National Medical Devices Policy: Can it blaze a trail?

The newly announced National Medical Devices Policy 2023 aims to help the medical devices sector grow from the present US$ 11 billion to US$ 50 billion by 2030. But can this address the persistent import dependence issues plaguing the medical devices sector, given the 12-15% disability factor that impacts its competitiveness? 

medical devices

The global medical device market is expected to grow to approximately US$ 797 billion by 2025, with North America holding up the largest share, according to a report by Nagarro. Indian medical device market is relatively smaller than other overseas markets but holds significant growth potential. Around 6% of the total Indian healthcare sector, is occupied by medical devices.

The current market size of the medical devices sector in India is estimated to be US$ 11 billion and its share in the global medical device market is estimated to be 1.5%. India is the 4th largest market for medical devices in Asia after Japan, China and South Korea and is amongst the top 20 markets in the world. The market is predicted to increase to US$ 50 billion by 2025. Diagnostic imaging is likely to expand at a CAGR of 13.5% (2020-25). India is also the 2nd largest PPE (Personal Protective Equipment) kits manufacturer with a production capacity of 10lakh+ PPE coveralls per day. However, India has a very high import dependence in this sector to the extent of 75-80%.

The National Medical Devices Policy, 2023 is a policy framework approved by the Union Cabinet in India, aimed at accelerating the growth of the medical devices sector. To achieve this, the policy focuses on meeting the public health objectives of access, affordability, quality, and innovation. The policy is expected to help the medical devices sector in India grow to US$ 50 billion by 2030. With this, the motive is to emerge as a global leader in the manufacturing and innovation of medical devices by achieving a 10-12% share in the expanding global market over the next 25 years.

What the National Medical Device Policy aims at?

The policy provides a blueprint for the government to boost the medical device sector’s growth by prioritizing innovation, research, and production capacity. Additionally, the policy will enable testing facilities, enabling quicker diagnosis of illnesses and access to more precise and cost-effective treatments.

The newly introduced policy has set a goal to increase India’s presence in the global medical device market from 1.5% to 10-12% in the next 10 years, resulting in a market value of US$ 100-300 billion. The policy would encourage the production of 25 advanced medical technologies in India. It aims at promoting the manufacturing of critical components related to cancer treatment and imaging technologies such as ultrasound, MRI, molecular imaging, and PCR that are currently imported.

To achieve these goals, the government plans to create 50 clusters for rapid testing of medical devices and training experts in the field with a special curriculum prepared at the higher education level, with this policy. This initiative is expected to create more jobs and increase the competitiveness of the Indian medical device industry, while also improving access to high-quality medical devices for citizens.

India’s Import Dependence

Over the last decades, India has become a global leader in pharmaceuticals and biotechnology so much so that the country is known as the “Pharmacy” of the world. The recent Covid-19 pandemic saw India’s pharma and biotech prowess but the medical devices industry still has a long way to go in boosting its capabilities for international markets.

India’s reliance on imported medical devices has risen to a worrying level due to an increase in demand and a duty structure that is unfavourable to domestic manufacturers.

Medical device imports rose by a record 41% to Rs 63,200 crore in 2021-22 from Rs 44,708 crore in FY21, according to the Association of Indian Medical Device Industry (AiMeD).

India imports six major categories of medical devices including consumables, disposables, electronics and equipment, implants, IVD (in vitro diagnostics) reagents, and surgical instruments.

Medical devices imports by segment

Source: AiMED, data for FY 2021-22

Almost 80% (by value) of the domestic requirements are met by imports. Most of the imports are from the US, Germany, Netherlands, China and Singapore. China remained the primary source of medical devices for India, with shipments from the neighbouring country rising 48% YoY to Rs 13,538 crore in FY ’22, the AiMeD analysis showed.

According to the HMED (Healthcare and Medical Equipment and Devices) sector report by Rajiv Gandhi Institute for Contemporary Studies, the US is the biggest source country across all types of medical devices except disposables (dominated by Singapore), and electronics equipments are the highest imported products.

India's medical devices imports

Source: AiMED, figures in Rs crore

It is cheaper to import products than to procure the raw material in India and this has led to the closure of some small and medium units.

The new framework for the medical devices manufacturing sector aims to reduce import dependence from 80% to 30% in 10 years and make India a top-five global manufacturing hub for medical devices by 2047, addressing a long-standing demand from the industry.

Existing Policies for medical devices

The government has taken several initiatives to promote domestic production of medical devices. A Production Linked Incentive (PLI) Scheme for medical devices has already been implemented. The government is also supporting the setting up of four Medical devices Parks in states including Himachal Pradesh, Madhya Pradesh, Tamil Nadu and Uttar Pradesh. Rajiv Nath, Forum Coordinator, AiMED, mentioned in a previous interaction with IBT, “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 fulfil 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.”

Under the PLI scheme, a total of 26 projects have been approved, and 14 projects producing 37 products have been commissioned. An investment of Rs. 1,206 crore is committed for the same. Out of this, so far, an investment of Rs.714 Cr has been achieved.

Domestic manufacturing of high-end medical devices like Linear Accelerator, MRI Scan, CT-Scan, Mammogram, C-Arm, MRI Coils, high-end X-ray tubes, etc. has started. The remaining 12 products will be commissioned soon. Recently, five projects have been approved for domestic manufacturing of 87 products/product components. These initiatives aim to reduce the import of medical devices and promote domestic production.

Final Word

The policy calls for establishing large medical device parks, and clusters equipped with world-class common infra in proximity to economic zones with required connectivity. It encourages private investments, and funding from VCs, and pushes for PPPs.

The Indian medical devices market comprises more than 800 manufacturers, of which 65% of companies have a turnover of less than US$ 1.5 million, 25% of companies have a turnover of US$ 1.5-6 million and 2% of companies have a turnover of more than US$ 73 million. A report by NITI Aayog and the Department of Pharmaceuticals recognizes that Indian manufacturers have a 12-15% disability factor in manufacturing medical devices. This is attributed to:

  1. Lack of adequate infrastructure, supply chain and logistics;
  2. High cost of finance;
  3. Inadequate availability and cost of quality power;
  4. Limited design capabilities; and
  5. Low focus on R&D and skill development.

It is important, therefore, to note that promoting domestic production of medical devices can have both positive and negative effects. On the positive side, it can lead to increased job opportunities, a boost in the local economy, and potentially lower costs for consumers. However, regulators will also have to maintain stringent quality standards, encourage outcome-driven innovation and maintain effective price controls to ensure that the transition towards indigenous supply chain is smooth.

It will be essential for the government to monitor the implementation of this policy and address any unintended consequences that may arise.

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