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India’s medical devices sector-Drivers of growth

Medical devices constitute an integral segment of the Indian healthcare sector. In the fight against Covid, they played a crucial role through the large-scale production and supply of ventilators, thermometers, rapid antigen testing kits, RT-PCR kits, PPE kits, and N-95 masks. Medical devices is a sunrise sector of India’s economy, which is growing at a rapid pace. In 2020, the sector was estimated to be around USD 11 billion. Hundred-percent foreign direct investment (FDI) is allowed in the sector under the automatic route for both brownfield and greenfield setups. Strong FDI inflows reflect the confidence of global players in the Indian market. India’s expected export of medical devices is expected to reach USD 10 billion by 2025.

There are several drivers for the growth of India’s medical devices sector. Healthcare expenditure in the country – both public and private – is rising. India’s middle class is growing. It is estimated that approximately 73 million households will move into the middle-class category over the next ten years. This means that their purchasing capacity with respect to medical devices will also be enhanced. Disposable incomes are also on the rise. It is expected that 8 percent of Indians will earn more than USD 12,000 per annum by 2026. With rising incomes, more Indians will also have access to health insurance cover.

The government has placed tremendous emphasis on strengthening the sector through multiple policy initiatives in recent years. The government is implementing the performance-linked incentive (PLI) scheme for medical devices. Under this scheme, 26 projects have been approved thus far with a committed investment of ₹1206 crore, out of which an investment of ₹714 crore has been achieved. As part of this initiative, 14 projects have been commissioned for producing 37 products, including high-end devices like MRI scanners, CT scanners, and linear accelerators. Support is also being provided for the establishment of four medical devices parks in Himachal Pradesh, Madhya Pradesh, Tamil Nadu, and Uttar Pradesh.

A draft of the Drug, Medical Devices, and Cosmetics Bill 2022 has been released that defines medical devices as a separate category and makes a provision for the constitution of a separate expert group on medical devices. It also focuses on the establishment of testing laboratories for medical devices at the central and state levels, along the lines of drug-testing laboratories.

The Union Cabinet has recently approved the National Medical Devices Policy, 2023. It was felt that a holistic policy framework to accelerate the growth of the medical devices sector is the need of the hour. While various departments of the government have undertaken interventions to encourage the development of the sector, the current policy aims to put in place a comprehensive set of focus areas for growth in a coordinated manner. Additionally, in light of the multidisciplinary nature of the sector, the regulations, skilling, and trade promotion of medical devices is spread across several departments in the government, both at the central and the state levels. Coordinated action is of the essence.

The policy envisions expanding India’s share of the global medical devices sector from the current 1.5 percent to around 10–12 percent over the next 25 years. The policy is expected to help the Indian medical devices sector grow from the present USD 11 billion to USD 50 billion by 2030. The policy focuses on a number of critical areas. An important aspect of the policy is enabling regulatory streamlining. As multiple departments and agencies are involved, providing a single-window clearance system can greatly enhance ease of doing business. Enabling infrastructure through the setting up of medical devices parks and clusters in proximity to economic zones is another important aspect. Emphasis is also laid on facilitating research and development as well as innovation, attracting investments to the sector, brand positioning, and awareness creation. A key focus of the policy is on ensuring a steady supply of skilled workforce for the sector across the value chain, such as scientists, regulators, health experts, managers, and technicians. The policy will support dedicated multidisciplinary courses for medical devices in the existing institutions to ensure availability of skilled manpower for futuristic medical technologies, high-end manufacturing, and research.

According to the study report “India: Health of the Nation’s States” – The India State-Level Disease Burden Initiative in 2017 by the Indian Council of Medical Research, it is estimated that the proportion of deaths due to non-communicable diseases (NCDs) in India has increased from 37.9 percent in 1990 to 61.8 percent in 2016. The four major NCDs are cardiovascular diseases, cancers, chronic respiratory diseases, and diabetes. This will considerably increase the demand for advanced diagnostics and imaging medical devices for hospitals as well as self-monitoring devices.

Technological advancements, such as the Internet of Things (IoT), artificial intelligence (AI), and telemedicine have been accelerated, especially in the post-Covid era. With people also becoming more conscious about their health, there will be opportunities for innovations like smart watches and smart bands. Fitness trackers, which capture parameters like respiration, oxygen saturation, heart rate, blood pressure, and skin temperature can find an increasingly large market base. In Malaysia, a study by Chinnasamy A. Nambi Malarvizhi and Shamima Raihan Manzoor found that the IoT played a significant role in connection with wearable technologies and digital healthcare. The study found that the improvement of connected devices had a remarkable effect on the entire healthcare sector and was noticeably appreciated in remote clinical monitoring, chronic disease management, preventive care, and assisted living for senior patients living with NCDs.

Finally, India is becoming an increasingly popular destination for medical tourism. India currently ranks tenth in the Medical Tourism Index for 2020-21 out of 46 destinations globally. Foreign tourist arrivals for medical purposes increased from 1.83 lakh in 2020 to ₹3.04 lakh in 2021. The sector is expected to grow to USD 13 billion by 2026. This will further accelerate the demand for high-end medical equipment and technological devices.

Views expressed are personal.

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