Indian medical devices companies need a level playing field

Rajiv Nath, Founder and Forum Coordinator of AiMeD, tells TPCI that there is a need to incentivize quality in the Indian medical devices industry and also to conserve them with a predictive nominal tariff protection policy.

TPCI: Do you think that India has the necessary ecosystem (e.g. infrastructure, innovation, zeal for R&D) to become the global hub for production of medical devices? What are the critical gaps to be filled?

Rajiv Nath (RN): India definitely has the necessary ecosystem – infrastructure, innovation, zeal for R&D to become the global hub for the production of medical devices. However, some of the critical gaps to be filled are:

• Need to regulate all medical devices under a Patients’ Safety Medical Devices Law to protect patients and aid responsible manufacturing.
• Need to protect consumers from exploitatively high MRP in medical devices by rationalized price controls and aid ethical marketing.
• Need to encourage employment and Make in India of medical devices and address 80-90% import dependency by a predictive nominal tariff protection policy, as done for mobile phones to ensure a vibrant domestic industry & competitiveness and price stability driven by competing domestic players.
• Need to incentivize quality in healthcare products in public healthcare procurements by preferential pricing for Q1 e.g. ICMED (QCI’s Indian Certification for Medical Devices) instead of L1 (lowest price) to ensure patients access acceptable quality. Importers have been lobbying to be kept outside the purview of trade margin rationalization. By accepting their demand, the government would be doing a great disservice to the domestic device manufacturing industry.
• A pro-active policy formulation to regulate medical device differently than drugs should permit free market dynamics to succeed and keep regulations simple, protecting consumers and incentivizing Make in India.

We stress these are vital and strategic to meet the health-for-all National agenda of PM Modi and aligned to the Health Policy 2017, to make quality healthcare accessible and affordable for common masses and to enable placing India among the top 5 medical devices manufacturing hubs worldwide and end the 80-90% import dependence forced upon us and an ever increasing import bill of over Rs 38,837 Crore. Pseudo manufacturing & unethical marketing is harming consumers and disallowing manufacturing to succeed in India by well-meaning investors. We can repeat the success story of mobile phones by replicating the same strategies.

TPCI: According to reports, the government is planning to have a single regulatory framework for all medical devices? What repercussions is this likely to have for the industry?

RN: We at AIMED since long has been emphasizing on the need to regulate all medical devices under a patients’ safety medical devices law to protect patients and aid responsible manufacturing.

While we welcome the steps being taken by Government to consider bringing all medical devices under a single regulatory framework, what’s missing in the covering note of the Under Secretary is a Stated Policy or an assured Road Map – to a separate medical devices law with a defined transition period and in a phased manner in addition to the voluntary registration as a temporary measure under the current Drugs Act. In the absence of this written assurance, how can Indian manufacturers accept to be regulated under the Drugs Act under above notice w.e.f. December 2019 and cut their hands? 

It will be difficult given the short time frame for implementation of the new norms, which is contrary to what had been discussed by the industry and the government before. At the recent conference, the DCGI unveiled the MoH – DTAB Roadmap to regulate all devices in a phased manner and assured an adequate transition period of nearly 4 years for high Risk and near High Risk Devices – however the one year transition period announced for certain Medical Electronics Devices is not as per the assurance given of 4 years. The discussions earlier gave a three to five year period for phased transition to the new norms.

Most countries like Australia, EU, Canada, Singapore, etc. when they bring in regulations or major amendments of existing regulations, provide a 3-5 year transition period so that mandatory regulatory requirements are not disrupting the supply chain.

We request the Govt. to stick to earlier assurance given to the industry of at least a time frame of three to five years for a phased transition to the new norms. 

TPCI: How can foreign firms be attracted to invest in the Indian medical device sector? What policy recommendations would you like to recommend to the Indian government to give a fillip to this sector?

RN: The government is exploring all possibilities to attract foreign firms to invest in India’s medical devices sector, a move which is likely to reduce the country’s import dependence.

