Cover Story

Medical Device Industry In India : A Potential Global Manufacturing Hub

Now, with changing economic and regulatory environment, the medical devices industry is expected to grow significantly, fueled by a range of factors such as:

1. Rising prevalence of chronic diseases resulting in a higher demand for healthcare services
2. Ageing population
3. Increasing income and affordability, resulting in higher demand and utilization of healthcare services:

The Government of India has in recent years, implemented several policy measures to address the challenges of medical devices industry. Some of these include:

1. MDR 2017
2. 100% FDI in medical devices under automatic route
3. ‘Make in India’ initiative for promoting indigenous manufacturing
4. The development of a quality standardization framework in India by BIS that is based on international standards and certifies the quality, safety and performance of medical devices.

Availability of advanced and sophisticated medical technology is creating new markets and applications, increasing the dependence of doctors on advanced medical devices, and is leading to rapid obsolescence of existing medical technology thereby creating demand for replacement and up-gradation of products.

The increasing penetration of mobile and internet are other important factors contributing to rising awareness and demand. Also the unique Indian ability for frugal engineering innovations has led to the recent development of low cost products that are at par with existing products on quality.

The imperatives for the medical devices industry are aligned to the objectives of ‘Make in India’

1. Availability of Capital and technology investments for setting up manufacturing facilities in India is now available from private and government sector such as TDB in the form of equity and soft loans.
2. India specific innovation to help improve accessibility and affordability of medical devices which is being promoted by BIRAC and ICMR
3. Training and development of human resources for manufacturing, operations and services which is being provided by the Skill Development Council and BCIL
4. Best-in-class infrastructure in compliance with global standards for supporting high-technology industry which is provided in the form of Medical Devices Parks being setup in various states along with common test facilities and single window clearances
5. Support to Indigenous manufacturing in the form of the Public Procurement Policy and Production Linked Incentive Schemes

But going further the Challenges across multiple dimensions that are disablers to the growth of indigenous medical devices manufacturing in India need to be addressed. These include aspects around the macroeconomic environment, the medical devices ecosystem and, those specific to the medical devices industry.

• Unfavorable duty structure
• Low domestic demand for certain product segment(s)
• Complexity and lack of transparency in regulation
• Absence of comprehensive laws and lax enforcement mechanisms for IP protection
• Absence of indigenous ‘quality certification’ authority
• Inadequate ecosystem support (suppliers, raw material etc.) for medical device manufacturing
• Absence of a structured ‘Innovate in India’ model
• Ease of doing business: licensing regime (which includes elapsed time at multiple layers), guidelines on regulatory affairs, layers of bureaucracy (at the center and state level)
• Restrictive labour laws
• Higher cost of financing

To sum it all up demand and supply dynamics provide an unprecedented opportunity for manufacture of medical devices in India as there is Increase in per capita consumption of medical devices and newer market access due to India based innovation which will lead to Shortening of lead-time and better serviciability of products and should serve as a de-risking option for the country in cases of medical emergencies as we face today.

Capitalizing on these factors, India can move up the technology ladder and focus on manufacturing of even mid and high tech products in the near term.

As India continues to innovate and develop new technologies, global demand and potential in the near and medium term will provide India with an opportunity to become a major participant in the global supply chain of medical devices.

With success stories from domestic manufacturers, India is steadily developing capabilities in manufacturing medical devices. Indian players have developed expertise in manufacturing products in consumables and implants segment. In the near term, the focus needs to be on manufacturing of mid and high tech products.

A key concern for the medical device industry today is that irrespective of the sophistication of technology, all segments and sub-segments of medical devices are being treated uniformly by regulators and other stakeholders in the ecosystem.

However, going ahead, as the industry moves towards indigenization, a differential treatment for each segment and subsegment is necessitated. For instance, most products in the high technology segments have a long lead time for development and require large investments. Being low volume products with longer return on investment cycles, such products need to be treated differently, possibly with additional incentives for development and manufacturing.

Now as the ecosystem matures to enable indigenous manufacturing of comparable global quality standards, tariffs and barriers need to be used to protect indigenous manufacturing. This would ensure orientation of the industry towards quality, thereby making indigenous manufacturing globally competitive. Also there is urgent need to revise policies to steeply favour made in India Medical Devices..