Large firms should back small units in R&D

By: |
Updated: February 03, 2015 1:40 PM

As the Narendra Modi government plans to move towards providing universal healthcare...

As the Narendra Modi government plans to move towards providing universal healthcare, rationalising the cost of medical devices and equipment assumes significance. The answer obviously lies in stepping up domestic manufacturing in line with the Make in India policy rather than rely on imports. Last month, the government has approved 100% foreign direct investment in the sector, which would come into effect from January 21. In an interview to FE’s Noor Mohammad, Sanjay Banerjee, chairman, Advanced Medical Technology Association, a grouping of medical technology companies in India, tells why SMEs are critical to achieving the objective of affordable medical services. Excerpts:

What is your association doing to make access to healthcare and diagnostics affordable for low-income people?
AdvaMed and its member companies in India have contributed immensely to spreading awareness about medical devices. They have worked hard to emphasise the difference between medical devices and pharmaceuticals to all the stakeholders. It is a result of this tireless effort that various sections of the government now appreciate this distinction, and in fact, the ministry of commerce & industry has acknowledged medical devices as one of the five sectors which have good investment potential for domestic and export markets. Innovative solutions by AdvaMed members in product development as well as those in the supply chain, service, delivery and reimbursement mechanisms have made healthcare affordable and improved its access for Indian patients.

How crucial will be technological innovation in the days ahead to improving access to healthcare?
The ‘Medical Technology Innovation Scorecard’ prepared by PricewaterhouseCoopers finds that advanced economies in general do not face the dire need for innovation that emerging economies do. India’s distinctive disease profile makes innovation in medical technology significantly more crucial. For instance, manufacturers have had to provide in-vitro diagnostics for malaria, dengue and other communicable diseases. Infrastructural constraints and climactic conditions have also led to the ‘tropicalising’ of medical technology. It is important to appreciate that medical device innovation refers not only to the invention of new devices but also to incremental improvements to efficacy and adapting devices to different settings.

How regulations can help in bringing down healthcare costs while ensuring quality of service?
For the medical device industry to succeed and try to fill the critical gaps in India’s healthcare system, several external factors – a supportive regulatory framework, a supportive investment ecosystem, better health infrastructure and an expanded health insurance cover– need to come together. Around the world, successful medical device “clusters” grow much better in this kind of dynamic and open innovation environment. Innovation thrives where there is a vibrant environment for collaboration among clinicians, researchers, and technology experts. Apart from supportive regulation, the medical device industry requires the provision of appropriate mechanisms to finance innovation. Large companies often invest minority equity stakes or provide loans to promising emerging technologies that need financial assistance to get through development, clinical research and testing, and approval. The availability of healthcare financing mechanisms such as health insurance and other schemes also play a key role in lessening the burden on patients and ensuring the smooth delivery of comprehensive healthcare services.

How do you see SMEs doing in coming years? Will they be able to compete with large players?
Traditionally, it has been the smaller companies that are most active and innovative in R&D of medical devices. According to a research consultancy commissioned by the US FDA in 2006, in the US small companies play a greater role in R&D of new innovative medical devices, with large firms providing organisational and capital assets that help ensure the commercial success of new products. A similar ecosystem needs to be emulated in India. AdvaMed member companies are working with relevant stakeholders to gradually build a sustainable ecosystem for medical device R&D and manufacturing where players of all categories can co-exist and prosper while providing investment and employment opportunities.

How do you see policy and the regulatory environment in the healthcare sector? Do you think Indian regulations are too lax?
The medical device industry in India has grappled with challenges for several years for recognition and regulation. Although according to the Global Medical Device Nomenclature (GMDN), there are over 14,000 different product types, the current regime only regulates 14 categories of medical devices and eight additional products. Moreover, these devices/products are regulated as “drugs” under the Drugs and Cosmetics Act of 1940. This is problematic because medical devices are very different from drugs, in terms of diversity, product development, patent structures, types of failures, scientific disciplines involved in assessing performance/efficacy.

Apart from the indiscriminate and arbitrary application of the rules for drugs to medical devices that hinders the development and quality of and access to medical devices, there is also a lack of predictability in the regulatory system. The industry is concerned about the lack of standardisation in line with global best practices. This would not only ensure that the highest standards of safety and efficacy are met but also make indigenous industry globally competitive.

The government is promoting ‘Make in India’. What role can the medical technology sector play here?
The medical device industry is very encouraged by the Prime Minister’s recognition of the critical role of medical devices in addressing India’s healthcare challenges. In general, we have received a strong message from the government that it is interested in promoting the medical devices sector and creating an environment that fosters innovation and development.The PM’s call to medical device manufacturers goes a long way in our efforts to gain recognition as a separate and important part of the healthcare system. The medical device industry sees itself contributing exponentially to India’s healthcare ecosystem.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.