Connect with us

Industry Speaks

Medical devices industry outlook in 2023

One of the most important factors to steer the medical devices sector in 2023 is that hopefully the government should announce the Medical Devices Policy and build on the momentum and focus that medical devices industry gained during the Covid pandemic.

During Covid crisis, the Government of India, through its flagship Make in India initiative, relied heavily on the Indian manufacturers to meet the rising demand for essential healthcare equipment for the country, pushing the Indian medical devices sector to become self-reliant with the Prime Minister urging India for becoming Atmanirbhar in medical devices.

However, sadly, of the over 1000+ factories set up during the pandemic to cope with the country’s heightened needs, about 300 have shut down and another 300 are expected to, in about six months. While this may be due to the drop in Covid-19-linked demand, they could have been repurposed and supported to remain in medical devices manufacturing, with diversification or protected from low-duty imports and falling international prices and inability to offer attractive trade margins built into their regulated MRPs, compared to imports. Some of them have moved back to non-medical businesses as they were unable to fund compliances to international regulations needed in medical devices, without which they cannot enter many markets.

The factories shutting down were in segments like PPEs/overalls, oxygen concentrators, oximeters, etc. And their exit is a loss to the country and the sector.

Despite learnings from the pandemic, when the dependence on one country for products proved costly to the world, the present ecosystem in India is still largely import-friendly.

China remained the top import source for India as medical devices imports from China grew 48 percent from ₹9112 crore in 2020-21 to ₹13,538 crore in 2021-22. It is very painful to see the plight of domestic industry players shutting shop as the local industry cannot compete with cheaper Chinese imports.

It is ironic that though our honourable Prime Minister urges India to become Atmanirbhar in medical devices, yet the recent union budget has not announced any measures to help end the 80–85 percent import dependence forced upon India, and an ever-increasing import bill of over ₹63,200 crore.

In addition to the steps taken by the government to encourage manufacturing of medical devices by setting up of dedicated MedTech parks, Export Promotion Council for Medical Devices, PLI (production linked incentive) schemes, draft New Drugs, Medical Devices and Cosmetics Bill, 2022, and an ongoing discussion on an entirely separate dispensation for medical devices, GOI needs to make manufacturing of medical devices in India to be a viable business proposition, as done for consumer electronics and mobile phone industry by a predictable tariff-protection policy, by protecting ethical marketing with a cap on MRP of maximum four times over imports landed price, and as recommended by the Parliament Committee on Health by bringing in a separate medical devices law that decriminalizes minor offences, and considering a separate department of medical devices.

The medical devices market is over ₹120,000 crore and doubling every 4 to 5 years. To support aspirational domestic manufacturers have a majority market share of this pie instead of a mere 10 to 20 percent, is to first and foremost make it viable for them to continue to make and sell in the country by policy predictability, especially related to tariffs. The Indian medical devices industry has been waiting for many years now, for a well-defined policy governing medical devices, which will hopefully be announced shortly.

The aspects that need urgent attention in 2023 to ensure that India genuinely becomes an indigenous supplier of medical devices to the world, which could be in the form of partnerships, collaborations, incentivization, regulations, certifications, are:

  • Graded increase of custom duty to 10–15 percent from current zero to 7.5 percent.
  • Reduced GST on 18 percent, where being applied, to 12 percent as medical devices are not luxury goods.
  • Trade margin monitoring: The purpose of low duty was to help consumers get affordable access to devices. This objective is not realized if consumers will be charged a high MRP of 10 to 20 times import-landed price.

It is high time for serious bold reforms in the Indian medical devices industry, as recommended by the Parliament Committee on Health if the government wants the Indian medical devices industry to reach USD 50 billion by 2030, and to be among the top five manufacturing and exporting hubs worldwide.

Copyright © 2023 Medical Buyer

error: Content is protected !!