Abstract

India is one of the top twenty markets for medical devices in the world. Regulatory structures
were virtually absent until some rudimentary control was initiated by Government of India in
2005. Experiences of OECD countries suggest that with increasing dependence on medical
technology in health, costs of health care provisioning have gone up significantly. While India is
planning to embark upon Universal Health Coverage mechanism regulation of imports, and
production and use of medical technologies would be one of the most challenging tasks before
the government. The Indian medical device industry is on its upward march of growth and is
strongly supported by India’s robust legal framework. There are certain challenges to do business
of medical device in India, but they can be easily overcome. This paper presents the information
on the current market segments in medical device industry in India and what could be the
possible growth drivers for the industry by aligning with the Government initiatives to fully
realize the potential of Make in India, leveraging the Government’s policy and regulatory
changes.

Introduction

The Indian healthcare sector is one amongst the country’s most remunerative sectors with respect
to the number of employment generated as well as revenue for the country. Advancement within
the medical field has yielded immense success in the treatment and eradication of some
sicknesses and diseases in India. The healthcare industry has over the years developed many
medical devices to aid both the patients and the medical professionals for efficient health care
services. Some of these devices are segmented into diagnostic imaging, consumables, I-V
diagnostics, patient aid, orthos and prosthetics. There are different devices with varying
applications in the healthcare sector.

The medical device industry in India is presently valued at USD 5.2 Billion and is growing at
15.8% CAGR. Currently, India is counted among the top 20 global medical devices market and
is the 4th largest medical devices market in Asia after Japan, China and South Korea and is
poised to grow to USD 50 billion by 2025 as per some industry estimates.

The medical device market is dominated by imported products that comprise of around 80% of
total sales. The domestic companies are mostly involved in manufacturing low-end products for
local and as well as international consumption. Lately, many multinational companies have
established local presence by acquiring established domestic companies or starting a new
business. The Indian medical device market offers a great opportunity not only of its size, but
also because of encouraging policies and regulations that the Government has introduced to give
a fillip to the medical device industry. For instance, the government has overhauled the
regulatory framework for medical device in 2017 and has brought it at par with international
norms by introducing the concept of ‘risk-based’ regulation. The regulatory licenses issued for
import, manufacture or sale of medical devices have been made perpetual in nature to cut down
on unnecessary and time-consuming paper-work, in a bid to increase ease of doing business in
India. Foreign direct investment in medical device manufacturing sector is permitted without any
prior approval from the government, allowing business to quickly scale-up existing operations by
infusing capital or engage in time-sensitive strategic acquisitions.

The already robust intellectual property rights regime in India has been strengthened further by
tweaking of rules for grant of patent and trade mark in the last two years. The Indian
Government has also introduced various fiscal measures to promote research, development,
manufacturing and import of medical devices. For instance, the Government has incentivized
scientific research and development by providing weighted deduction for the expense incurred
on that front. There is minimal or no import duty on certain medical devices.

The approximate USD 5.2 Billion worth Indian medical device sector is Asia’s fourth largest
market, and presents an exciting business landscape and opportunities for both multi-national
and domestic players. Till the early 1990s, the medical device sector was significantly dominated
by domestic players. But after India opened up its markets in 1991, tables have turned. The
technological advancement and expertise that the global market leaders offered has proved to be
an advantage.

Today, India’s medical device sector is dominated by multi-national companies, which is evident
from the fact that about 80% of the sales are generated by imported medical devices. The
domestic players, on the other hand, were quick to adapt the winds of change and started to focus
on low cost devices. The domestic players in India export more than 60 percent of their output as
Indian markets are dominated by such imported medical devices.

Statistical analysis of medical device market in India

The Indian medical devices sector can be broadly categorized into the following segments:

 Equipments and Instruments

 Consumables and Disposables
 Implants
 Patient Aid
 Stents
Equipment and Instruments: USD 2.67 billion

 Diagnosing imaging and IV diagnostics forms major part of Equipment and Instruments
with market size in excess of USD 1bn and USD 0.4bn respectively. Approximately 51%
of medical device imports are from the Equipment and Instruments category.
 Key products: MRI machines, CT scanners, ultrasound machines, dental drills, dental
chairs, dental x-ray machines, etc.
 Key players: GE Healthcare, Philips Healthcare, Schiller Healthcare, Danaher
Corporation, Mectron India, Roche Diagnostics, Accurex Bio-medical, Narang Medical,
etc.
 There is great potential in low-end and mid-range systems purchased by small hospitals
and facilities in rural areas.