Existing companies marketing their Products in India will be motivated to invest when they find their competition (with Factories in India) are having a competitive advantage over them, which can be by having a predictable tariff protection policy to protect manufacturers who put up factories in India and are also given a price preference in public health procurements.

TPCI: How do Indian medical devices companies fare in comparison to their international counterparts and what can be done to make them more competitive?

RN: The beleaguered medical devices industry is focusing on exports as they continue to lose market share to imports on account of lack of adequate tariff protection, lack of non-tariff import barriers & unfair unethical market that favors perceived higher quality of familiar MNC brands with attractive trade margins and higher MRP vs unfamiliar unknown new Indian brands, which even if lower priced against European or American or Japanese brands, if not Chinese, do not adequately induce retailers & hospitals to push their products nor do they have the deep pockets to match the sales promotion, marketing budgets to sponsor events of celebrity doctors.

Even as medical device makers in America allege that the regulatory environment in India has hindered the growth of their exports, the data suggests otherwise. India imports around 80% of its medical devices requirement and a fourth of that comes from the US. The Top 5 countries that India imports medical devices from are US (21%), Germany (14%), Singapore (11%), China 10% and Netherlands (7%).

Exports have gone up a record 29%, Rs 2,840 Cr from Rs 9908 Cr in 2017-18 to Rs 12749 Cr in 2017-19 but the Rs 2840 Cr gain is not enough to neutralize the Rs 7450 Cr import increase. We are however happy to contribute another Rs 4610 Cr to the negative trade imbalance of India. We are being globally competitive but not in our own market.

We estimated the market size at the retail and institutional level to be over US$ 15 billion with domestic products now at less than 20% market share. 

There is an urgent need for the Govt. to expedite steps to end the 80-90% import dependence forced upon us and an ever increasing import bill of over Rs 38,837 Crore, expedite steps for patients’ protection, stronger quality & safety regulations, price controls to make medical devices and quality treatment accessible and affordable and ethical indigenous manufacturing viable .

TPCI: How will the government’s initiative of setting up medical parks help?

RN: The government has given approval for setting up four medical device parks with a view to support Make in India initiative and provide world-class products at affordable price for treatment. The four parks will be set up in Andhra Pradesh, Telangana, Tamil Nadu and Kerala, sources said, adding that Uttarakhand and Gujarat have also approached the Centre for a go-ahead for such parks.

These parks will provide necessary infrastructure, where companies can easily plug and play, sources said.

While medical device parks can focus on import substitution, the government needs to also focus on strengthening existing clusters so that manufacturers located over there do not need to be relocated to medical devices parks and are assisted to strengthen their competitiveness.

This will not only cut import bill but will also help in easy access to standard testing facilities and reduce cost of production, they said.

The project of Andhra Pradesh Medtech Zone for creation of Common Facility Centre (CFC) for Superconducting Magnetic Coil Testing and Research was given in-principle approval recently.

The government’s initiative of setting up medical parks is a major step towards making India a global manufacturing hub for the medical device sector and to build a robust system for innovation in the medical devices sector in the country.

This initiative will help develop skill programs in the areas of medical devices and related areas that fulfill the required manpower to hospitals, medical equipment companies and manufacturing industries. This will benefit the manufacturers/industries by making available skilled manpower very easily who are well trained as per the requirements.

This will be a wonderful opportunity for the country to increase its industrial footprint and create employment while giving a big boost to import substitution for the country.

It will also create more job opportunities for our engineers across the globe. It will enhance the competitiveness and profitability of Indian medical device industry.

Medical device manufacturing could be the next big thing for Indian economy after the IT revolution. Medtech parks will catapult India into the league of top medical equipment producing countries in the world, but equally important is that it will help bring down overall healthcare costs while ensuring tremendous saving in terms of foreign exchange.

TPCI: What lessons can the country learn from its international counterparts in the medical devices industry?  

