By Ashok Patel
In recent years, India has emerged as one of the fastest growing healthcare markets in the world with most healthcare players showing impressive results, including the medical device sector. In fact, the Indian medical device market is said to be the fourth largest in Asia and is among the top 20 markets globally. Yet, while health as a whole has become one of the most important sectors in terms of income and employment, almost 80% of the sales of the medical technology sector in the country continue to come from imports. To clarify, healthcare roughly includes hospitals, medical devices, clinical trials, outsourcing, telemedicine, medical tourism, health insurance, and medical equipment.
What is really preventing the Indian medical device sector from developing a truly local industry and what can be done to catalyze the growth and development of a well-developed and indeed thriving indigenous medical device ecosystem?
Lack of supporting infrastructure and supply chain network
First, although the government has taken several initiatives in this regard in the recent past, for a country with such a high disease burden as India, it lacks a sufficient supportive supply chain network, manufacturing auxiliary and relevant infrastructure to manufacture quality medical devices. This is especially true for high-end devices and especially those that involve expensive technologies and components. For their part, Indian manufacturers mainly focus on low-end products for local and global markets. According to the government’s own approach paper on National Medical Device Policy 2022, the high-tech part of the medical device market is almost entirely served by foreign multinational corporations. On the other hand, domestic players mainly cater to the low-end consumables segment and hold a market share of almost 65%. Although this has been changing in recent years, most multinationals have production (and R&D) facilities outside India from where they import products for the Indian market.
Inverted tariff structure favoring the import of finished products
Second, import duties on raw materials and components are generally higher than those on finished products. In other words, there is a low barrier to entry for finished medical products and equipment. This is a natural incentive for medical device industry players to bring complete standalone products into the country instead of raw materials and inputs that they could eventually use to innovatively manufacture an entirely new product themselves. In the process, many players effectively become traders and not really manufacturers of several medical devices.
The special nature of the internal market
Third, even though India has a large population and a high disease burden, from the perspective of high-end and technologically sophisticated medical device manufacturers, there is insufficient domestic demand for them to invest and operate in full share. Whatever demands exist, they are limited to hospitals and healthcare facilities as well as individuals and families in Indian metros and major cities. In fact, hospitals in non-metropolitan cities are likely to opt for cheap products and devices over high-end ones due to affordability concerns. Therefore, aside from the usual risks associated with the very nature of a fledgling business venture, long-term sustainability in the country has often played on the minds of manufacturers in the country.
Lack of relevant training and skills
Fourth, although India produces one of the highest numbers of STEM graduates, including engineers, there is a clear lack of alignment between biomedical education and engineering disciplines. For Asia’s fourth-largest medical device maker, there are just 217 biomedical engineering colleges in the country offering full-fledged courses, according to an education industry tracking portal. Then, in a survey conducted by Andhra Pradesh Medtech Zone Ltd. (AMTZ), there are less than 20 biotechnology engineering related courses across India.
Designing devices for different temperature conditions is not easy
Fifth, from a design engineering perspective, experts say it is difficult to manufacture devices and customize them for different international markets with vastly different climatic conditions. It becomes even more difficult in India due to the lack of a supporting ecosystem.
Limited technology transfer to Indian companies
Sixthly, while the rules allowing up to 100% investment for greenfields and brownfields automatically in this sector have certainly led to an increase in investment by foreign companies, it remains to be seen to what extent This has resulted in a transfer of technology and know-how to their Indian counterparts.
Continued absence of a separate regulatory body for medical devices
Seventh, even though the government has from time to time introduced new rules and laws with the aim of streamlining and improving the regulatory framework for medical devices, the segment continues to lack a separate regulatory body.
In the context of the above reasons, what should the authorities do?
First, while identifying devices and technologies that are highly dependent on imports and preparing a list of priorities, the government should encourage a favorable ecosystem for these high-end and sophisticated medical devices. Indian companies willing to invest in such high-end quality devices must be duly incentivized with policies and other financial support. It would also involve imposing high import duties on finished products and reducing taxes on inputs and intermediate materials. In addition, existing PLI schemes need to be extended to more device categories. It is important to note that the government should continue to focus on encouraging products and innovations based on core technology and not get caught up in replicas and/or engineered medical device products. reverse. At the same time, local value chains for components must also be nurtured and allowed to grow.
Second, there should be tough negotiations with foreign companies over investment and the consequent transfer of technology, know-how and good practices to domestic companies. We need to use the large number of highly skilled (and trainable) professionals and relatively low labor costs as bargaining chips in these negotiations.
Third, against the practice of imposing price caps, the government should allow the rationalization of trade margins, which would pave the way for a level playing field for all players in the value chain, which would also benefit consumers. final.
Fourth, human resource development and knowledge sharing among different stakeholders is key to a long-term vision for the industry. According to a survey conducted by Andhra Pradesh Medtech Zone (AMTZ), nearly half of the workforce in the medical device industry is unskilled. To fill this gap, structured courses in biomedical engineering and relevant programs in biotechnology derived from the latest developments in the West and elsewhere must be available not only in top-tier institutions, but also in second- and third-tier institutions.
Fifth, the government should actively focus on creating a vibrant R&D environment in the country while facilitating industry-academia collaboration. At all stages of product development, from conception to design, including prototyping, validation and testing, research and innovation must be stimulated. New era health and medical technology start-ups should also be encouraged to partner with companies specializing in emerging technologies such as Artificial Intelligence (AI), Internet of Things (IoT) , robotics and nanotechnology, among others.
Sixth, the government could consider targeted purchases from local companies for appliances and equipment for which there is sufficient local capacity and competition available in the country. This would boost local production as well as innovation. Last year, the Department of Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry notified 135 in vitro diagnostic medical devices and 19 medical devices for this purpose. This is a promising development. Seventh, intellectual property and patent protection must be strictly pursued and implemented.
(The author is the founder and CEO of Max Ventilators. The opinions expressed are personal and do not reflect the official position or policy of FinancialExpress.com.)