If India is able to be self-reliant in the Medical Technology sector and capitalize on this Medical Technology revolution, by ensuring all stakeholders play their respective roles, it would stand a good chance of realizing its vision of providing healthcare to all its citizens.
Challenges in access to quality and affordable healthcare persist in large parts of the country despite several positive developments in the recent past. The medical technology (MedTech) industry plays a crucial role throughout the healthcare lifecycle and has been instrumental in transforming healthcare ecosystems across the world. For India too, it offers the potential to address healthcare issues by using a mix of nascent as well as advanced technologies. However, on account of multiple challenges being faced by the industry, the sector has not been able to realize its full potential. This untapped potential, if unlocked, could help the Indian healthcare ecosystem leapfrog over its constraints and provide the required impetus that India needs in realizing its vision of achieving Healthcare for All. CII and Deloitte have partnered and released a study mapping the role of MedTech industry in India’s healthcare journey, identified key constraints in the sector’s current landscape, and proposed methods to realize its true potential.
Setting the Context: Importance of Healthcare for an Economy
Economic health of a country is strongly dependent on the health and wellness of its citizens. In order to ensure adequate levels of health and wellness, an effective healthcare ecosystem is a prerequisite. With ~17 percent of world population and a GDP growth rate of ~7.2 percent, India is amongst the fastest growing economies of the world. For it to continue on this growth path, access to good quality healthcare services for all its citizens is critical. However, assessments of India’s healthcare system – from the point of view of its accessibility and affordability, to its effectiveness and quality – indicate that while we have come a long way, there remains a lot of ground to be covered.
Reality Check for Indian Healthcare
While the Indian healthcare industry has been growing at a double-digit rate and has matured significantly in the last few years, it still faces a number of challenges. The Indian healthcare sector grew at a rate of 18 percent from 2010 till 2016 and is expected to advance at a rate of 15 percent during 2016–2020 to reach USD 280 billion by 2020. The key factors that have been and will continue to be responsible for growth in the healthcare market include increase in disposable incomes, expansion of health insurance coverage, rising burden of lifestyle diseases due to sedentary lifestyle and increased stress levels, increasing life expectancy, and a boom in medical tourism in India. However, despite such high growth levels and a growing demand, the healthcare industry in India is still plagued by lack of accessibility, unaffordability, and variable quality of care.
Access to healthcare services. While the metro cities and increasingly other tier I cities have healthcare infrastructure that competes with the best in the world, the tier II/III cities and rural areas do not get sufficient care of good quality. With more than 65 percent of its population residing in rural areas, India cannot boast of a comprehensive healthcare system unless it satiates the healthcare needs of all strata of the society in all geographies. Several measures have been taken by the government of India over the years to strengthen the healthcare infrastructure and human resources for health but India still falls short on several key accessibility measures.
Affordability of healthcare services. For a country like India, where one in every five citizens is still below the poverty line, affordability of healthcare services is a major concern. Low insurance coverage and a weak public healthcare system are driving up the average cost of healthcare to families and creating a burden for those with limited resources.
Quality of healthcare services. In the public sector, the National Quality Assurance Guidelines prescribe a minimum set of standards that each of the states should meet in order to improve the quality of service delivery in public facilities. However, the adoption of these quality standards in public health facilities has been sluggish and variable across the country. These challenges are widely acknowledged by the government, healthcare fraternity, providers, payers, as well as medical device manufacturers. The government over the years has articulated these issues and has attempted to tackle it through various strategies. The government has also recently released the National Health Policy (NHP) 2017 where it has emphasized on the vision of Healthcare for All in India.
Healthcare for All and the NHP
The revised NHP of 2017, has refreshed the goals and principles in the context of Universal Healthcare Coverage (UHC). The key principles emphasized in the policy include equity, universality, affordability, care quality, leveraging technology/digital health and focus on preventive and promotive health among others.
The vision of Healthcare for All is an ambitious but essential one for India. However, the problems of accessibility, affordability, and quality are deep rooted and emanate from factors that are structural in nature. Accordingly, solutions that are linear and incremental will take forever to address these challenges. On the other hand, disruptive technological solutions have the potential to leapfrog over some of these issues and push the country toward a more accessible, affordable, and reliable healthcare systems in the foreseeable future.
A Crucial Link in India’s Healthcare Ecosystem: Role of MedTech in Healthcare
MedTech is indispensable to healthcare delivery. MedTech is an integral part of the entire healthcare lifecycle, from the stage of screening/diagnosing to treatment/care; from restoring patients to normal lives and monitoring their health post treatment. For decades now, with advancement of technology and increasing sophistication of medical devices, the industry has played a major role in bringing down the incidence of disease and improving the overall healthcare system across the globe.
