The COVID-19 pandemic not only brought into focus that the healthcare sector is the backbone of a country but also opened a floodgate of opportunities for the country to head toward a more resilient and robust healthcare system – one that is capable of not only fighting the current situation but also in safeguarding populations against any unanticipated challenges. Last year saw India undergoing a paradigm shift from the traditional legacy systems to cloud-based applications. The crisis proved to be a catalyst for increased adoption of digital healthcare systems across the world.
The onset of the COVID-19 pandemic was an unanticipated occurrence, which transpired into the most devastating international health emergency of the century, and sent shockwaves across global healthcare and economic structures. While India too faced a plethora of challenges, a strategically curated and proactive response strategy enabled it to limit the impact and raise the rate of recovery to almost 98 percent – one of the highest in the world.
The last two years of the pandemic also paved way for India to demonstrate unprecedented resilience and dynamism in terms of system strengthening, rapid policy making, and response planning as well as unified efforts by all stakeholders. Being a novel virus, India had only one laboratory testing for COVID-19, at the ICMR- National Institute of Virology, Pune in January 2020 at the beginning of the pandemic to reaching almost 3000 in October 2021 and having administered almost 14 percent of the total COVID vaccine doses administered worldwide, India has continued to achieve record-breaking numbers in many spheres of the pandemic response strategy.
Serving the entire healthcare chain of disease prevention, diagnosis, treatment, and supportive care, medical devices are crucial in realizing the dream of Health for All. In spite of India’s global dominance with pharmaceuticals and vaccines, she continues to lag far behind in the medical devices sector.
Urgent need to address the huge ₹45,000 crore import bill
Forum Coordinator of Association of Indian Medical Device Industry (AiMeD) & Managing Director,
Hindustan Syringe & Medical Device Ltd (HMD)
The Government of India through its flagship Make in India initiative relied heavily on the Indian manufacturers to meet the rising demand of essential healthcare equipment in the COVID-19 crisis and the sector rose to the challenge admirably.
When imports got disrupted, specific devices detailed with quantified production shortages and a focused Inter-Ministry Group coordinating with domestic manufacturers via AiMeD addressed production bottlenecks and challenges, so that not only was the capacity utilized but also ramped up rapidly.
The government interventions helped the medical devices industry scale up production during the pandemic. We enjoyed an unprecedented teamwork and rapid proactive communication from NPPA, who became a facilitator instead of a regulator & Dept. of Pharma, DPIIT, Invest India and MSME Ministry, as they set up help desks to address production bottlenecks of all medical devices.
We are now waiting for a policy announcement on the vital issues, listed below to end the 85 percent import dependence forced upon us and an ever-increasing import bill of over ₹45,000 crore:
Consumer protection. For ensuring Ethical Marketing is not disadvantageous, trade margin rationalization is needed. It will also protect consumers from exorbitant pricing. MRP labeling needs to be enforced on unit of sale of medical devices by Customs. Also, the government may introduce Trade Margin Cap Mechanism of maximum 4 times MRP over Import Landed Price / Ex-Factory Price for domestic manufacturers, but not from price to distributor as that would make India at a competitive disadvantage over imports;
Regulate all medical devices under a Patients’ Safety Medical Devices Law, separate from Drugs to protect patients and aid responsible manufacturing while decriminalization of minor offences;
Restriction on import of pre-owned medical equipment of over 3 years age;
A 5 percent cess on healthcare needs to be applied to other medical devices too. In addition, a predictive nominal tariff protection policy should also be implemented as done for mobile phones; and
Incentivize quality and domestic content in healthcare products in public healthcare procurements by preferential pricing for Q1 e.g. ICMED (QCI’s Indian Certification for Medical Devices) instead of L1 (lowest price), to ensure patients access acceptable quality made to global standards.
India is among the top 20 markets for medical devices worldwide. From USD 10.36 billion in 2020, the Indian market for medical equipment is expected to reach USD 11.86 billion in 2022, and is expected to increase at a 37-percent annualized compound annual growth rate (CAGR) to reach USD 50 billion in 2025.
Again, the things are not based on a single root. Massive expansion of medical facilities factored in and introduction of the Medical Devices (Amendment) Rules 2020 is also there to boost the demand for medical devices in the market.
On the policy front, the Indian government is undertaking deep structural and sustained reforms to strengthen the healthcare sector; it has also announced conducive policies for encouraging foreign direct investment (FDI). In fact, India’s FDI regime has been liberalized extensively. Currently, FDI is permitted up to 100 percent under the automatic route (i.e., a non-resident investor or an Indian company does not require approval from the Government of India for the investment) in the hospital sector and in the manufacture of medical devices. In the pharmaceutical sector, FDI is permitted up to 100 percent in greenfield projects and 74 percent in brownfield projects under the automatic route. In the AYUSH sector as well, 100-percent FDI is permitted for the wellness and medical tourism segment.
