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Fostering innovation for improved health

Indian medical device industry is dominated by large multinationals with extensive service networks. With the entry of new global players and the growing presence of existing ones, import of medical devices, equipment and consumables witnessed a CAGR of around 6.8% during 2010-2015 in USD terms. Consequently, in 2015, imports accounted for nearly 72% of the market.

India’s medical device industry is poised for significant growth in the next five years:

  •  Market size expected to reach USD 50 bn by 2025 
  •  The rising per capita income is projected to increase per capita spending on medical devices to USD 3.7 bn by 2020 from USD 2.7 bn in 2015
  •  Orthopaedics and prosthetics & patient aids segments to be the two fastest- growing verticals by 2020, and are projected to grow at a CAGR of 9.6% and 8.8%, respectively
  •  Diagnostic imaging, dental products, and consumables are expected to grow at a CAGR of 7.1%, 7.4% & 7.1%, respectively, during 2015-20

HIGHLIGHTS

  • India among the top-20 markets for medical devices in the world
  • Market size expected to reach USD 50 bn by 2025
  • India’s surgical robotics market to expand at 20% CAGR during 2017-25

Industry Scenario

The industry is forecasted to reach USD 5.6 bn by 2021, growing at a CAGR of 7.6% (2015–2021)

The domestic industry for medical devices in India is highly fragmented with a large number of players from small and medium enterprises (SMEs). Currently, around 800 manufacturers of medical devices operate in the country.

Industry was valued at USD 3.6 bn in 2015, and grew at a CAGR of 3.8% from 2012 to 2015.

Key market shares out of the total medical devices industry (2016)

  •  Diagnostic imaging - 36% 
  •  Consumables – 19%
  •  Patient aids - 9%
  •  Orthopaedic & Prosthetic - 8%
  •  Dental product – 4%

Growth Drivers

GD
  • Contribution to Indian healthcare industry

    5%

  • Growth rate (2009-2016)

    ~15%

  • No. of private players in India

    800

  • No. of health-tech startups in India

    250+

Key policies

Medical Device Rules (2017)

The Ministry of Health and Family Welfare on Thursday notified Medical Devices Rules, 2017, which are in conformity with Global Harmonisation Task Force (GHTF) framework. The rules have come into effect from January 01, 2018.

The rules have been drafted with the intention to distinguish medical devices from pharmaceuticals for improved and well-defined regulation. The key highlights of the rules are:

1. Redefining ‘medical devices’, making it more comprehensive and easy to comprehend

2. Introduction of risk-based classification system for class-wise regulation

3. Single window clearance (online portal) for applications for import, manufacture, sale or distribution and clinical investigation

4. Establishment of product standards for medical devices to be conformed to

5. Rationalization of timelines for obtaining licenses required to market medical devices

6. Consolidation of registration certificate and import license into a single license

7. New regulatory framework for clinical investigation of medical device

National Medical Device Policy 2015

The Department of Pharmaceuticals in 2015 issued the draft National Medical Device Policy, 2015 (currently awaiting stakeholder consensus), which sets out the regulatory structure for medical devices.

The policy proposes incentives for both new and existing medical devices firms. It has asked for interest subsidy to MSMEs, concessional power tariff, seed capital, viability gap funding, tax benefits to the sector, minimum or zero duty on raw materials and incentives for exports.

The policy also suggests setting up of an autonomous body National Medical Device Authority and a single window clearance for the industry.

The Prime Minister’s Office has pushed the Department of Pharmaceuticals (DoP) to fast-track the formulation of the policy. According to DoP, the work on the policy has been expedited and it will be released soon.

News: After PMO push, medical devices policy likely soon (Read news)

Relaxation of FDI Norms

100% FDI is allowed in medical devices through the automatic route.

Revision of Medical Devices Prices Control Order

The government is currently looking at the middle ground of imposing a cap on the distributor and retailer margins. Unlike price caps, fixing trade margins would restrict how much a product’s price can be raised from the import or manufacturing cost.

Discussions on trade margin rationalisation come amidst growing industry fears that the government may impose price caps on more medical devices like those on coronary stents and knee implants.

FDI Facts

  • FDI inflows (USD) in medical devices during April 2000 - December 2017

  • FDI inflow (in USD) in Medical and Surgical Appliance during 2015-16

  • FDI is allowed in medical device manufacturing, through the automatic route

Recent Investments

  • April 2018 - Apax Partners acquires Healthium MedTech for USD 350 mn

  • April 2018 - Medical Device startup Biosense raises USD 1 mn from Menterra Venture, Artha Venture Challenge.

  • March 2018 - Neuberg Diagnostics, an alliance of five leading pathology laboratories from India, South Africa and the UAE, is planning to invest USD 45.9 mn in India, the Middle East and Africa as part of its expansion plans.

Major Investors