MedTech has the potential to address many of the healthcare issues of India. Today medical devices can provide enhanced patient care in remote areas by leveraging video conferencing and embedded computing devices, which can send and receive data via the Internet. By implementing a hub and spoke model, the costly servers and processing units can be placed in a central location while the monitoring can happen remotely and data can be transferred to the central locations for processing.
Complex machinery and devices like MRI and CT scanner are susceptible to breakdown by a simple surge in voltage. Such devices can be remotely monitored to predict failure probability and trigger preventive maintenance action thus saving cost. Advanced equipment leveraging on technologies such as artificial intelligence and robotics provide higher levels of precision thus increasing the success rate and improving overall quality of care. Technologies such as virtual reality and augmented reality can also be used to simulate real time healthcare environment to provide training to physicians, technicians, and doctors thus eliminating the need for presence of actual equipment for training purposes. The market for wearables in the form of pedometers, activity detectors, etc. has also increased significantly in the recent past. Such devices when interconnected with other medical equipment, diagnostic equipment, and healthcare analytics platforms can transmit real time data related to a patient’s health and vitals which can be used for continuous monitoring of people’s health. Through many such exciting technologies the MedTech industry is leading the way to address many of the healthcare challenges of India.
MedTech can assist in achieving the priorities set by NHP. Based on the priorities and broad principles of equity, affordability, quality etc. set by NHP 2017, medical devices can significantly accelerate India’s goal toward universal healthcare. For instance, in the preventive care segment, medical devices have a significant application in screening and early diagnosis of disease.
Also, with the use of medical devices in complex procedures, with low success rates earlier, the clinical outcomes have now improved significantly and the overall quality of care has risen. This reduces the lifetime cost of a disease through early detection and reducing readmissions resulting in improved affordability and reduced morbidity.
The Untapped Potential
With majority of demand coming from the metro cities, rural areas which comprise a significant chunk of the population are highly underserved. The Indian medical device market has grown from USD 2.02 billion in 2009 to USD 4.9 billion in 2016 at a CAGR of 17 percent. While India comprises one-sixth of the world’s population, its domestic medical devices market represents only 1.7 percent of the global market. With a per capita consumption of USD 3, India’s medical device industry is underpenetrated in comparison to countries like Brazil, Russia, China, and the United States of America. A disproportionate percentage of current demand for medical devices emanates from the metro cities. There is significant untapped demand for medical devices in tier-II/III and rural areas, which presents a huge opportunity for driving growth. However, the key concern remains the huge disparity in the healthcare infrastructure in tier-II/III areas in comparison to the metro and tier I cities.
Realizing the Potential
The growing healthcare market in India presents a huge opportunity for the MedTech industry. But this potential cannot be realized until both the public and the private sector play their respective roles to overcome the challenges which are inhibiting growth of the industry.
Role of the Government
Create an enabling regulatory landscape. The government of India has, over the last few years has taken several measures to bring more focus on the MedTech industry. Most notable amongst these is the passing of the Medical Devices Rules, 2017 which are set to come into effect from 2018. These rules seek to regulate import, manufacturing, distribution, and sale of a wide variety of medical devices. They have also subsegmented devices on a risk-based categorization. Moreover, the rules propose a single-window online portal for processing all applications of import, manufacture, sale or distribution, and clinical investigation of medical devices. While these steps have been appreciated by all stakeholders, the government may also consider the following: Set up an independent medical devices authority and a separate legislation for medical devices and faster patent approvals.
Support in creating a viable business case to attract investment. The sector has not been able to attract the expected levels of funding despite various initiatives taken by the government. MedTech industry is capital intensive with a high gestation period for investment. Various facets such as bolstering the local manufacturing landscape, driving innovation through R&D, building the ancillary industry, and producing skilled staff for the industry require huge amounts of capital. Hence it is crucial that the government supports in creates an enabling ecosystem which draws investment from both domestic and international players. The government in the recent past has taken a number of measures to promote investment: Promoting Make in India (MII) for the medical devices industry; Allowing 100 percent FDI under the automatic route for medical devices; Correcting the inverted duty structure for select medical devices; and setting up of MedTech parks in three states and testing labs in two states. In spite of these steps, the investment flow in the sector has been modest at best.
Learnings from successful MedTech investment countries. India can learn from some of the models adopted by other nations that have achieved success in attracting investments for their MedTech industries. While at one end of the spectrum China has achieved scale especially in high-volume low-tech devices backed by a huge domestic demand, Ireland at the other end, has positioned itself as an export hub in spite of a small domestic market.
Providing financial incentives is an effective lever which could catalyze investment. The medical device industry has been advocating for certain incentives to ensure reasonable returns especially in the initial few years such as: Extended tax holidays for domestic manufacturing; Weighted tax deductions for R&D investments; and incentivizing exports for medical devices.