India has emerged as one of the fastest-growing emerging economies over the last two decades, receiving large FDI inflows. FDI inflow in the medical and surgical appliances sector stood at USD 2.19 billion between April 2000 and March 2021.
During 2015–2020, India received USD 600 million with key investments from countries, such as Singapore, US, Europe, and Japan. Categories, such as equipment & instruments and consumables & implants, attracted the most FDI.
The government has been very supportive. The Department of Pharmaceuticals (DoP) has launched a PLI scheme for domestic manufacturing of medical devices, with a total outlay of funds worth ₹3420 crore for the period FY21–FY28. The department then released a revised notice on the Public Procurement Order (PPO), incorporating 19 medical devices in the revised guidelines of the PPO, which is expected to improve domestic medical-devices manufacturing, strengthen Make in India initiative, and reduce import bills by ₹4000 crore. In March 2021, the government also announced a new PLI 2.0 scheme for promotion of the in-vitro diagnostics market.
In September 2021, the union government notified a scheme to promote medical devices parks at a financial outlay of ₹400 crore till financial year 2024-25. The financial assistance for a selected medical devices park would be 90 percent of the project cost of common infrastructure facilities for the northeastern and hilly states. For the rest, it would be 70 percent. However, maximum assistance under the scheme for one such park will be ₹100 crore.
Diagnostics: Catalysing higher quality of life
J Mitra & Company
Diagnostics and IVD within healthcare are playing a very critical role in catalyzing a higher quality of life. For example, the entire war against the corona pandemic stands on two strong pillars – diagnostics and vaccination.
The decline in the deaths and occurrences of other diseases can also be attributed to the growth of the diagnostic services through in-vitro diagnostics, imaging, radiology, and ultrasound.
Diagnostics serve as the first and foremost line of defense in the fight for better health and fitness. Diagnostics ascertain the ailments and provide data for deciding on the correct treatment, surgery, and medication. Seventy percent of medical decisions depend on diagnostics.
In the last 50 years, improved diagnostics have positively impacted healthcare. The diagnostics industry has developed several innovative solutions designed to improve life expectancy and quality of life significantly. These innovations have focussed on developing new diagnostic procedures and medical devices like stents, precise diagnostic scanners, and surgical robots.
As a result, diagnostic services have played a vital role in spotting health problems and catalyzing informed medical interventions with higher integrity due to evidence-backed decisions. This has resulted in a domino effect on healthcare and quality of life.
Advancements like robotics have ensured higher levels of efficiency and accuracy, reducing the duration of hospital stay, catalyzing patient comfort, and decreasing stress.
In addition, wearable monitoring devices and self-use devices help patients take charge of their health in their own homes, and regularly monitor critical health parameters. Furthermore, remote monitoring by doctors reduces the frequent visits to the hospitals.
Indian diagnostics are at par with global quality standards, precision, and affordability. As a result, Indian diagnostics manufacturers make their solutions more cost-effective and ensure last-mile accessibility even in remote rural India.
The Indian diagnostics industry is gradually catalyzing a higher quality of life for the patients.
On October 18, 2021, the Directorate General of Foreign Trade (DGFT) removed export curbs on all diagnostic kits and reagents including instruments, which are used in the detection of coronavirus infections. The export restrictions on these products were imposed in June last year and August 16, 2021, on account of increasing COVID-19 cases. In a separate notification, the DGFT revised its earlier decision of October 4, 2021, with regard to the export of syringes with or without needles. It was earlier put under the restricted category for export purposes, but now the curbs would be there for only certain denominations of syringes. India needs around 300 million syringes to inoculate its children annually. But it needs close to that number every month for the COVID-19 vaccination drive. Last fiscal, India exported syringes worth USD 45 million or so, and between April and July this year, the industry exports stood at USD 17.37 million.
In order to expedite the clearance of medical devices such as nebulizers, oxygen concentrators, and oxygen cannisters, the government made it easier in April 2021 to import critical medical devices by easing the requirements for clearance under the Legal Metrology Act (Packaging Rules 2011).
The tax holiday under section 80-IB for private healthcare providers, operating 50-bedded (or more) hospitals in nonmetropolitan areas, has been increased. The benefit of section 80-IB has also been extended to new hospitals with 100 beds or more, set up in rural areas; such hospitals are entitled to 100-percent deduction on profits for five years. A 250-percent deduction for approved expenditure, incurred on operating technology, enables healthcare services, such as telemedicine and remote radiology. Further, there is an income tax exemption for 15 years for domestically manufactured medical technology products.
All of these factors together have created several opportunities for investment in India’s healthcare industry.
Some more initiatives. With an objective to boost domestic manufacturing, and attract large investment in medical devices sector, 13 applications have been approved by the government that are expected to lead to a committed investment of ₹873.93 crore by MedTech companies including Siemens Healthcare, Wipro GE Healthcare, BPL Medical Technologies, Nipro India Corporation, Sahajanand Medical Technologies, Integris Health, and Poly Medicure.
