The Medical Device Industry- catalyst for driving India’s healthcare leadership
India is well on its way to attaining Aurobindo's (Indian philosopher) vision: "India will rise, not only to serve her own material interests but also to live for the world as a helper and leader of the whole human race"
Today, India is a proven, reliable, and trusted partner when it comes to addressing pressing healthcare concerns of this age and is poised to become the “Vishwa-guru” (global leader) to provide healing solutions to the world. The concept of healthcare in India is extensive and all-encompassing, which doesn’t limit only to the curative aspect but also to the prophylactic and well-being aspects of health. This offers multitudinous opportunities for the stakeholders to cast their nets wider and foray into the healthcare sector to capitalize on the growth story.
The macro-economic landscape in India offers an optimum incubating ecosystem for the healthcare industry to nurture, nourish and flourish. The third-largest economy (by PPP) and the third-largest start-up nation with a favourable demographic profile and a mushrooming innovation hub with ease of doing business, is well-positioned and stationed on the launchpad for its upward trajectory. Moreover, India is now becoming one of the major investment destinations as it provides the right mix of four Ds- Demography, Democracy, Demand & Diversity. In this multi-orbital transformational journey, the healthcare sector in general and the medical device industry, in particular, could become an integral component of the propulsion system and can act as a catalyst for India’s healthcare leadership.
The medical device sector in India is vital for the prevention, diagnosis, treatment, and management of all medical conditions, diseases, illnesses, and disabilities. It, together with healthcare providers, the pharmaceutical industry, and insurance providers, contributes to the achievement of the key values enshrined in the National Health Policy (NHP) 2017 viz. providing high-quality, affordable, and comprehensive healthcare to all citizens. The medical device industry generally includes (a) Electronic Equipment; (b) Implants; (c) Consumables and Disposables (d) IVD reagents (e) Surgical Instruments and (f) Extracorporeal technologies.
The global medical devices sector has grown significantly in the last decade and is estimated to reach USD 433 billion by 2025, growing at a compound annual growth rate of 4.1%. The market is dominated by the United States of America (40% share), Europe (25% share) and Japan (15% share). Similarly, the medical devices industry is also growing in emerging markets. Thailand’s medical device market was valued at USD 27 billion in 2019 and is expected to grow by 8-10%, Brazil’s current medical device market is worth approximately USD 10.5 billion & is growing at a CAGR of 5.8%, and China’s medical device sector is currently valued at USD 96 billion and is growing at a pace of more than 20% for several years now.
However, In India, the current market size of the medical devices is estimated to be USD 11 billion only and its share in the global medical device market is estimated to be a meagre 1.5%. Unsurprisingly and unfortunately, India is counted among the top global medical device market destinations. There are 750–800 domestic Medical Device manufacturers in India, with an average investment of USD 2.3–2.7 million and an average turnover of USD 6.2-6.9 million. The domestic players, constituting around 65% of the medical device manufacturers in India, focus on low-cost, low-technology devices such as consumables and disposables thereby catering to local consumption with limited exports. The Indian medical device market also has a major presence of various multinational corporations, which are currently market leaders and account for 80 per cent of sales. In addition to wealth drain, this has resulted in an over-reliance on imports (surprisingly, 75-80 per cent import dependency) and technological partners for ensuring India's strategic health security. As a result, the time is nigh for India to transition from a "market destination" to a "market winner and a leader". If India can capture this zeitgeist, the country's medical device industry can subsequently grow at a 35.4 per cent CAGR and reach USD 50 billion by 2025.
However, it is pertinent to anatomically diagnose the malignancy which has been asphyxiating this industry’s organic growth. The X-ray image of India’s medical device sector exposes multiple fractures which, apparently, have been quite evident even before the onset of the pandemic. The industry appears to be in critical care and requires debridement & immediate resuscitation.
The overarching governance and legal framework will have to evolve with time. The Drugs and Cosmetics Act, 1940 regulates the import, manufacture, distribution and sale of drugs and cosmetics. To incorporate devices under the regulatory ambit, the Medical Devices (Amendment) Rules, 2020 were rolled out under the aforementioned legislative framework and stated “devices as drugs” for regulatory considerations. As drugs and devices are two different categories serving different needs and requiring different regulatory frameworks, there is a dire need to have an exclusive and clear legal framework for devices alongside an independent and impartial regulatory regime parallel to the Central Drugs Standard Control Organization (CDSCO), as suggested by the NITI Aayog (Government of India Think Tank). Moreover, cumbersome regulatory procedures and approvals and a multiplicity of regulatory agencies create a high compliance burden on the businesses. Therefore, the draft National Medical Devices Policy 2022 (NMDP-2022) outlines the need for a predictable & transparent regulatory environment by proposing a single-window clearance system, harmonization with global standards and effective price regulation mechanisms that will further foster the ease of doing business.
