The gap in medical technology in India

Posted by Global technology interface on June 15, 2017


Over recent years, the healthcare industry in India registered a growth of 10% and is expected to reach USD 145 billion by 2018 and over USD 280 billion by 2025. Factors such as increased spending capacities, rising life expectancy, and growing public awareness to personal health have contributed to a higher demand for quality, affordable healthcare services[1].

Despite India’s potential for growth in the medical sector, we lag behind several BRIC countries in terms of meeting the demand for quality and affordable healthcare. For example, India has 1.3 hospital beds per 1000 people in comparison to China’s 3.8, and we have 0.7 doctors per 1000 people versus America’s 2.5. In 2012, the total healthcare expenditure in India was only 3.9% of the GDP, compared to 8.9% for Brazil, 6.2% for Russia and 5.2% for China[2]. In India personal non-insured expenditure is as high as 61%2, with only 25% of the Indian population being covered by health insurance in comparison to 85% of the American population with healthcare coverage.

Medical devices have the potential to play a huge role in augmenting India’s healthcare industry, with increased demand for cost-effective and reliable solutions. With technological advancements, the role of medical devices is now expanding to improve quality of care across each stage of the healthcare process for patients - such as screening and diagnosis, treatment/ procedure, and recovery/ monitoring. Currently, medical technology contributes significantly to healthcare delivery costs. An estimated 30-40% of capital costs[3] of setting up a tertiary care hospital? is attributable to medical technology. Additionally, depending on the hospital type, cost of medical devices and diagnostics contribute approximately 20%-25% to the cost of medical services.

According to a study by Deloitte “while medical device companies have focused largely on extending life expectancy and improving quality of care, there is a need to increase affordability for a widespread impact”[4]. The challenge therefore for companies in India is to produce medical devices that are both cost competitive and effective to increase penetration to even rural areas with limited access. It is in this context that the “Make in India” initiative becomes significant for the medical devices industry. Medical devices play a role not only in screening, diagnosing and treating patients but also in ?restoring patients to normal lives and in regularly monitoring health indicators to prevent diseases. In 2016, the customs department raised import duty on medical devices used for surgical, dental and veterinary use from the 5% to 7.5% to help companies manufacture these products in India[5].

Innovative healthcare startups have noticed this gap and there appears to be a rush to invent creative, low-cost medical devices to provide solutions, particularly to the non-communicable healthcare issues such as diabetes, anemia etc. For example Wrig Nanosystems, backed by Flipkart founders Sachin Bansal and Binny Bansal and former Ranbaxy and Fortis promoters Malvinder Singh and Shivinder Singh, has developed a mobile phone-sized device called TrueHb Hemometer to measure haemoglobin in a few minutes[6].

Currently, the Indian medical devices industry represents just over 1.3% of the global medical devices market of USD 335 billion, which is dominated by USA (USD 134 billion in 2014)[7]. India's medical devices industry is growing at about 15 per cent annually and is expected to reach at least $25-30 billion (Rs 1.65-1.98 lakh crore) by 2025, driven by local manufacturing, exports and local innovation[8]. Healthcare startups inventing scalable, low-cost solutions who manage to penetrate the market have huge potential, albeit setbacks in regulations such as slow-patent policies. According to Siraj Dhanani, CEO at InnAccel “there is a huge backlog with the patent office, which often stifles innovation". Furthermore the time taken to create a product is compounded by the reality of the time taken to establish a brand and penetrate the market.

 

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[1] India Brand Equity Foundation: https://www.ibef.org/industry/healthcare-india.aspx

[2] Deloitte: Medical Devices Making in India - A Leap for Indian Healthcare

[3] Deloitte: Medical Devices Making in India - A Leap for Indian Healthcare

[4] Deloitte: Medical Devices Making in India - A Leap for Indian Healthcare

[5] http://www.business-standard.com/article/finance/import-duty-on-medical-devices-raised-116012000049_1.html

[6]http://economictimes.indiatimes.com/articleshow/51640537.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

 

[7] BMI Espicom, India Medical Devices Report Q3, 2014; Deloitte analysis

 

[8]http://economictimes.indiatimes.com/articleshow/51640537.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

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