Indian medical device industry is sitting on the cusp of transformation — from being a humble and often stressed provider of low end domestic healthcare equipments to aspiring of becoming a global supplier of high end devices of repute. The visionary Make in India programme as rolled out by our prime minister Modi and explicit support assured by various cabinet ministers who are stakeholders of medical device and healthcare sector has spelled the intent to transform the Indian manufacturing landscape and in turn spurred the medical device sector too. The intent to set wheels of change has been clearly and loudly articulated. But intent has to be followed by appropriate enabling actions to achieve the desired objectives and goals. Many good works have been promised and delivered but some critical steps which are must to realise this dream are still to be taken.
The rapidly growing Indian medical sector is currently the fourth largest medical device market in Asia and is worth over $10 Billion (Rs 65,000 crore) at retail and institutional sales level. At production value level, i.e. at ex-factory and import landed price (pre duty) level, it’s estimated to be over
Rs 35,000 crore of which imports account for approximately over Rs 27,300 crore and exports at over Rs 8,900 crore. The industry had earlier seen tremendous growth of 15-20 per cent over the last decade, but is currently growing at a slower rate of 10-15 per cent though the market is growing more rapidly at 15-20 per cent which indicates a declining share of domestic industry. One can also notice that our import dependency is at over 70 per cent which calls for path correction and immediate reversal of the unhealthy situation. The present situation not only implies huge outgo of foreign exchange but also loss of opportunities in terms of employment, income, enhanced export competitiveness but also a vulnerable healthcare security architecture. The situation call for a new business environment regime. And it is it is critical to put in place appropriate policy and regulatory architecture while incentivising the sector via multiple means.
Association of Indian Medical Device Industry has repeatedly voiced that piecemeal cautious steps will neither galvanise the sector nor achieve ‘Make in India’ objectives. We have to roll out a bold comprehensive progressive package for results to be swift and demonstrable. In addition, India needs to show its resolve against resistance to its national programme because many vested and genuine international suppliers will face a setback in terms of market loss. But our national interests need to rein in supreme. In the scenario of shrill international objections, we also need to show them mirror as to how various governments around globe undertake special measures in the long term interest of their nation. For example, governments of USA, China, Malaysia already have policies such as preferential purchase policy (PPP) in favour of domestic suppliers in healthcare tenders or special low interest rates for funding exports. Government needs to broaden the ambit of PPP from telecom, electronics to medical device sector too. To spur domestic medical industry the following steps are necessary:
Buy Indian policy: Many countries have a policy to encourage domestic manufacturing. USA has a buy American policy which gives stated preferences to domestic manufacturers in public healthcare and overseas USAID procurements. While PMO / DIPP has recently announced the public purchase order with intent to give preference to domestic manufacturers it's fallen short on achieving this as its only an option for Indian manufacturers with proven over 50 per cent domestic content in their manufactured product to match an imported lower priced product which probably will be originating from China. Why will any sane manufacturers sell below remunerative pricing to get half the business? It will indeed be desirable if Indian public healthcare system follows the World Bank’s domestic preference clause of giving a price benefit for projects financed by them if we are really serious of supporting our domestic manufacturers as being done by China , USA , Malaysia etc .
Quality certification: Quality certification is essential but unfortunately in India due to legacy myopia, quality certification was also used as a tool to subvert the growth of Indian enterprises. Unthoughtful insistence on USFDA certification gives a massive edge to exporters from other countries, specially USA to gain massive foothold in our market at the cost of Indian manufacturers. Getting an USFDA certification for manufacturers from this part of the world is not only a time consuming and expensive exercise, it is also an exercise in futility for most domestic manufacturers as they don’t export to USA. So why should they invest their time and money on this. But the fallout of this situation has been that most public healthcare tenders have been bagged by foreign companies or importers pretending to be manufacturers. Today we have our own world class certification system i.e. ICMED certification from QCI. This certification should be the only criteria in public tenders / procurements. Along with a preferential buy Indian policy, a change in quality certification criteria would go a long way in making ‘Make in India’ programme successful.
Encouragement to voluntary compliance: In absence of regulations to encourage voluntary compliance to GMP & QMS standards and reward those who have made the effort, there may be a consideration to additionally grant a 5 per cent price benefit for ICMED certification and 2 per cent for IS:13485 Certificate Supplier to reward quality compliant companies at the time of tender evaluation for medical devices.
Scrap 100 per cent FDI in brownfield projects: If one is serious about ‘Make in India’ programme, then why have policies which permits 100 per cent FDI auto approval in brownfield projects. Scrap this policy with immediate effect but retain and encourage this for 100 per cent Greenfield projects and ensure that the money coming in is used to invest in building manufacturing infrastructure and not financing imports.
Special packages for upcoming medical device parks: Government need to up its support to world class medical device parks coming up in the states of Andhra Pradesh, Maharashtra, Gujrat & Karnataka. The commercial success and financial viability of these parks will determine the future course of ‘Make in India’ programme. So their success has to be ensured.
Creation of a medical device promotion council: To make Indian manufacturers globally competitive this council be floated under medical device department in Ministry of Life Sciences or of Healthcare Products and thus enable balance of facilitation and regulation.
Separate set of legislation and regulation for medical device Sector: Medical device sector, primarily a medico -engineering sector is ironically still governed by Indian drugs and Cosmetics Act, 1940, which is designed for pharma and chemicals. Nowhere in the world, a precision engineering sector is governed by an act meant for fundamentally different sector. Time is ripe to put in place a distinct set of legislation and regulations for medical device sector. A beginning has been made with the Medical Devices Rules but these need to be backed with a more appropriate and rational legislation.
There are some of the more desired actionables on our wish list and if the above mentioned suggestions are implemented, no one can stop India from emerging as a global hub for medical devices.
(The writer is forum coordinator of Association of Indian Medical Device Industry [AiMeD])