Mr. Raghuveer Gopalkrishna Kini
Additional Executive Director,
Pharmaceuticals Export Promotion
Council, since July 2004

• Educational Qualification : B.Com., Diploma in Business Management, Diploma in Labour Laws and Labour Welfare

• Work Experience :
  - Worked as Director with Plastics Export Promotion Council
  - Worked as Head of Imports & Exports with M/s. Amforge Industries Limited.
  - Worked as Manager – Exports with M/s. Rammaica India Limited. and more.

• Has attended Specialised Training Programmes By CBI , The Netherlands at Rotterdam and Indo-American Society.

Medical Devices is a critical component of healthcare with promising opportunity for the industry. The demand and growth potential in the medical device segment is phenomenal. As per the below statistics, global medical device market stood at US$ 215.2bn in 2008 with a cumulative average growth rate of 4.5% during 2004-08. Currently, U.S., Japan, Germany, France, and Italy constitutes 13.1% of global population but 76% of global medical device use as compared to China, India, Indonesia, Brazil and Pakistan – 50% of global population and 4.4% of global medical device use. If we look at the region wise market share, North America alone having 44% followed by Europe 32%, Asia Pacific 18% and Rest of the world only 6% (as in fig).

1.1 Current position of Indian Medical Device Industry

India is one of the fastest growing medical device markets, which is estimated at around US$ 3275.42 in 2009. An analysis by Ernst & Young pegs the Domestic Medical Device and Equipment Industry at $2.14 billion (Rs 9,790 crore) in 2006 growing at 15 percent per year, to reach $4.97 billion (Rs 22,396 crore) by 2012. The Medical Device Industry in India is the 4th largest in Asia.

Currently, about 65 percent of the Medical Devices are imported in India, with more than 70% imports in high end devices. It has therefore a strong potential for indigenous manufacturing leading to import substitution and forging partnerships across borders. Engineering excellence, cost-effective labour, increasing emphasis on intellectual property rights and most importantly a fast growing domestic market makes India an ideal manufacturing base.

India is a key market of the future for Medical Devices & Equipments market. Changing demographic profile with increasing old age population, increasing incidences of life style diseases like cancer, CNS and diabetics, etc are some of the other relevant factors. Market for medical supplies and disposables is dominated by the domestic manufacturers, whereas importers dominate the costly and high end medical equipments.

1.2 SWOT Analysis of Indian Medical Device Industry

• Strengths
  - Potentially Huge market with growing urban middle class population
  - Growing private hospital sector aiming to attract health tourists
  - Success in Pharma and other paramedical areas

• Weaknesses
  - Low per capita expenditure
  - Developing government policies and infrastructure
  - Untapped rural markets
  - Excessive dependency on imports
  - Academic knowhow is not well developed in this sector
  - Support system from R & D not available

• Opportunities
  - Overseas companies investing in India to set up R & D units
  - Increasing Joint ventures and agreements
  - Overseas aid assisted projects to improve healthcare infrastructure
  - Regulations to improve market for domestic manufacturers

• Threats
  - Regulation policies may slow down the development of the market
  - Unorganized market for medical disposables
  - Lack of regulations, specifications - leading to spurious products

The FICCI study states that healthcare sector is one of the large and fast growing sectors in India with an annual turnover of Rs. 171,000 crore with 10-12% annual growth rate. 72% of the healthcare sector is dominated by the Healthcare services i.e. hospitals, labs, physicians & other services. Medical Device & Equipments sector contributes only 6% of the total healthcare sector at Rs. 10,000 crore and is growing at 15%. The Indian medical device industry is also stifled due to fiscal anomalies. The industry characterized by over 70% imports.

1.3 Export & Import of Indian Medical Devices

1.4 Emerging Opportunity & Challenges for Medical Device

This can be stressed upon the following points

• India’s dependency on imports for supply of medical devices

• Regulatory environment – Reliable & Consistent

• Low level of healthcare insurance

• Low levels of healthcare facilities and awareness especially in rural areas

Imports constitute over 70% of the market. Most imported products have high gross margins. Currently, the high value imported products include cancer diagnostic, medical imaging, ultrasonic scanning, plastic surgery equipment and polymerase chain reaction technologies.

However, the market is becoming increasingly competitive due to low entry barriers (for MNCs), an increasing number of players and an expanding consumer base. The exports mainly consist of dental instruments, surgical items and other laboratory equipment.

Prominent MNC’s operating in the Indian market include B Braun, Becton, Dickinson and company, Bayer, Johnson and Johnson, Phillips ,Roche, Siemens and GE. Some of the domestic players hat have consolidated their market position include, BPL Healthcare, Godrej Healthcare, Nicholas Piramal India Ltd., Opto Circuits India Ltd. and Advanced Micronic Devices Ltd.

Major issues and constraints found to cripple the industry are India’s dependency on imports for supply of medical devices, low level of healthcare insurance and low levels of healthcare facilities and awareness especially in rural areas.

Indian medical devices supply is heavily dependent on the imports from other countries like the US, Japan, the UK, France, Finland, Germany, etc. Domestic production consists primarily of low technology products (like surgical textiles and other medical supplies), whereas the demand for high technology devices is met predominantly by imports.

High cost of obtaining the required documentation for these regulatory submissions continues to be a matter of concern for medical devices importers. The importer has to pay USD 1500 towards the registration of the manufacturer from whom he is importing. A fee of USD 1000 is paid for registration of a single medical device and an additional fee of USD 1000 for each additional device. The high fee could become a burden for smaller manufacturers and also affect the available range of products in India as the sales per device are usually quite small.