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India’s medical device market to be supported by reform, infrastructure

India’s recent shift to a more unified government through the Bharatiya Janata Party’s dominance will bode well for medical device market growth. Previous large coalition governments and fragmented administrations have complicated policymaking at its centre as outside parties pursue their own agendas with competence varying significantly across India’s 28 states and eight union territories. A stronger majority will increase the pace of structural reform momentum and bode well for India’s business environment, providing tailwinds for growth.

The Make In India initiative will be a long-term driver of local medical device manufacturing. The scheme will continue to develop domestic production capabilities for medical device manufacturing as healthcare infrastructure continues to develop and go on to support medical device exports for India. The initiative has given a much-need thrust to the manufacturing of medical devices in the country as well as the development of related infrastructure. 38% of social infrastructure projects in India are in the healthcare industry. Schemes that have been encouraging the market include the Production Linked Incentive scheme for promoting domestic manufacturing of medical devices which has attracted large investments and a significant total outlay. Under this scheme, a 5% incentive is provided on incremental sales of medical devices manufactured in India. Companies that meet the requirements will receive the incentives for a period of five years. The Scheme for Promotion of Medical Device Parks will help develop the necessary infrastructure, providing 90% of the project cost in north-eastern and hilly states and 70% in other states. The medical device market will be boosted in the long-term through the success of this initiative and its supporting policies.

Total current social infrastructure projects by sector

Diagnostic imaging and patient aids will be the most dynamic product areas registering low double-digit CAGRs in local currency terms throughout the forecast period. Diagnostic imaging will grow at a 2020-2025 CAGR of 13.5% in local currency terms and 10.7% in USD terms while patient aids will grow at a 2020-2025 CAGR of 14.1% in local currency terms and 11.2% in USD terms. In the short-term, diagnostic imaging will grow strongly throughout 2021 due to increased demand as a result of the Covid-19 pandemic, expanding by 40.8% in 2021 and returning to mid-single digit growth from 2023, supported in the long-term by market advancements. Patient aids will be boosted in 2021 due to increased demand of therapeutic apparatus as a result of the Covid-19 pandemic and is expected to return to mid-single-digit growth in 2023 as demand wanes.

Projected medical device market CAGR by product area, 2020-2025 (%)

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