Professor Michael Lerch of the University of Wollongong (UOW) has been given a USD 179,000 Australia-India Council grant to conduct pre-clinical testing on a novel medical device for neurosurgery by the Department of Foreign Affairs and Trade (DFAT).
In January 2021, Tamil Nadu government proposed to build a medical devices park (spanning 350 acres) near Oragadam in Kancheepuram district. The proposed cost for developing this project is ₹430 crore (USD 58.92 million).
In February 2021, Punjab government proposed a park for medical devices at Rajpura, across an area of 210 acres, with an estimated project cost of ₹180 crore. In addition, a bulk-drug pharma park in an area of 1300 acre involving project cost of ₹1800 crore has been proposed at Bathinda.
In June 2021, the National Anti-profiteering Authority (NAA) directed tax officials to ensure rate cut on GST for COVID-19-related medical supplies to offer consumers tax relief on supplies.
To expand the primary healthcare industry and clinical centers in the country, in July 2021, the Government of Uttar Pradesh announced to introduce automatic medicine-dispensing machines. The state health department has been initiated to design an action plan and install Health ATMs walk-in medical kiosks with combined medical devices for fundamentals, basic laboratory testing, emergency offerings, cardiology, neurology, pulmonary testing, gynecology, etc., operated by a medical assistant in all 75 districts of Uttar Pradesh. The government also announced plans to build a medical park in Uttar Pradesh, which is expected to generate an estimated ₹500 crore (USD 67.13 million) business in the state.
In September 2021, the center has sanctioned a ₹5000 crore worth medical devices park at Nalagarh in Solan district, Himachal Pradesh. The estimated cost of this park would be ₹266.95 crore and ₹160.95 crore would be borne by the state government.
Private sector responds. In March 2021, Transasia Bio-Medical announced plans to invest ₹150 crore to set up a manufacturing unit at the Medical Devices Park in Sultanpur, Telangana. The company plans to manufacture state-of-the-art high-technology analyzers in the unit to address biochemistry, immunology, hematology, molecular testing in addition to COVID-19, HIV, dengue, and TB testing for domestic and export markets.
Japan-headquartered Omron Healthcare, which established its Indian arm in 2010, is drawing growth plans for India that may include setting up a manufacturing unit in India and expanding its retail footprint. By the end of 2021, the company plans to have 10 retail outlets in India and plans to create a center in Warangal as part of its expansion into Southern India, where it anticipates a potential contribution of 40 percent of its sales in FY2020. The company expects a ₹220 crore (USD 30 million) turnover in India during that period.
New Delhi-based SS Innovations, promoted by renowned robotic cardiothoracic surgeon Dr Sudhir P Srivastava, will commercially launch India’s first and cheapest robot surgical system in the next 4–6 months. The company plans to manufacture 100 units in 2021 of its new Mantra multi-arm surgical robotics system, which was indigenously developed over the last three years, and sell >1000 units in the next five years.
In April 2021, Medtronic inaugurated a Medtronic Engineering and Innovation Centre (MEIC) in Hyderabad to leverage India’s large pool of diverse and qualified talent to accelerate its innovative work in the medical technology space in the country.
In April 2021, ResMed expanded AirView for Ventilation, a cloud-based remote-monitoring and management platform in India, which allows healthcare professionals and physicians to leverage this digital respiratory monitoring solution to remotely track patients and provide better care.
In April 2021, Anthill Ventures announced a collaboration with Kanfit3D (an Israeli health tech company) to help the company (Kanfit3D) expand in India and produce custom-made medical implants and market access to healthcare providers in the country.
In June 2021, Skanray Technologies filed its draft red-herring prospectus (DRHP) with SEBI for its initial public offering (IPO) worth ₹400 crore (USD 53.70 million). The IPO is expected to include sale of secondary share, wherein its promoters and Ascent Capital (an existing private equity investor) are expected to sell a part of their stake.
Indian MedTech industry has been growing at double-digit rates and has evolved significantly in the last decade. However, a number of challenges need to be addressed in providing access to quality, affordable healthcare, and making this sector self-sustainable.
To sum up, COVID-19 outbreak in India has given tremendous opportunities to the Indian medical devices manufacturers to shine by addressing indigenous needs, and be a credible global player for medical devices manufacturing and supply. The Indian medical devices industry has been growing at double-digit rates and has evolved significantly in the last decade. However, a number of challenges need to be addressed in providing access to quality, affordable healthcare, and making this sector self-sustainable.
As the world is now looking at India to be the hub for providing cost-effective medical devices components and devices, India being globally established as the IT leader has the potential to lead the era of digital healthcare solutions. It is time for the Indian government to continue with its multiple policy initiatives for creating an enabling ecosystem and catalyze the holistic development of Indian medical devices industry to shine. India has the potential to provide quality medical devices products at affordable price points, which is unique to India.
India is finally poised to take giant leaps in the medical devices sector.