Consumables and Disposables: USD 1.31 billion

 Syringes, Needles and Catheters form major part of Consumables and Disposables with
market size in excess of USD 1bn collectively.
 Consumables and Disposables is the only trade surplus segment of the medical device
sector with domestic players having a larger market share.
 Key products: syringes, needles, catheters, bandages and dressings
 Key players: Hindustan Syringes, Lotus Surgicals, Sutures India, B Braun, Beckton
Dickinson
 Most of the requirements are met through domestic manufacturing.
Implants: USD 0.35 billion

 Implants segment is highly import driven (dominated by USA) and expected to grow
faster than the other segments in the medical device sector.
 Few domestic companies in the Implants segment are offering customized designs for the
Indian population gaining competitive advantage.
 Key products: knee and hip implants, artificial joints, dental fixtures
 Key players: Smith & Nephew, Narang Medical, Zimmer Holdings, J&J
 Domestic players are experimenting with proprietary technologies and technology tie-
ups. Products customized for the Indian market may gain a competitive advantage.

Patient Aids: USD 0.65 billion

 Hearing Aids and Pacemakers form major part of the Patient Aids segments and
constitute 70% of the market collectively.
 Import-driven segment: Most products are primarily sourced from Ireland, USA,
Australia, Singapore, China and South Korea
 Key products: hearing aids, pacemakers and artificial respiration apparatus
 Key players: St Jude Medical, Shree Pacetronics, Medisafe International, Medtronics
 Significant potential for domestic manufacturing

Stents

 Drug-eluting stents and bare metal stents form a major part of the stents segment and
constitute more than 70% of the segment collectively.
 Import-driven segment: Most products are sourced from the USA and Europe.
 While domestic companies are manufacturing cost competitive products, they still face
competition from international players on account of quality.
 Key Players: Abbott Vascular, Boston Scientific, Medtronic, Meril Lifesciences
Sahajanand and are some of the prominent players in this segment.

Growth Prospects

Over the years, many multi-nationals have set up operations in India. However, the nature of
majority of the operations is to only distribute imported devices and provide support function.
Few multi-nationals have started domestic production too. Some multi-nationals have also
entered India by acquiring domestic manufacturers. For example, Netherland-based Royal
Philips Electronics, a leading manufacturer of General X-Ray acquired Alpha X-Ray
Technologies, a leading manufacturer of cardiovascular X-Ray systems. The sector is at present
growing at around 15.8% Compound Annual Growth Rate (“CAGR”) for a plethora of reasons.
A significant percentage of purchasers of medical devices are private medical institutions and
hospitals.

Due to increased competition in Tier I cities, private enterprises have started to focus on Tier II
and Tier III cities, a market which is until now untapped in India. As private enterprises expand
in lesser explored markets, the demand for medical devices will expand proportionally.

The demand for medical devices is predicted to rise so as to meet the demands of a growing
population. According to the United Nations, India’s population is set to touch 1.45 billion by
2028, making it the world’s most populous nation. With socioeconomic changes such as rapid
urbanization, demographic and lifestyle changes, the society is more prone to lifestyle-related
ailments, including diabetes, obesity, stroke and cancer. Also, out of the total population, the
share of ageing population in 2011 was 5.3% and is expected to increase to 6% of the total
population by 2021. The disease burden has shifted from acute to chronic diseases due to
lifestyle changes and ageing. With an increasingly ageing population, there will be a greater
demand for better health care facilities and medical devices. India’s population above the age of
60 was estimated at 104 million in the 2011 census, and is expected to increase to 200 million by
2025 and to 300 million by 2050.

One peculiar feature of the Indian medical device industry is that it is largely unregulated. The
Indian government has regulated only a few types of medical devices. All other types of medical
devices are unregulated, meaning there is no government oversight on its manufacture, import,
distribution and sale.