Public–private partnership. Government under the National Health Mission has announced the Free Diagnostics Service Initiative aimed at providing a minimum set of diagnostics to the underserved people in India. The program under the National Health Mission has also recognized an integrated approach for prevalent non-communicable diseases (NCDs) – hypertension, diabetes, and cancer – wherein emphasis would be laid on screening and testing for select chronic illness all year round. Such government mass screening programs will go a long way in giving a fillip to the in-vitro diagnostic (IVD) industry.
Role of the Industry
Prioritizing and focusing on the right segments of medical devices. Domestic manufacturing of medical devices can provide significant benefits to the economy. However, Indian MedTech stakeholders need to prioritize areas and have a segment wise strategy toward manufacturing.
Current structure of medical devices in India. Domestic manufacturing of medical devices in India is currently a small and fragmented industry with presence of both domestic and MNC players. While most domestic players operate largely in the low-tech and high-volume segments, the high-end segments are dominated to a large extent by MNCs. Moreover, import dependence is higher majorly in the mid to high-tech segment of the medical devices – diagnostic imaging, instruments and appliances, patient aids, and others.
Prioritization of segments. One of the ways India can select potential areas to focus on is to prioritize manufacturing of low- and mid-tech products which have a significant scale (medium to high) such as needles, catheters, X-ray apparatus, dental instruments, X-ray apparatus, ophthalmic instruments, etc. On the other hand, high-tech low-volume devices such as CT scan and MRI machines would require a longer-term outlook. Efforts should be made toward developing required capabilities and the necessary ecosystem for their manufacturing in the medium- to long-term horizon.
Focus on innovation to design products appropriate for India. Indian entrepreneurs have realized that developing products and solutions that bridge the gaps in the Indian healthcare system can lead to long-term financially viable businesses. However, researchers and entrepreneurs require an ecosystem which can support them through the early stages of discovery and development in order to successfully launch the products and go-to-market.
The administration in the recent past has been instrumental in extending support for innovation in this space. In June 2017, the union cabinet has announced a USD 250 million initiative under the National Biopharma Mission to fund biotech start-ups in the area of medical devices, bio-therapeutics, etc. and create bioclusters to help build the next generation of healthcare technologies. The government could further consider setting up R&D incubation centers in collaboration with premier institutions to encourage innovation in the area. Providing momentum to this wave of innovation bodes well not only for the growth of the Indian MedTech industry but also for progressing the overall healthcare landscape of the country.
A Summary: Shaping Healthcare for All
For long, India has struggled to provide quality affordable healthcare to all its citizens. While the challenges in achieving this are well-known, adopting the conventional route for creating adequate physical infrastructure, building a medical and paramedical resource base, and achieving high-quality standards would require huge investments and timelines that a developing country like India can ill afford.
The disruptive power of technology has completely transformed the landscape in various spheres of life. It has changed the ways humans communicate, travel, socialize, store, and access information and many other aspects. MedTech has the potential to do the same for healthcare by leapfrogging over the current infrastructural, skill-based, geographical, and affordability constraints.
MedTech can bridge the distance between the care provider and the patient thereby helping patients in remote areas access specialist and specialized equipment present in large cities far away. Technological advancements in the fields of health monitoring and diagnostics can help in detecting health issues early on thereby reducing overall cost of care and enhancing wellness levels of the society. Similarly, technological interventions are rapidly increasing the precision and efficacy of treatment modalities thereby improving clinical outcomes. However, to realize this opportunity at scale rather than as isolated, fragmented initiatives, both the government and the industry will need to make concerted efforts.The government should streamline the regulatory and business ecosystem in a manner that makes operating in India more attractive and simpler for both the medical device players as well as investors. Some of the key areas where government could intervene include: Setting up an independent authority for medical devices and enabling faster grant of patents; Supporting local demand of medical devices through public health and health insurance programs as well as by collaborating with the private sector through PPP models; Providing relevant financial incentives for the industry; and supporting innovation in India by providing capital and infrastructure support to MedTech start-ups.
The industry needs to customize their business models to suit Indian markets. Medical devices segments which provide sizeable opportunities and require moderate level of technological expertise to produce should be prioritized for manufacturing in India. For high-tech low-volume segments, efforts need to be directed toward developing the necessary ecosystem and capabilities for their manufacturing in the medium- to long-term horizon. Finally, the MedTech industry in India should embrace the path of innovation so that its products and solutions are tailor-made for the opportunities and constraints of the country. If India is able to be self-reliant in the Medical Technology sector and capitalize on this Medical Technology revolution, by ensuring all stakeholders play their respective roles, it would stand a good chance of realizing its vision of providing healthcare to all its citizens.