May 10 – There are many definitions of what is known as ”medical technology.” Officially, it is known as healthcare products (devices, equipments as well as consumables/ supplies) that are meant by its producer to be used particularly for investigative and/or therapeutic purposes.
There can be no superior illustration than India to demonstrate the requirement for medical technology for civilizing healthcare delivery. As the second most crowded country in the world, the supply of healthcare services falls considerably short of the demand. Existing health care delivery mechanisms are insufficient to meet the ever-growing needs of the Indian population, particularly in smaller towns/ rural areas. The limited healthcare facilities obtainable in the country are tilted more in favor of the rich and affluent class of population.
India has world-class doctors, clinics and technologies, and attracts international medical tourists in growing numbers. However, even today, the bulk of India’s population cannot pay for anything better than the most basic healthcare. Low health insurance coverage (approximately less than 10 percent of the population) makes matters even worse. Furthermore, convenience is restricted by scarcity of healthcare facilities and professionals.
It is estimated that for every 10,000 Indians, there are 6 doctors while China has 20 doctors for every 10,000 people, Australia has 249, the UK has 166 and the United States has 548. Also, most of India’s population lives in rural areas whereas most of the good doctors live in cities.
High-quality classified healthcare is out of reach for a majority of India’s people. Government aid/subsidies alone are not sufficient to supply the healthcare needs of this section of the population. There is a need to use medical technology efficiently to deal with the deep space between demand and supply of healthcare services in India. Innovative products and business models are needed to make healthcare affordable and accessible to a larger percentage of the population.
The market is likely to hit the US$5 billion mark by 2012 with a yearly expansion rate of nearly 15 percent. However, it should be known that this industry has not been well documented in the Indian framework, and estimates of industry size and growth differ considerably across different sources. The mainstream Indian medical technology market is dominated by medical instruments and appliances used in specialties such as ophthalmic, dental and other physiological classes. This segment accounts for 25 percent of the total market, followed by the orthopedic /prosthetic goods segment accounting for 20 percent of the total market.
The other segment includes endoscopy equipment, cardiovascular control equipment, and healthcare IT equipment.
The Indian medical technology industry is extremely aggressive and split, with domestic firms mainly manufacturing low technology products such as disposables and medical supplies, and MNCs primarily importing high-end medical equipment. Though, in recent years, some domestic firms have established long-drawn-out local manufacturing operations to create cost effective, medium-end medical devices. Most MNCs are involved in distribution of medical technology products, though some of them have set up manufacturing operations in India. MNCs looking to penetrate the industry typically form joint ventures with local manufacturers, establish subsidiaries, or employ local agents to deal out their products. Still, more and more of these companies are moving away from the practice of importing through local agents and setting up subsidiaries.
High-end medical technology products are mainly imported into India. In fact, imports comprise about 75 percent of the Indian medical technology marketplace. Main categories of items that are imported into India contain imaging equipment, pacemakers, orthopedic and prosthetic appliances, breathing and respiration apparatus, and dental equipment.
It is fascinating that while India’s medical technology business is chiefly import reliant, at the same time, nearly 60 percent of what’s being manufactured is being exported. In fact some companies derive as much as 75 percent of their revenue from exports.
Growth drivers and opportunities
- Accessibility of advanced and urbane medical technology has created new markets and applications, which have expanded demand. The introduction of new and dependable investigative technology has also forced the medical society to augment their dependence on diagnoses
- Medical tourism is being promoted by the government and inspired by the corporate boom in medical care
- India is fast rising as a medical tourism hub for patients from across the world
- International travelers coming to India for medical treatment demand high quality care and world class devices and equipment. This has also determined private care providers to improve their medical technology transportation
- The Indian consumer, particularly in urban areas, is becoming more aware of the newest medical technologies available in the market, and as a result demanding the same
- Global healthcare providers, such as Malaysia-based Columbia Asia, are also incoming to India. Entry of new players has made the private healthcare space very competitive
Ways to improve methodology
Innovation is the requirement for the Indian medical technology industry, there is assured key enablers that will ease and drive the course of innovation.
While many of the MNCs have contact to enough capital for investment in R&D, most Indian firms do not benefit from such rank and are incapable to innovate due to lack of financial support. The government can take part in a role here by providing some financial support to medical technology companies with ground-breaking business proposals and by encouraging private investment in the sector.
India has a large support of technical manpower with basic qualifications; it lacks though trained and experienced professionals to carry out high-end research and development in the field of medical technology. As a result, medical technology has not received enough attention as a field for higher education.
A fine authoritarian structure is a key enabler for development of the medical technology industry, and will accelerate the rapidity of innovation.
Domestic manufacturing will facilitate creation of cost-effective devices and grant the volume needed to raise penetration. A few companies are already focusing on producing low-cost medical devices and equipment for the Indian market.
In spite of the well-built growth of the Indian medical technology market in the last few years, the industry is plagued by low penetration. The per capita use of medical technology in India is roughly US$2, as compared to US$5 for China and US$231 for Germany. While the medical technology industry is rising quickly in India, requirement comes chiefly from major cities. Penetration in lesser cities, towns, and rural areas remains low due to mainly to lack of affordability, accessibility, awareness and ease of use. Another main challenge is that India has not been able to expand itself as a strong manufacturing base for medical technology. The industry remains reliant on imports for meeting its domestic requirements. The main reason behind this is high level capital requirement. While the industry is on an elevated growth trajectory in India, the general market remains small due to low access. Therefore, volumes are short and do not offer economies of scale for most manufacturers.
A joint approach towards innovation in the industry will assist in overcoming this challenge and facilitate the medical technology industry to be the game changer in transforming the Indian healthcare situation. A synchronized attempt is required from all stakeholders, together with the industry, academia, healthcare providers and the government to endorse medical technology modernization in India. Every stakeholder must put in towards intensification of the medical technology network, which will in turn recover healthcare delivery in the country.
Those interested in India’s medical device and technology industry should check out the India-U.S. Business Network Webinar on the country’s evolving medical devices industry scheduled on June 14. To find out more, please click here.
Dezan Shira & Associates is a boutique professional services firm providing foreign direct investment business advisory, tax, accounting, payroll and due diligence services for multinational clients in India. For more information, please contact email@example.com, visit www.dezshira.com, or download the firm’s brochure here.