The Medical Device Industry in India

The eastern hemisphere of the earth showing the emerging economies of India, China, and many MENA nations.

It sounds like a no-brainer that India, with a population of 1.3 billion – second largest in the world (and almost 18% of the world’s population!), which is spread over an area of 3.3 million sq. km (7th largest) would need robust healthcare infrastructure. It shall need, and provide an ever-increasing business to medical device industries. Add to this, a fast growing economy (GDP growth of 5-7% per annum), which is globally considered to be one of the most important for the future, access to quality professionals (doctors, engineers, etc.), and a fast growing group of middle-class with increased awareness; if not already, it may seem to most readers that a gold rush is in the offing. However, it gets a little more complicated from hereon.

India is a land of juxtapositions”
India is a land of juxtapositions. It is amongst the top 5 medical tourism destinations, and yet only has 0.7 hospital beds per 1000 of its own citizens. 70% of the population lives in rural areas, and yet 60% of the hospitals are located in the urban areas. India is considered as one of the top manufacturing destinations, and yet imports 75% of their medical technology needs. The entire healthcare eco-system in India is in need of an upgrade, either in terms of capacity, or technology, to supply to the apparent demand (quite high even by the most conservative calculations). Medical and relevant technical colleges (e.g. biomedical engineering), research institutions, hospitals – government and private, manufacturing setups, a respectable regulatory system (currently medical devices are classified under the drugs act), and health insurance are all stakeholders of this eco-system. A simple comparison (Table 1) of some key-points of the medical device industry in India and USA (world’s largest, and developed) as scale should provide a brief snapshot.

Table 1 – Snapshot of the Indian and USA medical device market
India USA
Market Size (Medical Devices) US$ 3 bn US$ 100 bn
Primary medical device market for Class I and II All Devices
Total healthcare spending US$ 0.064 trillion US$ 2.3 trillion
Regulatory System Almost non-existent Stringent FDA regulations
R&D Around 1-2% of revenues Around 11-12% of revenues
Hospital Beds/ 1000 people 0.7 2.9
Life Expectancy 66 79

Listed below are the typical preconceptions for the Indian market.

  • Products may be too expensive for the market
  • Bureaucracy – difficulty in importing, and subsequently distribution through the country
  • Intellectual property protection, or rather the lack of.

It is clearly established that India has the demand (on paper), and even though it may seem difficult to break into the market, assuming that domestic and major global players are meeting the existing demand, there are a few growth strategies that could be adapted. We will attempt in the following segment of this article to discuss a few strategies to successfully enter the Indian market.

Market Positioning

The market in India was historically divided into the affluent and low-income households. However, since the turn of the millennium, there is fast growing middle-class, who is educated/ aware, and is willing to pay a reasonable amount for a well-built product/ service.

Smith & Nephew, is predominantly considered to be an expensive/ high-end option in the Indian orthopaedic market. On the other hand, the Sushrut Adler group is a respected Indian orthopaedic devices manufacturer, with an extensive manufacturing and distribution setup, and products affordable to the Indian middle-class. Smith & Nephew’s recent takeover of the Sushrut Adler group (renamed as Adler Mediequip, after the takeover) has added the mid-tier product portfolio, which would appeal to the growing middle class segment, and be considered as a globally recognised brand at a reasonable price. With Smith & Nephew’s global reach, they can take this brand to other emerging economies. Furthermore, this also would not disturb Smith & Nephew’s main brand setup and strategy.

Research & Development

India is the land of frugal engineering, and the land of Jugaad (although it is completely wrong, in my opinion, to have this methodology be used for anything with any medical device!). It would be naïve to think that a medical device built for the developed markets would be as successful in sales, as it may have been in the other markets. That doesn’t mean that the fundamental technology is not appreciated, or the population do not require that certain kind of medical device. The key to successfully enter the Indian market would be via customisation. Some routes may involve customisation of the industrial design of the product, or simplification of the features. It is important to understand the culture, and apply the appropriate human factor engineering to products for India, and other developing countries. This would allow the manufacturers to sell the most appropriate and effective product to their target consumers, saving costs at the manufacturer’s end, and making it affordable for the end-users, a win-win. 

“The key to successfully enter the Indian market would be via customisation”

Another advantage of designing/ customising the medical device to this market is that it opens up gateways to many other developing nations. Taking that a step further, GE deployed “reverse innovation”, where they designed a US$1000 ECG, and a US$15,000 ultrasound machine, at their hubs in emerging economies like India and China, and after a successful launch, were upgraded and are now selling in the USA, and other developed nations. You may read WHO’s piece on how emerging economies drive frugal innovation at http://www.who.int/bulletin/volumes/91/1/13-020113/en/.

Regulations & the Indian Government

The recent parliamentary elections of 2014 installed a government, who the citizens and investors alike are optimistic about, for their economy growth incentives, and bid to modernise India. A recent decision may soon allow 100% FDI (Foreign Direct Investment) in medical device manufacturing. This would not only allow global manufacturers to setup shop in India, to take advantage of cutting manufacturing costs, but also to cater to the large population of India. A big break-through for the medical device industry in India would be bringing about a robust and efficient regulatory body. There are positive signs of that happening in the near future.

Additionally, the increasing medical tourism is bringing patients, who are aware of global brands and medical device quality to India. This is simultaneously pushing the hospitals to upgrade their equipment, whilst spreading awareness in the Indian medical community.

It would be impossible to summarise all the information on the Indian medical device industry in this short article. The emerging market of India’s healthcare industry is in a stage to influence to provide more affordable, timely and accessible healthcare all over the country. It has the potential to become a major market, and also one of the leading manufacturing destinations of medical devices – a true power in this industry, and encouraging steps are finally being taken to provide better health to all.

JJD is at an advantageous position in collaborating with medical device manufacturers globally. Our setup in UK, India, and UAE allow us to combine world-class research, medical device standards, and intellectual property norms, along with the advantages that emerging economies like India would bring (many discussed above) to their existing/ future products.

 

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