RN: I feel extremely aggrieved when I see that India is ranked 145 among 190 nations, lower than even Bangladesh, Sudan and Equatorial Guinea by the 2018 Global Healthcare Access and Quality Index. It’s time that we change this landscape by ensuring affordable access to reasonably priced medical devices.

At present, India is the fourth-largest marketplace for medical devices in Asia, after Japan, China and South Korea. However, almost 80% of the medical devices used in the country are imported products. 

Two decades ago, China was in the same boat as India, importing all their medical equipment. But, today they manufacture all their equipment. This is because they have a policy that says all companies outsourcing their manufacturing to them should also share their technical know-how. India has no such rules.

Domestic policies on price controls should not be decided in New York, imagine India dictating to a delegation from Nepal what their regulations should be.

Government of India needs to take policy decisions to give level playing field if not a strategic advantage to domestic manufacturing while safeguarding consumers or India will remain 80-90% import dependent.

Recently Lord David Prior the Chairman of NHS (National Health Service) of England was in India with a Delegation of 14 British MedTech Manufacturers seeking collaboration and markets for their Products and meeting was hosted by the British High Commissioner & UKTI. Similar initiatives need to be taken by Health Secretary & DOP Secretary to help Indian manufacturers export their products to US/Europe, China, Africa, etc.

While we welcome the steps being taken by Govt. to consider to bring all medical devices under single regulatory framework, it will be difficult given the short time frame for implementation of the new norms, which is in contrary to what had been discussed by the industry and the government before.

TPCI: How has your business evolved since inception and what are your domestic/global expansion plans? What are the major challenges you face in doing business?

RN: Founded in 2nd August, 1957, HMD was created to serve the medical profession with affordable, world class medical devices. It was the very first technical collaboration between a Japanese Corporation and an Indian MSME set up to produce glass syringes in the year 1959 and subsequently added other products such as surgical blades in 1971, single use syringes in 1986, single use needles in 1987, cannula manufacturing in 1989, scalp vein infusion sets in 1991, I.V. cannulas in 1992, auto disable syringes in 2001, vacuum blood collection tubes in 2007, blood collection needles in 2008 and safety I.V cannulas in 2014 to its product range.

Hindustan Syringes & Medical Devices (HMD) is one of the Top 5 manufacturers of disposable syringes in the world and the largest for auto disable syringes. It is India’s leading medical device manufacturer with offices in USA and UK and has an annual turnover of approximately US$ 100 million. HMD is a trend setter and has pioneered innovative medical disposables to compete successfully with entrenched multibillion dollar MNCs and became a market leader in I. V. cannulas, syringes & needles in India. HMD has nine highly automated plants employing over 3,500 people and has a nationwide customer base of over 5,000 dealers. HMD’s primary international markets are US, Europe and Middle East. All its ICMED Certified Products are manufactured as per ISO 13485, and in compliance with the European CE & US FDA regulatory requirements.

Few years ago, HMD signed an agreement with a Swedish medical technology company, where Vigmed granted HMD the right to utilize its patents on Safety I.V.Catheters and market these products that prevent needle stick injury under HMD’s brand in select markets.

In the recent times, Hindustan Syringes & Medical Devices (HMD) developed the most revolutionary and pioneering, India’s First “Made in India” Dispovan Insulin Pen Needle” to provide affordable injection comfort for people with diabetes in May 2018.

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Rajiv Nath is the Founder and Forum Coordinator of AiMeD. He has undertaken many initiatives for establishing a collaborative framework with various government departments and media to bring to their attention issues affecting the industry and drawing investments in India as part of the endeavor to make the country among top 5 global manufacturing hubs of medical devices. He is also Managing Director of Hindustan Syringes & Medical Devices Ltd.

Mr. Nath has been recently honored for his exemplary zeal to Global Public Healthcare Sector. He was conferred the ‘Award of Appreciation’ by Minister of State for Health & Family Welfare Ashwini Kumar Choubey on behalf of the intervention NRI Community. Views expressed are personal.