August 2016 : AMTZ Special Issue

AMTZ A Leap for Indian Healthcare

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leapsystemThe goal of Andhra Pradesh MedTech Zone (AMTZ) is to make Andhra Pradesh an internationally recognised manufacturing hub for medical devices and contribute to volume-generated cost reduction of medical devices for patients, shares Sudheer Goutham of Elets News Network (ENN)

Andhra Pradesh is on a new mission. Nara Chandrababu Naidu-led government is setting up a dedicated industrial park for the manufacture of medical devices in Andhra Pradesh. He sees this as a tremendous opportunity for Andhra Pradesh, especially in the areas of industrial development and employment generation, while addressing a decadeold problem that India is facing in the healthcare sector.
The healthcare industry in India is on a high-growth trajectory, having evolved significantly in the last decade. However, healthcare provision remains inequitable and challenges in access to quality, affordable healthcare persist in large parts of the country. The medical devices sector has also grown considerably during this period and plays a critical role at each stage of the healthcare continuum. Although it has been instrumental in improving access and affordability of healthcare services, a number of ecosystem constraints have led to a high dependence on imports for addressing the domestic demand.
Kamineni Srinivas, Minister for Health and Medical Education, Government of Andhra Pradesh shares, Lack of domestic manufacturing of medical devices is the main reason for the import dependency and high cost of medical products and services in India. It is the vision of N Chandrababu Naidu to develop a dedicated industrial park for the manufacture of medical devices in Andhra Pradesh. The goal of Andhra Pradesh MedTech Zone (AMTZ) is to make Andhra Pradesh an internationally recognised manufacturing hub for medical devices, help in national agenda of import substitution and contribute to volume generated cost reduction of medical devices for patients.

       Role of Medical Devices
  • Will help reduce the cost of production of medical devices
  • Will help small & medium companies in medical devices to become global players


What is AMTZ?

The Andhra Pradesh MedTech Zone (AMTZ) is Indias first manufacturing hub for medical devices. Being set up in Visakhapatnam, the port city of Andhra Pradesh, the AMTZ will be developed in 270 acres of land. This prestigious industrial park will accommodate around 200 independent manufacturing units, each of a built-in ready-to-use of 1 to 2 acres of land. The zone will provide for certain capital-intensive facilities required by most medical device manufacturers and modern state-of-art-facilities.

All investment towards land development, and building of common facilities as above would be done by the Government of Andhra Pradesh through formation of special purpose vehicle (SPV). The AMTZ would include the following facilities over an area of 50 acres:

  • Component testing centre
  • Electromagnetic interference laboratory
  • Medical-grade low vacuum molding, cabinet molding and injection molding centres
  • 3D designing and printing for medicalgrade products
  • Sterilisation & toxicity testing centre
  • Radiation testing centre
  • Warehousing
  • Regulators office
  • Other facilities commonly required in the manufacturing of medical devices

The AMTZ is very unique project and the first-of-its-kind in the world, says Dr Jitendar Sharma, CEO of AMTZ, who is the brains behind this prestigious initiative. He says the project provides as a package of all scientific facilities that are critial to medical device manufacturing.
His mandate is to commence the operations of AMTZ that can accommodate 200 plus manufacturing units and establish scientific facilities required for device manufacturers. All these tasks are to be completed within 18 months. The AMTZ has three main unique selling points (USPs) “ scientific facilities, affordable space and plug-andplay ecosystem, says Dr Poonam Malakondaiah, Principal Secretary, Department of Health and Family Welfare, Government of Andhra Pradesh, who is the Chairperson of the Board of Directors of the Andhra Pradesh MedTech Zone.
I am extremely thankful to Chief Minister Mr Chandrababu Naidu for recognising the opportunity and taking a quick and firm decision to set up Indias first medical device park in his state, says Rajiv Nath, Forum Coordinator of Association of Indian Medical Device Industry (AIMED) and Joint Managing Director of Hindustan Syringes & Medical Devices.

From Manufacturing to Destination
The industry park is being built scientifically keeping the international quality standards for manufacturing of medical devices in mind. The domestic and global markets will depend on two factors – Quality and Cost. As all the scientific facilities in AMTZ are being provided by the government, the cost of production for the manufacturer will go down. With quality and cost-effective devices, the manufacturers will become competitive in the domestic market.
They will also be able compete with China, Korea and Taiwan imported medical technologies in India. The AMTZ approach towards national market is cost reduction, which will lead to a better competitive pricing. For international market, it is not just pricing, but also the concept of international benchmark quality.
Dr Poonam Malakondaiah says, We set three goals for AMTZ, achieving them in five years. They are: 1) To build AMTZ as Indian Hub in medical device manufacturing; 2) To make AMTZ in its core area as Asian Hub while competing with other esteemed Asian market leaders “ China, Korea, Taiwan, etc; and 3) To reach the prestigious status of Global Hub. Here we will not only have to compete with the South East Asian nations but also contend with global markets such as “ Russia, Germany, Italy, France, USA, etc.

