this was identified as an Entry Point Project (EPP). The project is still ongoing even though Pemandu has been disbanded.

Since then, the scope of the company’s ambition has grown. Not content to just manufacture better CAPD bags, Loke has turned his attention to automated peritoneal dialysis (APD) machines. When he saw what was available in the market — a bulky machine that is roughly 18kg and the size of two old-fashioned central processing units — he decided that this would be another product ripe for innovation.

By doing so, he would be taking on the big boys. And if he succeeded, he would be putting Malaysia on the elite list of dialysis machine manufacturers. Even South Korea is not on this list.

“We came up with a machine that weighs less than 4kg. And we made it an Internet of Things device so your doctor would be able to monitor you remotely through a mobile app,” says Loke.

“We are going to patent it and start registration of the machine really soon. We will also be starting patient trials.”

Right now, patients suffering from kidney failure have three options: they can get a kidney transplant (chances are low as there just aren’t enough donors), go through haemodialysis or do peritoneal dialysis.

“With haemodialysis, they go to a hospital or dialysis centre, where a tube is inserted into a vein. The blood is drained out, filtered and returned to the body. They would need to do this every other day for four or five hours at a stretch. After that, they are usually too tired to work. So, they tend to lose their employment because no boss will allow you to take every other day off,” says Loke.

“This can actually cause a family to collapse economically because it involves not just one but two family members at a time because after the treatment, you will not be able to drive. So someone, usually a family member, will need to come with you or pick you up after the treatment.”

Alternatively, there is peritoneal dialysis, where a cleansing fluid or dialysate is circulated through a tube inside part of the abdominal cavity to absorb waste products from blood vessels in the abdominal lining. This fluid is then drawn back out of the body and discarded.

“With CAPD, you do this manually. With APD, you use a machine and the whole process is automated. You hook up the machine and go to sleep, and the machine will take care of everything automatically — fill [your abdominal cavity with the solution], dwell [allow the liquid to circulate inside you and absorb the waste products] and drain several times,” says Loke.

But how does an accountant develop a better dialysis machine? “We started from scratch. We introduced another rotary pump concept and looked into other mechanisms like some valves to stop the flow of the liquid and sensors to actually do some calculations,” says Loke.

Wouldn’t all this require a background in physics and chemistry, not to mention biology? “I have an interest. And being an entrepreneur, you don’t need to do everything yourself. You build a small team and they help you. So, if I needed the talent, I just found the right people to do the job,” he says.

Basically Loke came up with the specifications. And when university students applied to do their internship with the company, he set them to work on developing the machine. “I said, rather than spend eight weeks doing nothing important, I will give you a series of assignments and you just have to come up with the solutions.”

They came up with the components and the students, as well as his staff, looked at how they could fit together. Their efforts were not always successful, but they failed fast and moved on.

Now that he has developed and tested the machine, he needs to focus on manufacturing the solution. “When the machine is developed and registered in Malaysia, the existing manufacturers globally will refuse to supply the solution. So, I cannot generate sales with just the machine,” says Loke.

The two key players — Baxter and Fresenius — do sell the machine as a product, but they would rather bundle it with the solution. They sell it using what is known as the McDonald’s index, or based on what is affordable in a particular market.

How does Medical Devices plan to compete? “We have not finalised the business model. I think we will just follow the market leader. But eventually, when we have the solution, we will bundle it as well as sell it at a more affordable price. Or if a country wants to buy the machine without the solution, we can work something out as well,” says Loke.

Although the product has not been registered yet, the company already has potential partnerships in Canada, Poland and the Netherlands, says Peter Phelan, principal of North Shore Capital and financial adviser of Medical Devices. Now, the company needs to get the product registered and approved by the medical councils in all of its potential markets.

Medical Devices has already built a plant on a one-acre site in Tanjung Malim and purchased the machines to make and fill the CAPD bags. Next, it wants to buy the sterilisation equipment for the medical solution.

The ideal situation is for the company to attract one equity investor, says Phelan. “We have approached general investors but RM8 million, or the equivalent of £1.5 million, is too small for them. So ideally, it will be a single investor who comes in and it will be good if that person has foreign contacts and can help in other ways.

“Preferably, it will be a person who has someone close to them on dialysis, who will be able to see the quality of life change for that individual with the introduction of this machine. Then, he will understand and appreciate what we are trying to do.”