The Indian healthcare sector presents many opportunities for the Indian Medical Technology industry. However, the MedTech industry faces several challenges that impede the growth of industry. These include – lack of regulation, insufficient investments, an inadequate talent base and lack of focus on innovation, among others. These challenges must be addressed at the earliest and public-private sector participation is essential for overcoming these challenges and for ensuring the smooth development of the industry.
The CII-Deloitte Report “Medical Technology: Shaping Healthcare for All in India” discusses the government and the industry’s role in addressing the challenges faced by the India Medical Technology sector and also suggests possible future action in this area.
Role of the Government
The government should take a proactive role in aiding the Medical Technology industry by removing the roadblocks and taking necessary steps to address the challenges.
Create an enabling regulatory landscape: The market for medical devices in India has been largely unregulated due to the absence of a specific legislation until now. For regulating the import, manufacturing, distribution and sale of medical devices, the Government of India has notified the “Medical Devices Rules, 2017” which are set to come into effect from 2018. The rules propose a single-window online portal for processing all applications of import, manufacture, sale or distribution as well as clinical investigation of medical devices.
The report further recommends setting up of an independent medical devices authority and a separate legislation for medical devices which can define and set the standards, provide approvals and establish monitoring mechanisms for medical devices.
Faster patent approvals could foster innovation. Thus, the government should aim to create an enabling robust Intellectual Property protection framework and fast track grants to eligible patents.
Support in creating a viable business case to attract investment: The high capital intensive nature of the MedTech industry requires huge amounts of capital investments in the sector.
Government Initiatives in the recent past to attract investments include – allowing 100% FDI under the automatic route for medical devices, correcting the inverted duty structure for select medical devices, setting up of MedTech parks in three states and testing labs in two states and promoting the Make in India campaign.
However, despite various initiatives taken by the government, the investment flow in the sector has only been modest at its best. Total FDI in the sector after the allowance of FDI was only USD 85 million, which is just 0.5% of the total FDI and about 5.4% of the FDI in healthcare in India.
India can learn from some of the successful models adopted by other nations for attracting investments from other countries. For example, while China has achieved scale in high-volume, low-tech devices backed by domestic demand, Ireland has established itself as an export hub in spite of a small domestic market. Some of the common features in these models include significant public share of health expenditure, a high percentage of population covered with health insurance, access to mature foreign markets and relevant financial incentives.
Learnings from successful MedTech investment in countries
Supporting local demand for medical devices by expanding provision of services in its public health and healthcare programmes can catalyse investments in the country by meeting latent demand of the services, by making them affordable and accessible, commensurate with the objectives of India’s National Health Policy 2017.
The Government is already exploring avenues to collaborate with the private sector through Public-Private Partnership (PPP) models to extend healthcare services to the population.
Role of the Industry
The industry needs to play an equally proactive role along with the government in addressing the many challenges of the MedTech industry. The industry should customise its business models in line with the requirements of the Indian markets.
Prioritizing and focusing on the right segments of medical devices: The Indian MedTech industry can be broadly classified into four broad segments – consumables and implants, diagnostic imaging, instruments & appliances, and patient aids & others. Each segment has its distinct characteristics with respect to category of players, use of technology, target markets etc.
As each of these sectors have varying levels of sophistication, each segment needs to be treated separately. Accordingly, the industry needs to have a segment-wise strategy towards manufacturing. For example, products in the higher technology segments are usually characterized by long lead time for development, require large investments and a talent base with specialized skill sets. In contrast, low tech segments can be set up and scaled up rapidly with moderate capital.
Focus on Innovation to design products appropriate for India: The industry for medical devices in India is heavily dependent on imports and often the products developed are not suitable for Indian market conditions. Recently, both MNCs and domestic players are focussing on innovation in complex areas such as patient monitoring, point of care screening and diagnostics, and are focussing on developing products to better suit the market needs. The focus has been on using frugal innovation techniques to create affordable devices, cost reduction during designing products, developing easy to operate devices and creating compact and energy efficient devices which can be deployed even in the small centres in rural areas.
Many start-ups have entered the MedTech space and are creating market suitable offerings and disrupting the industry landscape. Indian entrepreneurs have realized that developing innovative products and solutions can lead to long-term, financially viable businesses and can also solve many of the problems facing the Indian healthcare sector. Therefore, the Indian MedTech industry should embrace the path of innovation and focus on developing affordable and quality products and solutions, tailormade for domestic needs.
In June 2017, the Indian Cabinet announced a USD 250 million initiative under the National Biopharma Mission to fund bio-tech start-ups in the area of medical devices, bio-therapeutics etc. The government could further consider setting up of R&D incubation centres in collaboration with premier institutions to encourage innovation in the area.
Therefore, in order to realize the vision of providing healthcare to all, India needs to capitalize on this Medical Technology revolution by ensuring the active participation of all stakeholders in the process.