At the root of the tragic stories in India’s public healthcare system, be it the headline-grabbing news of the deaths of 64 children in Gorakhpur public hospital, or the serious, yet largely unnoticed, shortage of ventilator beds across the country, the critical gaps are in India’s public health systems, particularly the suboptimal medical infrastructure and inadequate supplies of medical devices.
Serving the entire healthcare chain of disease prevention, diagnosis, treatment and supportive care, medical devices are crucial in realising the dream of ‘Health for All’. In spite of our global dominance with pharmaceuticals and vaccines, India continues to lag far behind in the medical devices sector. India imports over 75 percent of its domestic medical device requirements. The current NDA government's policies are aimed at changing this scenario. However, against the high decibel policy moves of the ‘Make In India’, allowing 100 percent FDI into medical devices manufacturing and the legislative provisions under the Medical Devices Act of 2017, it’s time for the government to conduct a reality check.
Serving the entire healthcare chain of disease prevention, diagnosis, treatment and supportive care, medical devices are crucial in realising the dream of ‘Health for All’.
India’s medical device market, which was around Rs 25,000 crores in 2015, is estimated to double itself to over Rs 50,000 crores by 2020, riding over the CAGR of 15 percent over next few years. On the global scale, it is expected to even outpace the growth rate of the pharma sector, which is slowing down on the account of subdued pace of discovery of new molecules and blockbuster drugs. While it is tempting and only logical for India to seize the opportunity in the medical devices industry, success is conditional to the right dosing of ambitions with proper fiscal and regulatory measures, while facilitating the creation of ecosystems to turn India into a hub for medical devices. Sadly, India is missing its targeted dose.
Indian domestic manufacturing is dominant mainly in high-volume and low-cost segment of medical consumables such as disposable syringes and gloves, which contribute to a large chunk of the country’s medical device exports. But when it comes to low-volume and expensive, high-tech segments, for example advanced diagnostic imaging, India has a long way to go. Just as a single category, diagnostic imaging — critical aspect of medical care — accounts for the largest share of domestic device market of over 25 percent.
However, in the near future, the best returns on the buck lie in the intermediary, relatively less complex, mid-tech segment consisting of In Vitro Diagnostics and Implants, collectively accounting to over 35 percent of the total device market. Experiences from the state-driven medical device clusters located in Delhi-NCR, Gujarat, Tamil Nadu and Andhra Pradesh are primitive in success, but prime enough to learn from their experiences.
Just as a single category, diagnostic imaging — critical aspect of medical care — accounts for the largest share of domestic device market of over 25 percent.
Success stories from Israel and Ireland should guide the governments at both the Centre and States to act far more coherently in order to really spur the growth of the domestic industry. While Israel’s march in medical devices has been based on innovative, high-end research and development, Ireland’s progress in the global medical devices value chain has been a result of some smart policy frameworks that have attracted global investments in the sector.
Israel today has about 1,000 medical-device companies, with 200 new ones being established each year, placing the tiny country second only to the United States in this fast-growing sector. Nobody could strap on the ReWalk robotic exoskeleton or have a tumor removed non-surgically by InSightec’s ExAblate if not for the Israeli design team that took a genius concept and made it function with precision, at a realistic price in a user-friendly form.
Ireland, through some conducive and investor-friendly policy environment, has moved up the value chain and is now a location of choice for EMEA (Europe, Middle East and Africa) service departments, research and development, and high-end manufacturing of invasive devices. Today, 80 percent of the world’s cardiovascular stents are manufactured in Ireland. The combined output of several big-name producers — including Johnson & Johnson and Bausch+Lomb — export one third of all contact lenses sold in global markets, and around one quarter of diabetes patients rely on products manufactured in the Irish Republic. Most of the 400 medtech companies that call Ireland home are engaged in R&D, often plugged into the country’s tertiary education sector.
It is vital for India to increase research funding for better execution through innovative, dedicated platforms — for example Biotechnology Industry Research Assistance Council (BIRAC) equivalent for devices — while curating extensive industry-academia partnerships. However, these partnerships must extend far beyond the conventional options of Indian Council for Medical Research (IMCR) and Council for Industrial Research (CSIR) to a much wider network with both public and private institutions of technology and healthcare across the nation.
Government's policies and actions should be woven through a three-pronged approach:
- Extensively promoting the existing low-tech segment,
- Innovatively incentivising the middle segment to scale-up, and
- Simultaneously driving-up public investments initially into R&D of high-tech segment all under the overarching mandates of both ‘Make in India’ and ‘Made in India’.
