Despite challenges, medical device industry in India has potential for high growth

According to government data, there are 750–800 domestic medical device manufacturers in India, with an average investment of $2.3–2.7 million and an average turnover of $6.2-6.9 million.

Despite challenges, medical device industry in India has potential for high growth
Patients today are more aware of their health, diseases and their implications, and the available diagnostic or treatment options. (File)

By Guruprasad S

The Indian medical devices industry comprises four segments – consumables and implants, diagnostic imaging, instruments and appliances, and patient aids and, others. The global medical devices market is projected to grow from $495 billion in 2022 to $718.92 billion by 2029 at a CAGR of 5.5%. India is the 4th largest market of medical devices in Asia. The size of the Indian market is estimated to be around $12 billion with the sector comprising large multinationals and small and midsized companies.
India’s import of medical devices is staggering at almost 80%, and the country is highly dependent on foreign suppliers, particularly for high-end equipment such as cancer diagnostics, medical imaging, ultrasonic scans, and polymerase chain reaction technologies. According to a draft policy of the government on medical devices, India’s share in the global market is around 1.5% and the sector is still at a nascent stage in the country. During the Covid-19 pandemic, the Indian medical devices sector’s contribution became more visible with the production of medical devices and diagnostic equipment such as ventilators, RT-PCR kits, IR thermometers, PPE kits, and N-95 masks. But local production is largely at the lower end of the technology value chain. Most local manufacturers are primarily focusing their R&D efforts on developing affordable medical devices for the lower and middle-income segments of the Indian market and operate predominantly in the low-priced, high-volume market segments.
According to the government’s estimates, around 65% of the manufacturers in India are mostly domestic players operating in the consumables segment and catering to local consumption with limited exports.
Current barriers
The government’s recently launched production-linked incentive (PLI) scheme in medical device manufacturing aims to encourage domestic manufacturing, attract significant investments, and reduce reliance on imports. But while the Make in India and Atmanirbhar Bharat campaigns are praiseworthy, domestic producers are still far away from reaching a level of self-reliance in order to produce top-class products. By any yardstick, India’s medical devices sector has a tough road ahead for a variety of reasons.
The sector is highly capital intensive with a long gestation period and requires continuous induction of new technologies and training of healthcare professionals to adapt to new technologies for rapid innovation. Medical devices undergo safety, quality, and efficacy tests through processes defined by the regulator before they hit the market for sale which means that the industry requires huge investments in scientific facilities.
According to government data, there are 750–800 domestic medical device manufacturers in India, with an average investment of $2.3–2.7 million and an average turnover of $6.2-6.9 million. The nature of the sector requires highly skilled personnel for its R&D so that the products pass muster under regulatory norms like MDR, IVDR, etc. These special requirements add up to require a large investment to set up a medical device manufacturing facility.
Manufacturers of medical devices in India grapple with balancing between the time-to-market, cost and quality of the product, and optimal trade-offs in the light of tightening regulatory norms for the devices. Most of the time medical devices are overpriced and are not affordable by many because of the cost overruns during the development phase. The high cost of financing also acts as a barrier to setting up a medical device company. According to AiMeD, a network of medical device manufacturers in the country, most MSMEs simply do not have access to financing to build a greenfield project or increase investment in research and development.
A price control mechanism is also a contentious issue for medical device manufacturers. The government’s price control regime which is designed to bolster the use and manufacture of devices in India has resulted in substantially lowering the price of coronary stents. But price control can be a double-edged sword that can affect the quality benchmarks of high-end devices because all manufacturers cannot afford the kind of investment needed. A Parliamentary Panel on Health and Family Welfare has also mooted that all devices that are required for critical care be categorized as ‘scheduled medical devices’ and brought under the National List of Essential Medicines (NLEM) and fix the retail prices of those products.
Plus points
Despite the hurdles the sector faces, enabling policies like PLI, export incentives, R&D support, and incentives and support for innovation can boost the medical device industry in India. The government is aware that demand and supply-side dynamics provide an unprecedented opportunity for the manufacture of medical devices in India. It believes the Indian medical devices industry has the potential to grow at 28% annually to reach $50 billion by 2030. The government is planning to further boost India’s strengths of skilled manpower, and ease of business through its industry-friendly rules. According to the government’s draft policy, import dependence on medical devices will be halved in the next 10 years.
The imperatives for the medical devices industry are aligned with the objectives of ‘Make in India’ that include investment, innovation, skill, and infrastructure under the new manufacturing policy that seeks to boost the contribution of manufacturing to the GDP from 16% in 2013 to 25% in 2025. The Make in India vision calls for investment in capital and technology investments for setting up manufacturing facilities while India-specific innovation would help improve the accessibility and affordability of medical devices. It also calls for training and development of human resources for manufacturing, operations, and services, and best-in-class infrastructure for supporting high-technology industry.
Way forward
Since finance is a major stumbling block for many potential medical device manufacturers, adapting value engineering can help them to keep costs under control. Manufacturers will also do well to focus on critical value/features for medical devices. This requires a deeper understanding of patients and customers such as which product features they need. In many countries, manufacturers are developing strategies to attract and retain a new segment of customers who demand products that are “good enough” and competitively priced. This calls for frugality by adapting value engineering to deliver the value/features at the lowest cost.
In an increasingly connected world, medical device manufacturers need to develop a deep understanding of the end-user and create business models and scenarios that demonstrate how their new and existing devices not only improve patient outcomes but also create value for key healthcare stakeholders. Many medical device companies are reinventing themselves by adopting new strategies to harness data provided by digitally-enabled products and make their operating models relevant and sustainable. This helps companies develop evidence of better health outcomes at a reasonable cost and gain market access. For some medical device makers, this means shifting from a product-based model to a value-based system driven by software-based services and solutions. The Internet of Medical Things (IoMT), – a connected infrastructure of medical devices, software applications, and health systems and services to deliver improved patient outcomes efficiently, can help medical device manufacturers play in role in reducing these costs.

(The author is Vice President & Global Director (Healthcare & Data Science), Bosch Global Software Technologies Pvt ltd. Views expressed are personal and do not reflect the official position or policy of the

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First published on: 29-11-2022 at 10:00:00 am