India will prioritise procurement of locally manufactured medical devices for public procurement, thereby reducing dependence on imported products and boosting local manufacturing, the Centre said. The move may reduce imports by Rs 4,000 crore, the domestic industry said.
In a notification dated March 25, the Department of Pharmaceuticals (DoP) has stated that for a list of 19 medical devices (primarily covering consumables, orthopaedic items, X-ray machines) only class-I local manufacturers shall be eligible to bid. In February, the department had issued another notification covering 135 medical devices. The total number of medical devices for which preference will be given for locally manufactured products has thus increased to 154.
India is largely dependent on imports for medical devices, and ships in around Rs 42,000 crore worth of devices. Adding duties and taxes, the MRP ranges between 2-20 times of landed price or around Rs 1 trillion at retail level, said industry insiders. Domestic production is around Rs 10,000 crore, and at retail level, it works out to Rs 20,000 crore or so. Total medical devices market size is thus estimated around Rs 1.2 trillion.
“The government is the largest buyer of medical devices, and procurement for public healthcare is estimated to be around Rs 20,000 crore annually,” said an industry insider.
If preference is given to made in India devices, this would not only encourage investments in local manufacturing, but also has the potential to reduce imports worth Rs 4000 crore or so, said Rajiv Nath, forum coordinator of the Association of Indian Manufacturers of Medical Devices (AiMeD). Most imports come from the US, followed by China. Chinese competition has been growing in government tenders as they often emerged as the lowest bidder. “This is especially true in case of consumables like gloves, syringes, etc. The move to prefer locally made goods will provide a level-playing field for domestic players,” said a syringes manufacturer.
Nath outlined that imports of consumables (like gloves, syringes, etc) from China have a dominant share of 27 per cent (Rs 1,328 crore) of the overall Rs 4,874 crore category imports.
Since the government procurement was for the lowest price bidder, for categories like syringes and needles around 75 per cent of the public procurement was from China, the industry said adding that around 40 per cent of domestic capacities were lying idle. For thermometers and hot water bottles, domestic manufacturing had practically come to a halt, with almost the entire requirement imported from China, alleged a manufacturer.
Ganesh Sabat, CEO of SMT, India’s leading cardiac stent maker, felt that the government has chosen a list of devices for which India already has enough capacities. Another local device maker alleged that a strong MNC lobby operated to ensure the USFDA approval was mandatory for public procurement. “This often kept out the domestic manufacturers from bidding,” the person claimed. Some MNCs have local manufacturing too. For example, Siemens Healthineers is one of the largest manufacturers of made-in-India CT scanners. Wipro GE Healthcare has seen a 300-400 per cent rise in production of mobile X-ray machines at its Bengaluru site during the pandemic.
Wipro GE refused to comment.
MNC manufacturers’ lobby group Medical Technology Association of India said it felt disappointed that despite the commerce ministry’s assurance no PPOs will come without proper analysis of local market capacity. Business Standard