|
Challenges and Opportunities For Medical Disposables &
Implants Industry in India
|
To gradually transition from an
import dependent to an export
oriented sector, the Government with all stakeholders,
needs to come together to prepare and develop our
medical technology ecosystem.
Himanshu Baid
Managing Director
Poly Medicure Ltd.
& Chairman-CII
Medical Technology Division |
With 17% of world population and a GDP growth rate of
7.2%, India is amongst the fastest growing economies of
the world. The Indian healthcare sector grew at a rate of
18% from 2010 till 2016 and is expected to advance
at a rate of 15% during 2016-20 to reach USD 280 billion
by 2020.
With 1/6th of world’s population and a growing demand for
healthcare services, India is also likely to witness a
spur in the demand for allied technologies, medical
devices, medical equipment and medical consumables which
will aid in delivery of affordable healthcare. Medical
Technology can be instrumental in shaping healthcare for
all in India as it provides the opportunity to leapfrog
over India’s longstanding healthcare challenges –
accessibility, affordability and quality.
Current global medical technology market is around US$ 350
Billion. Which is expected to grow to US$ 500 billion+ by
2025. The Indian market is among the top twenty in the
world by market size, but its only 2% in value.
The Indian medical device sector is expected to grow at a
CAGR of 15 % for next 4-5 years. Medical Technology can be
instrumental in shaping healthcare for all in India.
• It plays a key role throughout the patient’s care
continuum – preventive, diagnostic, as well as palliative
treatments
• It has positively impacted the healthcare delivery and
patient outcomes
Medical Technology in India, like in several other
countries in the world, is largely import dependent. Over
70 per cent of high end medical devices and critical care
equipment are imported whereas large volume and
comparatively low to medium - end consumables, disposables
and equipment’s are mostly locally manufactured.
While the inverted duty regime is being touted as one of
the primary reason for this imbalance over the years, the
country’s Make in India initiative is being implemented
through a ‘policy push’ to encourage local manufacturing
and shift from an import dependent to an export oriented
market. The key issue remains that an
import dependent economy cannot suddenly shift to
indigenous manufacturing simply through driving policy
decisions in a sector such as healthcare. To gradually
transition from an import dependent to an export-oriented
sector, the Government with all stakeholders, needs to
come together to prepare and develop our medical
technology ecosystem. To create such a healthy ecosystem
in the near term, we will have to grant equal importance
to imports and domestic manufacturing with a view to
improve clinical outcomes and have continued access to
global technology enabling a smooth transition.
|
Industry proposes three
thrust areas : 1.
Healthcare expansion by ramping up government spending on
Healthcare:
The size of the Indian
medical technology market is a key constraint for
investment in India, particularly in local manufacturing.
On most healthcare metrics India has one of the lowest
ratios, be it doctors, per capita health care spend as a
percentage of GDP, or even hospital beds. The US$50
billion opportunity for Medtech in India can only be
realized if domestic demand is unlocked. Further - more, a
significant part of the demand generation opportunity will
be with the recently announced Ayushman Bharat programme
that aims to provide healthcare benefits for the 10 crore
poor families or around 40 per cent of the population.
This makes the program the world’s largest
government-funded health care program. Every family will
receive a benefit coverage up to Rs 5 lakhs per year under
the National Health Protection Scheme, which is likely to
cost the government around Rs 1000-1200 as the premium of
each family. The Government has urged the Indian Medical
Devices Industry to brace for meeting the demands of the
ambitious health insurance scheme. The Government expects
the Medical Devices industry to double in next five years.
With this clear approaching domestic opportunity, all
stakeholders are optimistic about the future of ‘Make in
India’ and are expecting manufacturing investments to
follow in the very near future.
We need to wait and watch how the government is going to
fulfill the promise of bringing over 10 crore Below the
Poverty Line (BPL) families under a health insurance
scheme and enhanced health insurance cover up to 5 lakh.
Funding such a large project in short term will be
challenging. 2. Single
window regulation for medical device related
manufacturing: A Single
window clearance for not only setting up the manufacturing
facility but also for day-to-day operations would go a
long way in addressing the primary concerns of investors
in local manufacturing in India. Alignment of policy
implementation across different state and national bodies
will help reduce the challenges of running efficient
operations in India. Designating areas as Medical
technology hubs is not enough.
The supporting infrastructure and desired talent needs to
be put in place. When designating areas as hubs, the
government needs to make sure the inbound and outbound
clearances (e.g., customs) are streamlined, logistical
challenges are addressed with sufficient Third Party
Logistics (3PL) capacity and finally enough technical
training is in the vicinity to provide trained manpower to
the hubs. 3. Economic
incentives and rationalized duty structure:
It is important to create incentives to enhance the
attractiveness of local manufacturing. As we know, the
cost of capital in India today is high and traditional
incentives such as capital subsidy and soft loans will
help companies to consider investing in India. Finally,
there is a need to establish appropriate duty structures
for imported raw materials (to address the inverted duty
structure challenges), which will encourage indigenous
manufacturing. For the medical
devices industry, the recent budget was a disappointment.
In 2016, the government had reduced the custom duty for
some of raw materials to 2.5 per cent, but it was not done
for in Vitro Diagnostic (IVD)s, which is a part of the
sector. If the government really wants to “Make in India”
they should have reduced the custom duty of all the raw
materials used in the medical devices, including IVDs. The
government announced a lot of measures to boost local
manufacturing, but they are not implemented as yet. For
example, the number of medical parks, which were announced
in various states, is still a non-starter as none of them
are operational. The projects are delayed in various
states. The medical devices
industry is just like the automobile industry, as a lot of
Research and Development (R&D) takes place. By allowing
weighted tax deduction of upto 200
percent on R&D investments for the sector will promote
innovation. Currently it is reduced to 150 per cent and
further it is said to be reduced to 100 per cent. |