       Andhra Pradesh MedTech Zone (AMTZ) – Key Takeaways
  • Indias first manufacturing hub for medical devices.
  • Will be developed in 270 acres of land.
  • Will accommodate around 200 independent manufacturing units, each of a built-in ready-to-use of 1-2 acres of land.


Market Scenario
It may be noted that Indian medical device industry is worth over Rs 60,000 crore. And countrys humungous import bill for this segment amounts to over Rs 23,000 crore (approximately USD 4 billion) while export amounts to only over Rs 7,000 crore (USD 1.1 billion). Indias import dependency on high-end medical devices is over 80 per cent and 60 to 70 per cent for other devices. And, this is where the dedicated medical device park would be of great value – reducing humongous import dependency, and increasing export while generating wealth and employment within.
However, the Indian healthcare system continues to be impacted by different aspects of healthcare, such as availability, affordability and quality of health services. Given these, India lags behind the averages of Brazil, Russia, India and China (BRIC) countries. A key area of concern for India is the proportion of non-communicable diseases which is expected to rise in the next decade.
The total healthcare expenditure in India was only 3.9 per cent of GDP, compared to 8.9 per cent for Brazil, 6.2 per cent for Russia and 5.2 per cent for China. Out-of-pocket expenditure is as high as 61 per cent, with only 25 per cent of the population being covered by health insurance. While the government and value chain participants have undertaken several steps to address the issues of healthcare access, quality and affordability, these have been uted in silos. Specifically, while medical device companies have focused largely on extending life expectancy and improving quality of care, there is a need to increase affordability for a widespread impact. The challenge therefore for companies in India is to produce medical devices that are both cost competitive and effective to increase penetration and use. It is in this context that the Make in India initiative becomes significant for the medical devices industry.
highendMedical devices play a role not only in screening, diagnosing and treating patients, but also in restoring patients to normal lives and in regularly monitoring health indicators to prevent diseases. With technological advancements, the role of medical devices is now expanding to improve quality of care across each stage of the healthcare continuum.
According to an industry report, in India, the medical devices industry is small, with a disproportionate reliance on imports and a complex regulatory environment. The global medical devices and technology market is expected to grow to USD 520 billion by 2020 from an estimated USD 3.7 billion in 2014. The Indian market is among the top 20 in the world by market size, and fourth in Asia after Japan, China and South Korea. However, the per capita spend on medical devices in India is the lowest among the BRIC countries at USD 3 (USD 7 in China, USD 21 in Brazil and USD 42 in Russia). It is significantly behind developed economies like the United States (US) (USD 340). This current under “ penetration of medical devices in India represents a sizeable growth opportunity.
The inflow of foreign direct investment (FDI) in medical devices was USD 90 million between December 2014 and August 2015, post the government permitting 100 per cent FDI under the automatic route. Several MNCs have been increasing their manufacturing footprint and locating research centres in India to serve both the Indian and global markets. Increased funding and investments have also reflected in other supply-side changes in healthcare delivery in India, such as:

Overall growth in healthcare infrastructure

  • There is a significant increase in the number of hospitals and hospital beds in India. Bed strength had increased from 0.8 million in 2002 to 1.6 million in 2012, and is further expected to increase to around 2.9 million by 2025. This increase has been driven primarily by the growing presence of corporate hospital chains, international companies and service providers entering tier-II and tier-III cities.
  • There is an increasing presence of diagnostics laboratory chains focusing on imaging and pathology. It is estimated that there are more than 100,000 diagnostic laboratories across the country, with the number expected to grow at a rate of 15 to 20 per cent.
  • The healthcare industry is also witnessing the emergence of new formats, such as the chains of multispeciality outpatient clinics, mother-and-child hospitals, short-stay surgery centres, IVF centers, etc., which are driving demand for medical devices.
       Medical Device Industry in India
  • Small with a disproportionate reliance on imports & a complex regulatory environment
  • Among the top 20 in the world by market size
  • Fourth in Asia after Japan, China & South Korea


What Next?
Our roadmap for next 5 years is ready, says Dr Jitendar Sharma. The AMTZ has strategised year-wise outlook for AMTZ. Between first and second year, the interested manufacturers in AMTZ will set up their assembly units. The first year will go for us to establish AMTZ and the second year will take manufacturers to set up their brand-specific interior assembly units. Between third and fourth year, the AMTZ will be established into a manufacturing hub that will be able to meet the medical device requirement in India. It is expecting over 200 to 300 manufacturing factories in AMTZ, each worth Rs 50 crore. On average, it means total factories worth Rs 15,000 crore. The total import dependency of India is Rs 24,000 crore. In the fifth year, it will exceed the capacity to meet the entire domestic requirement while also trying to be exporter in the global market.
The creation of such a zone is based on the fact that medical devices manufacturing requires certain high investment facilities which are too capital intensive for individual manufactures to invest upon. The AMTZ with in-house high investment scientific facilities would help manufacturers reduce the cost of manufacturing by more than 40 to 50 per cent. The AMTZ is expected to be operational by the year 2017-2018.

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