Other reasons for strong growth prospects of the industry are:

 Economic growth leading to higher disposable incomesƒ

 Increased Public Spending in Healthcare
 Increased Penetration of Health Insurance
 Improving Medical infrastructure
 Increasing affordability due to growing income
 Increasing number of ailments
 Increasing demand due to “Medical tourism”

The sector is also witnessing strong Foreign Direct Investments (“FDI”) inflows, which reflects
the confidence of global players in the Indian market. The major players in Indian market are (in
no particular order): Hindustan Syringes & Medical Devices, Opto Circuits (India), Wipro GE
Healthcare, 3 M, India Medtronic, Johnson & Johnson, Becton Dickinson, Abbott Vascular,
Bausch & Lomb, Baxter, Zimmer India, Edwards Life Sciences, St. Jude Medical (now a part of
Abbott), Stryker, Baxter, Boston Scientific, BPL Healthcare India, Sushrut Surgicals, Trivitron
Diagnostics, Accurex Biomedical, Biopore Surgicals, Endomed Technologies, HD Medical
Services (India), Eastern Medikit, Harsoria health care, Nidhi Meditech System, Philips Medical,
Wipro Technologies, HCL Technologies and Texas Instruments.

Make in India

In the last two decades, the Medical Devices Industry has undergone a transformation - from
being a domestic-industry dominated sector prior to 1991 to conversion to import dependence
post - New Economic Policy-1991, to being a non regulated sector prior to 2006 to regulation of
15 notified devices to the new Medical Device Rules announced in 2017.

The government has taken various steps to ensure that the medical devices sector is considered
as significant as the other sectors. To take this further, a task force was constituted to implement
a range of recommendations, including the segregation of medical devices from drugs. Currently,
only 15 categories of medical devices are regulated as drugs. The new set of regulatory practices
aims to remove these hurdles so as to prepare India to meet the Medical devices sector
requirements. These new rules shall thus enhance ease of doing business and ensure availability
of quality medical devices. Also, for the very first time, periodic renewal of licenses will not be
required. Consequently, manufacturing and import licenses will be valid until it is suspended or
cancelled. The rules also aim to promote a culture of self-compliance by manufacturers of
medical devices. In addition, the manufacturing licenses for certain medical devices are granted
without prior audit of the manufacturing site. In such cases, the manufacturer has to do self-
certification of compliance with the essential requirements and on the basis of such certification,
the license will be issued.

In 2017, the government also approved the National Health Policy, which envisages the
realization of quality health care through both primitive and preventive practices. Through this
Policy, the health care system will be made stronger and registries will be established for
diseases of public importance. One of the most critical policies is the Draft National Medical
Device Policy – 2015 that was proposed to strengthen the Medical Devices sector by reducing
dependence on imports, thereby giving impetus to the ‘Make in India’ initiative. Under this
Policy, a single-window mechanism will be provided to the industry to not just focus on self-
reliance, but also work towards making India the global hub of production in medical devices.
Additionally, the Policy envisages interest subsidy for MSMEs, concession on power tariffs,
seed capital and minimum or zero duty on raw materials, among others. Currently, the policy is
awaiting inputs from stakeholders and their validation.

Technological advancement and expertise coupled with government support has proved to be
advantageous for the sector. With Medical Parks planned in Gujarat, Andhra Pradesh and
Maharashtra and emphasis on excellence in Research and Development (R & D), the medical
devices industry in India is poised to cross a market size of USD 50 billion by 2025.
Market Entry Options in India

The Indian medical device sector offers tremendous opportunities for companies of all sizes
across segments. Some of the government-led initiatives taken to boost the sector include 100%
FDI in greenfield and brownfield investments under the automatic route, the Make in India
campaign, the draft National Medical Device Policy laying down the new framework for the
sector (which includes the regulator, price fixing authority), medical device parks providing
special incentives, and fast clearances and approvals.

Indian medical device players can leverage upon new policies, regulations and infrastructure to
tap various opportunities created such as technological collaborations, strategic alliances with
international players to focus on relevant market for them.

While entering the Indian medical device sector, a company’s market entry option is subjective,
and depends on their global strategy and capabilities. There are various options to enter the
market, with each one having its own advantages and enjoying certain benefits.

International medical device companies looking to explore the Indian market may initially
acquire/need a distributor to market their products, whereas companies that intend to take
advantage of low-cost manufacturing to export to other neighboring countries may set up/acquire
a manufacturing plant in India.

