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Confusing signals for a ₹ 1.6 lakh-crore MedTech industry

The Indian hospital sector is valued at ₹9.4 lakh crore in 2022. It is expected to reach ₹18.35 lakh crore by 2027, expanding at a CAGR of 18.24 percent during the FY23–27 period. Q1 FY24 results for listed hospitals and diagnostic centers are expected to be announced over the next few weeks. The outlook remains steady for hospital chains as higher in-patient and surgery count is generating cashflow, and the companies are diligently investing in expanding their network through M&A or brownfield CapEx. Base impact from Covid-led test is largely behind for diagnostic companies, and the leading diagnostic companies are likely to post a strong rise in revenue, EBITDA, and PAT in the quarter. Having said that, while health-tech continues to attract investment, the ticket sizes of these investments have been relatively small in FY23. The last quarter, Q4 FY23 witnessed a decline in both deal volume and value, indicating a cautious approach among investors, and the tapered valuations are expected to continue for some time.

The industry is awaiting the passing of the New Drugs, Medical Devices and Cosmetics Bill, 2023, that is being tabled in the Parliament in the monsoon session, scheduled July 20–August 11. The bill seeks to regulate the import, manufacture, distribution, and sale of medical devices; and clinical performance evaluation of new in vitro diagnostic medical devices with the objective of highest possible regulatory standards and a transparent regulatory regime. A separate Medical Devices Technical Advisory Board is also in the offing. The industry has been pressing for creating a separate authority to regulate medical devices in the country, currently being monitored by the DCGI.

Having said that, there is something strange. CDSCO is solely driving the exercise, and neither the stakeholders nor MDTAG have been consulted while formalizing the draft. Nor has the Parliamentary Committee’s 138th report been taken into consideration. Inputs have not been sought from DGHS, ICMR, and DHR, as is usually the practice. NITI Aayog’s proposal has been completely ignored.

Since 1982, the Central Government has been attempting to regulate the Rs 1.6 lakh-crore MedTech industry. Finally, when the issue is being addressed, instead of proposing an independent Medical Devices Regulation Bill, a combined complex Bill for Regulating Drugs, Medical Devices, and Cosmetics, continuing to treat devices as drugs, is being tabled.

And, above all, for an 80-percent import-dependent industry, with the Make in India initiative providing a platform for innovation and manufacturing, the clauses for punitive and criminal action toward licensed, registered manufacturing facilities is quite perplexing, to say the least!

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