Medical Devices Industry in India

Introduction

The healthcare and medical device sectors have grown significantly in the last decade. There is a huge gap in the current demand and supply of medical devices in India and this provides a significant opportunity for manufacturing devices in India.

India has the lowest per capital spend of US$ 3 on medical devices among BRIC countries such as China (US$ 7), Russia (US$ 42) and Brazil (US$ 21). At present, many medical device manufacturers (domestic and international) are chasing this massive under penetration of medical devices in India as a significant growth opportunity.

Market Size

India is among the top 20 global markets for medical devices; the market is expected to increase at a 35.4% CAGR to reach Rs. 352,450 (US$ 50 billion) in 2025 from Rs. 77,539 crore (US$ 11 billion) in 2020.

The medical devices sector in India comprises large multinationals and small and midsized companies.

The Government of India (GOI) has commenced various initiatives to strengthen the medical devices sector, with emphasis on research and development (R&D) and 100% FDI for medical devices to boost the market. From April 2000 to June 2020, FDI inflows in the medical and surgical appliances sector reached US$ 2.13 billion.

Export Scenario

India has a 75-80% import dependency on medical devices, with exports at Rs. 14,802 crore (US$2.1 billion) in 2019 and is expected to increase at a CAGR of 29.7% to reach Rs. 70,490 crore (US$10 billion) in 2025.

To increase export of medical devices in the country, the Indian Ministry of Health and Family Welfare (MOHFW) and Central Drugs Standard Control Organisation (CDSCO) implemented the following initiatives: re-examination and implementation of Schedule MIII (a draft guidance on good manufacturing practices and facility requirements), system for export labelling, clinical evaluation and adverse reporting clarification, state licensing authority to extend free sales certificate validity from 2 years to 5 years to allow exports, create a list of manufacturers with export licensing for easy access by regulatory authorities worldwide.

Investments

To further incentivise investments in manufacturing medical devices, in May 2020, the government announced incentivisation plans of at least Rs. 3,420 crore (US$ 4.9 billion) over a period of five years, and these funds will be offered to manufacturers only if they invest in set-ups to manufacture key medical devices.

In May 2020, AiMeD (an Umbrella Association of the Indian Manufacturers of Medical Devices) invited Japanese investors who were interested in setting up a manufacturing base for medical devices (including medical electronics & IVD) in India. As a part of this initiative, India is targeting 1,200 technical collaborations with Indian investors for JPY 600 billion (US$ 5,746.7 million) and above, 200 joint ventures with foreign investors for JPY 200 billion (US$ 1,903.8 million) and above, and 50 MNCs for JPY 200 billion (US$ $ 1,903.8 million) and above.

Some major investments and developments in medical devices are as follows:

• In December 2020, Central Drugs Standard Control Organisation (CDSCO) has granted medical device registration to three wearable devices from GOQii, a California-based fitness technology company. These devices offer measurements of body temperature and a pulse oximeter, as well as of vitals such as electrocardiography (ECG), blood pressure and heart-rate.
• In November 2020, the Engineering Exports Promotion Council India and the National Institute of Design collaborated to promote and upgrade designs and technology for the medical devices industry, enabling it to meet the emerging needs of the country’s health sector, particularly in the aftermath of COVID-19.
• In October 2020, Siemens Healthineers, a global medical technology company, announced plans to invest Rs. 1,300 crore (US$ 177 million) over the next five years in Bengaluru, Karnataka, to make India one of its four key digital innovation hubs worldwide. The innovation hub will be housed in a new state-of-the-art campus that combines existing R&D centre and modern medical imaging factory. This hub will play a strategic role in developing software products and platforms for the company’s three segments—imaging, diagnostics and advanced therapies.
• In September 2020, Thiruvananthapuram-based Sree Chitra Tirunal Institute for Medical Sciences and Technology announced that it will collaborate with the Kerala government to set up a Rs. 260 crore (US$ 35.44 million) medical devices park in Thonnakkal (Thiruvanthapuram).
• In June 2019, Transasia Bio-Medicals Ltd., a leading manufacturer of medical devices, announced an investment of Rs. 50 crore (US$ 6.8 million) to expand its manufacturing facility in Sikkim. At present, the manufacturing facility is spread across two acres of land and produces >6,000 instruments per month. The investment will help enhance production capacity of the plant and cater to the growing demand for medical devices in India and overseas.
• In August 2020, Medtronic, a global manufacturer of medical devices, announced an investment worth Rs. 1,200 crore (US$ 163.2 million) to expand its R&D centre for medical device software and engineering solutions facility in Hyderabad, Telangana. This will be Medtronic’s largest R&D facility, outside the US, generating ~1,000 jobs in the next five years. The investment is planned over the next five years and is aimed at making Hyderabad the hub for medical devices in India.
• In March 2019, Sahajanand Medical Technologies (SMT), a manufacturer of coronary stent, announced an investment worth Rs. 250 crore (US$ 34 million) to establish a stent manufacturing facility in Telangana. This facility will be Asia’s largest stent manufacturing facility with a capacity to produce 1 million stents and 2 million balloon catheters per year. The facility is expected to be ready by 2020 and will generate employment for ~1,200-2,000 people.
• In 2017, the Telangana government launched a medical devices park, in Sultanpur, which has become one of the leading destinations for top medical device companies. The park offers a dedicated ecosystem for Medtech innovation and manufacturing, wherein ~25 companies are in the process of establishing their R&D and manufacturing units, including Sahajanand Medical Technologies (SMT), Promea Therapeutics, Arka Medical Devices, Virchow Biotech Private Limited, Cyient Limited and Transcath Medical Devices.

Government Initiatives

The Government of India has recognised medical devices as a sunrise sector under the ‘Make in India’ campaign in 2014.

• Incentive Schemes: In March 2020, the government approved ‘Production-Linked Incentives (PLI) Scheme for Medical Devices 2020, with financial implications of Rs. 3,420 crore (US$ 464 million) wherein, an incentive at 5% of incremental sales over the base year 2019-2020 will be provided to segments of medical devices such as cancer care and radio-therapy medical devices, radiology and imaging medical devices, anesthetics and cardio-respiratory medical devices (including catheters of cardiorespiratory category & renal care medical devices and implants including implantable electronic devices such as cochlear implants and pacemakers). Since March 2020, 28 applications from 23 medical device manufacturers have been received.
• Introduction of Medical Parks: In 2019, the government approved to establish four medical devices parks in Andhra Pradesh, Telangana, Tamil Nadu and Kerala, and have granted Rs. 100 crore (US$ 13.5 million) per park to the respective states. The medical device parks are expected to reduce manufacturing costs, as these will be equipped with the necessary infrastructure where companies can plug and play.
• In November 2020, the Union Cabinet, chaired by Prime Minister Mr. Narendra Modi approved an MoU between the Central Drugs Standard Control Organisation (CDSCO), India, and the United Kingdom Medicines and Healthcare Products Regulatory Agency (UK MHRA) to cooperate in the field of medical product regulations.

Achievements in the Sector

In India, medical device manufacturing is costly because it requires high investments in scientific facilities. To combat this cost, the Government of Andhra Pradesh is establishing the Andhra Pradesh MedTech Zone (APMTZ), which will house all capital-intensive scientific facilities, laboratories, etc., and will be leased to manufacturers in Vishakhapatnam. This initiative will help decrease the cost of good-quality products.

Road Ahead

Policy makers in India will need to set out an action plan to reduce the country’s dependency on medical devices/technology imports. At present, NITI Aayog is reportedly drawing up a strategic road map for medical devices similar to the incentive package that gives sizable capital subsidies for the electronics business, which helps boost local production of cell phones in the country.

Medical device companies should develop India as a manufacturing hub for domestic and international markets, undertake India-based innovation in combination with indigenous manufacturing, collaborate across the Make in India and Innovate in India schemes, and produce Low to Medium technology products to cater to the underpenetrated domestic markets.

References:  Government Websites, Press Releases, Media Reports, Deloitte Report

Note: Conversion rate used for December 2020 is Rs. 1 = US$ 0.014

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.