Another significant concern is the manufacturing ecosystem. Although several initiatives, such as the Medical Parks Scheme, enabling unfettered FDI influx and the Production Linked Incentive Scheme for Medical Devices, have recently been undertaken under the Make in India and the Atmanirbhar Bharat vision, making things materialise on the ground is a monumental task. The manufacturing sector generated 17.4 per cent of India's GDP, a little increase from 15.3 per cent in 2000. (By contrast, during the same time period, Vietnam's manufacturing sector more than doubled its share of GDP.) Moreover, over the last 13 years, India's manufacturing sector's employment share has increased by one percentage point, compared to a five-point increase in the services sector. As a result, there is a need to cultivate a fertile environment that could boost productivity and attract capital. To make the ease of doing business easier, the Central (federal) and the State governments must exhibit and inculcate the spirit of cooperative and competitive federalism in order to develop industrial clusters, logistics, and export hubs. We will have to think big, start small and scale fast while adopting qualitative attributes viz. laser focus, plasticity & resilience in our approach.
Furthermore, the R&D and Innovation space need decongestion from systemic issues. Currently, the per capita spend on medical devices in India is at a dismal USD 3, compared to the global average of per capita consumption of USD 47 as well as the per capita consumption of developed nations like the USA at USD 415 and Germany at USD 313. The medical device industry thrives on innovation and needs multiple (fiscal & non-fiscal) and fluvial funding channels to fuel its growth. It becomes important that India rides on the Industrial Revolution 4.0 wave to harness the benefits of the digital revolution (AI, ML, IoT) & biotechnology & biomedical engineering (cell & gene therapies, 3D & 4D organ bioprinting, precision diagnostics, Robotics etc). Furthermore, the AIG trinity- Academia, Industry & Government will have to demonstrate unwavering commitment and undertake concerted actions in the areas of R&D, Intellectual Property Rights and global innovation alliances to repose faith in India’s medical device growth story.
Last but not least, human capital is the sine qua non for the growth story and must be reinvigorated. Creating a skilled ecosystem that provides a consistent supply of qualified workers across the innovation value chain (e.g., scientists, regulators, health experts, managers, technicians, etc.) is critical for the sector's growth. However, the availability of skilled personnel remains a concern, as highlighted by a survey conducted by the Andhra Pradesh MedTech Zone (AMTZ), which found that almost half of the workforce in the medical device sector is unskilled. According to the current state of affairs, with problems in the education sector, lack of trained personnel (the brain drain phenomenon is well-known), and a high unemployment rate, there is a high likelihood of landing ourselves into a demographic disaster. To mitigate this, the proposed NMDP-2022 considers establishing the National Institutes of MedTech (Medical Devices Education and Research (NIMERs) as Institutes of National Importance (INIs) akin to the National Institutes of Pharmaceutical Education and Research (NIPERs) to ensure qualitative skill development. Furthermore, the policy envisions the creation of a National Registry for Priority, which will maintain a data bank containing information about the most recent medical device technologies and the skills required to manufacture that technology. Furthermore, the policy firmly advocates for the funding of such talents through hands-on training as well as internships/training with both domestic and international institutions.
In a nutshell, the Medical Devices sector could be accelerated to increase access and affordability of high-quality products and services to meet patients' evolving healthcare needs. This could be ensured by establishing an innovative and globally competitive industry in India, supported by the state-of-the-art infrastructure, an enabling & facilitating ecosystem, a streamlined regulatory framework, and a skilled workforce. This would allow India to become the global leader in the manufacturing of medical device products, ensuring access to patient-centric, innovative, and affordable healthcare solutions for improved healthcare outcomes. During this transformational journey, the concerned stakeholders must always abide by the guiding principles viz. Quality, Accessibility, Equality, Universality, Affordability & Security.
At this juncture, as we complete the 75th year of independence (2022) and march towards the centenary (2047), the draft NMDP-2022 envisages the following for India’s Medical Device Sector
To be one of the Top 5 Global manufacturing hubs in terms of value and technology for Medical Devices by 2047.
India should become the hub to 25 MedTech $Bn companies and home & originator to 25 high-end futuristic technologies in MedTech
India should emerge as a Champion in critical components, cancer diagnostics, medical imaging, ultrasonic scans, molecular imaging, & PCR technologies
India should achieve 10-12% of the Global Market Share of the Medical Devices Sector to arrive at a USD100-300 billion industry.
The idea, "Vasudhaiva Kutumbakam," which translates to "The World Is One Family"," encourages India to assume leadership and India can very well transform itself from "Vishwa-sishya" (Global student) to "Vishwa-guru" (Global leader). When the entire planet yearns for universal health coverage and sustainable development, a new equilibrium is being forged between India and the rest of the world, with India providing a glimmer of hope for accomplishing these collective and shared interests.
On this world map, India's geographical design (you may refer to the outline of India's political map for a better understanding) speaks for itself. It signifies India's willingness to embrace all challenges with arms wide open and stay resolute to the cause of healthcare, well-being, and global prosperity.
Pharmaceuticals.gov.in. (2022). National Medical Device Policy 2022 | Department of Pharmaceuticals. [online] Available at: https://pharmaceuticals.gov.in/policy/national-medical-device-policy-2022.
India Brand Equity Foundation. Medical Devices Industry in India – Market Share, Reports, Growth & Scope | IBEF. [online] Available at: https://www.ibef.org/industry/medical-devices.
www.mckinsey.com. A new growth formula for manufacturing in India | McKinsey. [online] Available at: https://www.mckinsey.com/industries/advanced-electronics/our-insights/a-new-growth-formula-for-manufacturing-in-india#:~:text=In%20fiscal%20year%202020%2C%20manufacturing.