Growth of Indian Medical Device Industry Slowed by Bureaucracy

Marred by adverse regulatory policies, India’s medical device industry is facing the challenge of inadequate quality standards coupled with a high reliance on imports, time delays and other related obstacles. This has resulted in slowing new product development, making business non-viable and non-lucrative for the industry, according to a recent study conducted by the Associated Chambers of Commerce and Industry of India (Assocham).

“Unfavorable duty structure for imports and exports is [a] significant impediment in the growth of domestic medical devices’ industry as higher import duties for raw materials than finished goods has established an ‘import-export anomaly’ whereby devices manufactured in India become expensive owing to high raw material costs making them uncompetitive against low priced Chinese goods,” the study, titled “Access to Healthcare: Indian Perspective,” said.

The present landscape in Indian medical device industry is primarily import-driven with imports contributing close to 75 per cent of the market. According to the study, the industry is highly fragmented with close to 1,000 domestic firms primarily manufacturing low technology products.

“Of late, companies have expanded operations to produce cost-effective, medium-end medical devices thereby signaling a paradigm shift in the industry players’ approach as more and more Indian companies are becoming technology intensive thereby producing high quality and cost-effective medical devices,” the study added. “The domestic market caters to low-value disposables and supplies space, whereas importers dominate the costly and high-end medical equipment [space] with extensive service networks.”

“Unlike China, our country does not provide any incentive for setting up medical device production bases to encourage medical device manufacturing,” said D. S. Rawat, secretary general of Assocham. “Significant steps to overcome these anomalies are imperative to boost the domestic medical device industry, thereby reducing our high dependence on exports. Low research and development spends, lack of innovation promotion including low medical device funding from Department of Science and Technology/Department of Biotechnology, inadequate quality standards and others are significant challenges faced by the industry.”

If these challenges can be addressed effectively, the medical device industry in India is expected to grow at a compounded annual growth rate of about 15 percent, the study further noted. The Assocham study values India’s medical device market at approximately $3.5 billion, but a recent report by market research company RNCOS put the number at $5.1 billion in 2012.