A recent study by University of Washington’ points out the out-of-pocket personal spending on healthcare in India is a whopping 65.6 per cent – placing India at the sixth place with even countries like Sudan, Yemen, Azerbaijan, Nigeria and Cameroon ahead of it, writes Vivek Ratnakar of Elets News Network (ENN).
On the occasion of India’s 71st Independence Day, while speaking from the ramparts of Red Fort Prime Minister Narendra Modi called upon his countrymen to help him build a “New India”, “where there is equal opportunity for all; where modern science and technology play an important role in bringing glory for the nation in the global arena”.
Among the various government initiatives that he mentioned in his Independence Day speech, his vision of making healthcare affordable across the country echoed the aspiration of millions of people. They often find themselves at the receiving end when it comes to access quality healthcare within their modest means.
“Cheap medicines through Jan Aushadhi Kendras are a boon to the poor. There used to be a lot of expenditure on operations and stents. We are striving to make it possible for knee operations as well. We are striving to minimise this expenditure for the poor and the middle class,” said the Prime Minister in his speech.
“Earlier there used to be dialysis only at the State capitals. Now we have decided to open dialysis centres at district level. We have already opened this facility in 350 to 400 districts where free dialysis services are available for the poor,” he added.
More often than not, promises made by the government of the day end up hitting the roadblocks created by procedural ‘requirements’, but in this case action was followed soon. In the subsequent months, the government slashed the prices of medical devices like knee implants and heart stents by up to 75 per cent as part of its effort to make life saving devices more affordable for the patients.
According to a study by University of Washington’s Institute for Health Metrics and Evaluation, the outof- pocket personal spending on healthcare in India was at whopping 65.6 per cent – placing India at the sixth place with only Sudan, Yemen, Azerbaijan, Nigeria and Cameroon ahead of us when it comes to outof- pocket expenditure done by an individual to access healthcare services.
With about 750–800 medical device manufacturers in India, the medical devices industry in the country is at present valued at $5.2 billion, contributing about 4-5% to the $100 billion Indian healthcare industry, which is expected to reach $145 billion by 2018 and over $280 billion by 2025.
The Indian medical device manufacturers have an average turnover of Rs 450–500 million on an average investment of Rs 170–200 million, says a report by SKP Business Consulting LLP. India is also the fourth-largest medical devices market in Asia after Japan, China and South Korea. As per industry estimates, the Indian medical devices market will grow to $50 billion by 2025.
Given the rapid growth of medical devices manufacturing, the government has already notified the Medical Devices Rules, 2017 and is in the process of finalising the draft of Medical Device Regulation Bill for comprehensive regulation of the medical devices in the country.
However, the medical device industry urgently wants the government to resolve some pressing issues. The industry has been grappling for long and wants a set standard certification by a regulatory agency in place to deal with competitive edge the foreign device manufacturers have while participating in procurement tenders by government hospitals.
“It’s unfortunate when government owned- and-financed hospitals discriminate against Indian manufacturers, instead of giving a preference to them. This is also in complete violation of the recent public purchase order by DIPP, and a circular from the Ministry Of Health, with tenders issued by public healthcare facilities run by Defence, AIIMS and even State governments continuing to specify compliance to both USFDA and CE certification,” says Rajiv Nath, Forum Coordinator, Association of Indian Medical Device Industry (AiMeD), a representative body of domestic medical device makers.
“It’s ironical that to access our own market, we need to seek third-country regulatory approvals or certifications. The government should not finance such discriminatory tenders,” he adds.
“Quality and innovation are key to building a strong healthcare ecosystem that is able to meet the current and future needs of all of India’s people, and the recently introduced price controls represent a step in the wrong direction toward this goal. Rather than addressing concerns surrounding affordability and accessibility, price controls lead to significant negative impacts, including new concerns over access to high quality care and impeded availability of the most advanced treatments and cures from the medical technology industry. The medical technology industry stands ready to work with all stakeholders toward sustainable, market-oriented alternatives,” says Abby Prett, Vice President, Global Strategy and Analysis, AdvaMed.
