India’s Medical Device Market

India is Asia's fourth largest medical device market and one of the top 20 worldwide. According to an Indian Brand Equity Foundation (IBEF) report, the market for medical devices in India is expected to grow at a 35.4% compound annual growth rate (CAGR), with the overall market valued at $11 billion in 2020 and $50 billion by 2025. Imports, on the other hand, currently supply the bulk of the country's medical device market, accounting for 80% of overall sales.

The high reliance on imports presents an appealing opportunity for domestic manufacturers. The 2017 Medical Devices Rules came into effect on January 1 2018, making it the most significant year in terms of regulatory changes for medical device companies.

The government has made changes to the medical equipment legislation to greatly broaden the reach of the regulation. The adoption of new statutory legislation for medical devices is also being discussed, as medical devices are currently classified as drugs under the Drugs and Cosmetics Act.

Government Initiatives

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

  • To boost domestic manufacturing of medical devices and attract huge investments in India, the department of pharmaceuticals launched a PLI scheme for domestic manufacturing of medical devices, with a total outlay of funds worth Rs.3,420 crore (US$ 468.78 million) for the period FY21-FY28.

  • On March 25, 2021, the Department of Pharmaceuticals (DoP) 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 (and strengthen ‘Make in India’) and reduce import bills by ~Rs. 4,000 crore (US$ 538.62 million).

  • In order to expedite the clearance of medical devices such as nebulisers, oxygen concentrators and oxygen canisters in April 2021, the government made it easier to import critical medical devices by easing the requirements for clearance under the Legal Metrology Act (Packaging Rules 2011).

  • The government also approved applications for nine eligible projects that are expected to lead to a total committed investment of ~Rs. 729.63 crore (US$ 100.01 million) by the companies (e.g., Siemens Healthcare Private Limited, Allengers Medical Systems Limited (AMSL), Allengers OEM Private Limited (AOPL), Wipro GE Healthcare Private Limited, Nipro India Corporation Private Limited, Sahajanand Medical Technologies Private Limited, Innvolution Healthcare Private Limited, Integris Health Private Limited) and generate ~2,304 jobs.

  • In January 2020, the government set up a National Medical Devices Promotion Council to promote local manufacturing of high-end medical devices and attract investments in the sector.


Investments in Medical Manufacturing (1/3)

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

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

  • By 2022, the Gautam Budh Nagar, Noida, is expected to have Northern India’s first medical tools and system manufacturing park. The park is likely to be developed in Sector 28 of the Yamuna Expressway Industrial Development Authority (YEIDA) Space by the Yamuna Expressway Authority. In March 2021, YEIDA is expected to introduce a mission scheme worth ~Rs. 5,000 crore (US$ 685.35 million), of which Rs. 100 crore (US$ 13.71 million) is likely to be funded by the central authorities.

  • In February 2021, Punjab’s Industry and Commerce Minister Mr. Sunder Sham Arora announced that a park for medical devices was proposed in Rajpura, Punjab, across an area of 210 acres, with an estimated project cost of ~ Rs. 180 crore (US$ 24.67 million).

  • 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 Rs 430 crore (US$ 58.92 million).


Investments in Medical Manufacturing (2/3)

  • In March 2021, Transasia Bio-Medical Ltd., a Mumbai-based in-vitro diagnostic company, announced plans to invest Rs. 150 crore (US$ 21 million) 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 analysers 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 centre in Warangal as part of its expansion into Southern India, where it anticipates a potential contribution of 40% of its sales in FY 2020. The company expects a Rs. 220 crore (US$ 30 million) turnover in India during that period.


Investments in Medical Manufacturing (3/3)

  • 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 >1,000 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 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.


Way Ahead

In India, medical device manufacturing is costly because it requires high investments in scientific facilities. 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 under penetrated domestic markets.

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.

Section -7

Many companies have attained stepladder growth by identifying the winds of change in policies, which sometimes open up new business models. Those companies are also able set the agenda for future industry reforms through sustained dialogues.

Policy agenda might be construed as a specific policy ask, but this is not always the case. Moreover, a good policy agenda is accomplished only after several revisions, lengthy discussions, and healthy debate. Therefore, in the best interest of industry, leading companies deliberate, discuss and voice their concerns to the policy makers and parliamentarians.

Given the potential for a seismic shift in our nation’s political and regulatory landscape, we believe; these are times when close attention should be paid to regulatory developments. In times to come, when regulatory supervision is only going to increase, more proactive companies would continue to bear the fruit of favourable and accommodating rules.

Section -8

The ripple effects of a tumultuous 2020 are likely to be even more enduring and impactful than the forces that initially triggered them. In the aftermath of Covid the government is determined to build the economy through incentives like PLI schemes to boost domestic manufacturing, amending FDI regulations, setting aside startup funds, accelerating digital transformation, building infrastructure and going ahead with its ambitious disinvestment and asset monetization plans.

All of this would entail administrations pulling regulatory and legislative levers to implement its priorities. We are here to help your business along with implications for how to respond to shifts. Numerous companies and hyper growth startups have been a beneficiary of our advocacies and interventions.

Section - 9

We have reimagined the ways how the process of new age policy making would be.

Over the last decade, the government has taken a more professional approach to policy making.There has been a movement away from policy advice by generalists to one informed by concepts of risk, management, and delivery of services.

Our approach to policy advisory incorporates the perspectives of ministers as well as civil servants, since policy is the responsibility of both parties, and a product of their joint efforts. Bureaucrats, members of standing committees, joint parliamentary committees and opinion leaders can be persuaded to take a more proactive and participatory role in the emerging grey areas in policy dialogues.

Section -10

India remains a complex market. It is best to view India not as a single market, but as a series of interconnected regional markets where the regulatory and investment climate changes from one state to another.

Many states have created investment cells to attract business and have framed policies around them but the lack of coherence between the launch of new policy initiatives and policy stewardship leaves a lot to be desired. While most of the state civil servants acknowledge that they have to be innovative in their approach, there is a lack of clarity over what this means in practice. The ensuing implementation of reform policies is therefore likely to be heavily shaped by the culture. It has been the case that few states in India, receive the new policy ideas like Smart City Mission and Ayushman Bharat very attractive and scalable yet difficult to implement due to logistical and legacy issues.

To correct such perceptual anomalies and resistance, policy discussion needs to be tailored to the culture and existing economic opportunity present in the state.
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