Often, selecting an option also depends on the business phase the company is in. New
entrants/smaller players may initially prefer entering into alliances with domestic companies and
gradually scale up directly whereas mature/larger players may opt to enter directly through
brownfield or greenfield investments.

Future of Medical Device Market in India

The Indian medical device sector is certain to witness impressive growth as access to healthcare
facilities in the country remains limited at present. In the near future, the sector will be buoyed
by a strong and robust regulatory framework. Currently largely underdeveloped, the regulatory
framework will only act as a catalyst for growth once the proposed laws and policy changes are
implemented. India’s government has awarded due attention to the sector by making it one of its
priorities and swiftly following that up by allowing 100% FDI in the sector.

While the sector is currently import dependent with limited or no access to new technology, with
the government’s improved focus and favorable policy, domestic players are beginning to give
tough competition to MNCs in varied product categories. Many MNCs have started
manufacturing in India and more are bound to come as long as the government continues to
assist the sector in a holistic manner. With all of the upcoming market, regulatory, policy and
technological developments, the industry is ripe to attract investments across the segments.

The medical devices market in India contributes to about 5% to the $96.7 billion generated by
the health sector annually. Presently, the medical devices industry has a market size that is worth
$5.2 billion and about 750–800 medical device producers in the country,

In terms of revenue and employment, the Indian healthcare industry has grown to one of the
biggest sectors in the country and has attracted a lot of foreign players.

One of the major roles of foreign investments is to provide more equipments and instruments.
Also, to help increase the accessibility of stents and patient aids.

Foreign investment also helps in upgrading technology, raising the standards and quality of
healthcare, and in offering career planning programs, development and training programs,
benefits to employees with potential gain to the health sector and the economy as a whole.

Despite the major growth, there are some challenges that militate against the devices market in
India. Indian regulations on medical devices are a major challenge and this has been a problem to
many foreign investors in the industry. Low attention by policymakers and large tax regime are
also one the reason for the sector’s underdevelopment. Also, lack of customization and
innovation which brings about fewer options to patients.

Presently, local investors in the medical devices market in India rely solely on importation
especially equipment like the diagnostic devices majorly due to unfavorable legislation.
However, with the right amendment and review of the legislation, there will be an increase in
growth of the market and local producers will increase their presence.

With the equipment and instrument segment currently dominating at a rate of 56%, the segment
is projected to maintain its dominance due to its significance.

According to a Deloitte report, the growth rate of India’s medical-device industry is around 15
per cent which is more than double of the global industry growth rate of 4-6 per cent, and is
expected to become a $ 25-30 billion industry in India by 2025.

Conclusion

The medical device industry market is very dynamic and the key drivers impacting this sector are
healthcare expenditure, technological development, aging population, and chronic diseases.
Further emerging trends that impact the medical device industry include the changing medical
technology landscape, software as a differentiator in medical devices, as well as design and
manufacturing of patient portable or smaller devices. In India, medical devices are now
considered to play a key role in the delivery of quality health care to the masses. The awareness
around the need to have a robust medical devices ecosystem in the country is gaining traction
resulting in higher growth rates for India as compared to the global industry.

While the sector is currently import dependent with limited or no access to new technology, with
the government’s improved focus and favorable policy, domestic players are beginning to give
tough competition to MNCs in varied product categories. Many MNCs have started
manufacturing in India and more are bound to come as long as the government continues to
assist the sector in a holistic manner. With all of the upcoming market, regulatory, policy and
technological developments, the industry is ripe to attract investments across the segments.

With the present growth rate which is approximately 15.8%, the market will increase to a market
value of $ 50 billion by 2025.

References

[1] The Indian Medical Device Industry - Regulatory, Legal and Tax Overview by Nishith Desai
Associates

[2] Sector Survey – Medical Devices by Make in India

[3] Medical Device Market in India by Research and Markets

[4] Medical Devices Making in India – A Leap for Indian Healthcare report by Deloitte

[5] The Medical Device Industry in India report by SKP

[6] Indian Medical Device Industry – Current State & Opportunities for Growth by Dinesh Peter,
Life Sciences and Services, Infosys Consulting

[7]https://www.expresshealthcare.in/blogs/guest-blogs-healthcare/indian-medical-devices-
industry-outlook-for-2019/408205/