The impact of Goods and Services Tax (GST) on the medical devices sector is also considerable with many industry players saying that it may derail the plan of the government to make healthcare available at an affordable cost.
“Considering the massive healthcare requirements and the need for healthcare infrastructure in India, the Narendra Modi government has rightly kept the healthcare sector outside of the otherwise overarching Goods and Services Tax (GST) regime. However, the fine print of the roll out of the GST in the country and the taxes on many of the inputs that the healthcare industry requires obviates the very reasons why healthcare has been kept out of the GST net,” says Dr Dharminder Nagar, Managing Director, Paras Healthcare.
“The final increase in the prices of a lot of medical equipment is currently being absorbed by the healthcare providers. But in the process, the ability of the healthcare providers to expand to newer geographies and make a difference to the lives of people is being compromised. While initially healthcare providers are bearing the increased costs, there will be a time when they will find it unviable. This is when they will start looking at ways to pass on the increase to the patients, making the cost of treatment more expensive for them,” Dr Nagar warns.
Medical devices, including surgical instruments, used to attract 6 per cent central excise duty and 5 per cent Value Added Tax (VAT) and along with CST, Octroi, entry tax, etc. it comes to more than 13 per cent. With the new GST regime, the rate is 12 per cent – a decrease of mere 1 per cent. The medical device industry is highly technology-driven, innovative and a rapidly advancing industry globally. It is an industry that is changing the face of healthcare worldwide, impacting and improving diagnosis, treatment, and delivery.
MAKE IN INDIA PUSH FOR MEDICAL DEVICE MANUFACTURING
There are a range of medical device clusters that have emerged due to supportive state-level policies as well as the availability of skilled labour. There are a few Medical Device Parks planned across India, including Andhra Pradesh MedTech Zone Limited (AMTZ), a park in Sultanpur village (Telangana) and HLL Lifecare Mediparks in Tamil Nadu, Maharashtra and Gujarat.
AMTZ recently signed a Memorandum of Understanding (MoU) with the Board of Radiation and Isotope Technology (BRIT) for setting up of one radiation processing facility for medical products in India using Cobalt – 60 irradiation technology for large scale irradiation.
The MoU was signed by Dr Jitendar Sharma, Managing Director and CEO, AMTZ and G Ganesh, Chief Executive, BRIT.
This MoU will enable manufacturers at AMTZ to access the world class Gamma irradiation facility, which is being setup in a Public- Private- Partnership (PPP) mode in India.
This facility will be available at a highly subsidised rate for all manufacturers who will be manufacturing at AMTZ. Gamma irradiation enables fast turnaround time and is highly effective because of its ability to easily penetrate package and product.
Under the MoU, BRIT will help AMTZ with process technology, training to plant operators and support in establishing and standardising dosimetry.
AMTZ would also include facilities such as electro-magnetic interference laboratory, 3D designing and printing for medical grade products, X-ray tube and radiation testing centre, rapid prototyping centre, metal molding and metal finishing centre, warehousing and regulator’s office.
“The healthcare and medical device industries are at a critical threshold where growth can be significantly accelerated to ensure that India embraces the benefits of advancing medical technology to uplift standards of healthcare sharply in the next decade. A vibrant and profitable private sector is critical for success. By proactively listening to and understanding each other better, the government and industry can collaborate effectively to realise the vision of the 2017 National Health Policy,” says Ravindranath Menon, Senior Business Adviser, SKP Business Consulting LLP.
The government is starting to move in the right direction by segregating medical devices from drugs. But more work is required. Improved understanding of significant differences between the two subsectors will continue to help shape an appropriate policy. Key to this is an appreciation of the industry’s technology and innovation lifecycle, and a willingness to reward technology and continuing innovation since India has a long way to go in this sub-sector, given the current industry size.