The dilemma of being primarily indigenous for local affordability versus integrating seamlessly into the global supply chain and medical advances needs to be sorted out as well, through patient centric “Medical Device Sector Development Policy,” which can serve as a guiding force for various central ministries and states. India stands to benefit from setting its vision higher as long as it ensures its policies and actions are consistent with its intent. Vision should be unambiguous on what Indians need the most and the goal unanimous through cooperation and collaboration.
The dilemma of being primarily indigenous for local affordability versus integrating seamlessly into the global supply chain and medical advances needs to be sorted out as well, through patient centric “Medical Device Sector Development Policy,” which can serve as a guiding force for various central ministries and states.
It has been two years since the Centre allowed 100 percent FDI through an automatic route. This excited many as a step to garner the much-needed investments. However, owing to a lack of a holistic ecosystem, some were equally skeptical, expecting MNCs to just end up with their Indian subsidiaries to import or assemble and distribute. Witnessing not much buzz after the FDI provisions, it is pertinent to evaluate and take corrective steps. While India imports more than 60 percent of devices from just five countries — the US, Germany, China, Japan and Singapore — its trade deficit stood over 50 percent in 2016-17 among the optical, medical and surgical instruments having imports of Rs 29,494 crores against the exports of Rs 12,671 crores.
Some measures such as global harmonisation steps for medical device standards and the corrections in the inverted duty structure bodes well for the growth of quality devices domestically. But simultaneously, the implications of multiple labelling requirements under various new rules and the unclear influence under the GST regime seems to be adding up to the complexity of business.
Price controls on devices to make healthcare affordable has become a sticky issue. While aiming to reduce the costs of healthcare, it should be noted that the association of price controls and affordability is neither that simple nor linear, especially around the large and diverse private health sector. With hardly any regulatory control on hospital billing practices, lack of benchmarking mechanisms for clinical outcomes and with a limited sphere of influence on the prevalent re-use of the single use devices, the premise of price control driving affordability needs to be confronted with realism. Price control on medical devices is quite different compared to pharmaceutical price controls. Especially weighing on the negative sentiments over price controls and limited domestic strengths, government could better refrain from seeking the short-lived glory of populism through price controls and rather work to promote a sustainable and innovation-based medical device industry. At the same time, while enhancing market competition, government should parallelly ensure efficiency in public procurements, increase healthcare spending and stimulate the demand side of supply chain as well.
While aiming to reduce the costs of healthcare, it should be noted that the association of price controls and affordability is neither that simple nor linear, especially around the large and diverse private health sector.
The tone of Central government, if gauged by wordings in National Health Policy 2017, budget announcements on health and NITI Aayog’s recommendations for PPP models, hint at an attempt to augment demand, without a meaningful and practical operational roadmap to achieve the stated objectives in a time-bound manner.
The Drug and Cosmetics Act has undergone significant facelift and the newly carved out Medical Devices Rules are in place from 1 January 2018 by the Central Drug Standards Control Organization (CDSCO). This significant step is aimed to bring thousands of medical devices used in India, either locally made or imported, under firm regulatory control, compared to less than two dozen devices under control till last year. Such a welcoming and historical turn can be fraught with operational challenges unless governments both at Center and State levels internally equip themselves with adequate and personnel with requisite domain expertise and supportive systems.
The phase of mandatory approvals and vastly expanded scope under the rulebook heralds a new era for the regulation of medical devices. Lacking stringent device certification processes, similar to that of FDA in United States and CE in European Union, will continue to remain India’s weakness. If not now, it’s bound be even tougher going forward, with the increasingly complex nature of medical devices such as implants ending up inside bodies for decades or the rapidly growing Software as Medical Device (SaMD) applications. A voluntary certification process of Indian Certification for Medical Devices (ICMED), promoted by the manufacturers themselves, is too weak to make any transformative impact. Stronger focus on certifications should allow us to brighten our prospects on the global front while securing the desirable quality and safety across locations of use. With the current momentum on various fronts, this is the opportune moment to ensure that the medical device industry gets its optimal spin to achieve the long-term goal of domestic abundance and global excellence.
Unless current government acts in time to bring consistency between expressed intent and policy content, chooses pragmatism over populism and actual utility over mere availability, it will be a pity for India to be content with the legacy of carrying its health system on stretchers, even as desperate citizens continue to struggle carrying their sick from one facility to another in search of ventilator beds.
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