India is a land full of opportunities for players in the medical devices industry. The country has also become one of the leading destinations for high-end diagnostic services with tremendous capital investment for advanced diagnostic facilities, thus catering to a greater proportion of population, writes Dr P Siva Kumar, CEO, Trivitron Healthcare, in this insightful article on the Indian healthcare industry.
Healthcare has become one of Indias largest sectors – both in terms of revenue and employment. Healthcare comprises hospitals, medical devices, clinical trials, outsourcing, telemedicine, medical tourism, health insurance and medical equipment. The Indian healthcare sector is growing at a brisk pace due to its strengthening coverage, services and increasing expenditure by public as well private players.
India’s competitive advantage lies in its large pool of well-trained medical professionals apart from being cost competitive compared to its peers in Asia and Western countries. The cost of surgery in India is about one-tenth of that in the US or Western Europe.
The Indian healthcare market, which is worth around 100 billion, will likely grow at a CAGR of 23 per cent to $280 billion by 2020.The revenue of Indias corporate healthcare sector is estimated to grow at 15 per cent in Financial Year 2017-18.
India is experiencing 22-25 per cent growth in medical tourism and the industry is expected to double its size from present (April 2017) $3 billion to $6 billion by 2018. Medical tourist arrivals in India increased more than 50 per cent to 200,000 in 2016 from 130,000 in 2015. As the number of hospitals that are being accredited and recognised, apart from enhanced awareness to develop their quality to meet international standards, India should become a healthcare hub in years to come.
The Healthcare Information Technology (IT) market is valued at $1 billion currently (April 2016) and is expected to grow 1.5 times by 2020.
Over 80 per cent of the antiretroviral drugs used globally to combat AIDS (Acquired Immuno Deficiency Syndrome) are supplied by Indian pharmaceutical firms.
India is a land full of opportunities for players in the medical devices industry. The country has also become one of the leading destinations for high-end diagnostic services with tremendous capital investment for advanced diagnostic facilities, thus catering to a greater proportion of population.
India’s competitive advantage also lies in the increased success rate of Indian companies in getting Abbreviated New Drug Application (ANDA) approvals. India also offers vast opportunities in R&D as well as medical tourism.
With a potential for strong domestic demand and other supporting factors, India is set to emerge as an ideal destination for setting up manufacturing facilities, especially for global companies looking to align their global manufacturing footprint with shifting consumption patterns.
On the clarion call by Prime Minister Narendra Modi, The Make in India campaign aims to have medical equipment manufactured in India itself to bring costs down and make healthcare reach across the country and facilitates the investments from across the world.
With changing economic and regulatory environment, the medical devices industry including diagnostics, is expected to grow significantly, fueled by a range of factors. Make in India initiative has provided an opportunity to create a step change in Indian healthcare, especially in the medical devices industry. Additionally, Local innovation by MNCs as well as domestic players is expected to drive indigenous manufacturing and lead to rapid growth of exports.
For MNC players, India presents a good opportunity to simultaneously de-risk their business from regional/ global risks and the growing domestic market. India is set to become a major consumption location, with high potential to become an export oriented country. While China is an example of a location that provides huge domestic demand as well as low cost manufacturing, countries like Ireland, Singapore and Puerto Rico are successful examples of markets that have become major export hubs (where exports are significantly higher than domestic sales).
Even though manufacturing remains limited to producing low technology products, a few domestic companies and MNCs with manufacturing facilities in India have successfully developed low cost products that are on par in terms of quality with existing products that require complex technical know-how to manufacture. Consequently, these products have developed a niche market in many regions globally.
As India continues to innovate and develop modern technologies, global demand and potential in the near and medium term provide India with an opportunity to become a major participant in the global supply chain of medical devices. With success stories from domestic manufacturers, India is steadily developing capabilities in manufacturing medical devices. Indian players have developed expertise in manufacturing products in consumables and implants segment. In the near term, the focus needs to be on manufacturing of low and mid-tech products, with a gradual shift towards developing capabilities for design and manufacture of high-tech products.
In Vitro Diagnostics (IVD) Sector constitute a significant part of the healthcare component and this sector has in recent times witnessed immense progress largely due to technological advancements. Cutting-edge technologies have paved the way for the diagnostic sector to become a rapidly growing industry in the Indian medical devices market which can be broadly classified into equipment, reagents, and services.
The diagnostic industry has untapped potential and if the major e-commerce players in the country adapt to the market, this industry will soon develop immense potential to expand further. Various factors can enormously contribute to the growth of the industry. Likewise, if more players adapt to the e-commerce way of developing their business by establishing their own e-stores, they can generate revenues at a rapid pace. Soon, this can be expanded to other healthcare services as well. The government is also taking possible measures to make the business atmosphere more favorable, attracting a lot the foreign companies to invest in Indian companies.
The Indian healthcare industrys infrastructure development has been indirectly helping the diagnostics market to surge to greater numbers. With the compound annual growth rate (CAGR) of 18.1% from 2009 to 2016, IVD has emerged as one of the most profitable markets in the industry. With enhancements in the corporate hospital infrastructure and acquisition of state of the art technologies in Clinical Chemistry, Hematology, Immunochemistry, Molecular Genetics etc., the IVD segment is well on its way to achieve rapid growth at a much quicker pace.
There is a substantial scope for enhancing healthcare services considering that healthcare spending as a percentage of Gross Domestic Product (GDP) is on a rise. Rural India, which still accounts for over 70 per cent of the population, will emerge as a budding demand source. India is actually a land full of opportunities for players in the med tech industry. It has become one of the leading destinations for high-end diagnostic services with remarkable capital investment for advanced diagnostic facilities, which caters to a greater proportion of population.
With a focus on quality healthcare at affordable costs, several corporate laboratories and healthcare providers are offering cost-effective patient care packages. This would be viable through relation in in import duty structure and other benefits for manufacturing in India.
Favorable and cost-effective environment for manufacturing, affordable packages for healthcare solutions (diagnostic services and other patient care solutions), continued awareness and education amongst the population are the key to success for making India a powerful hub for quality diagnostics solutions. With the support from the government and investments from domestic and multinational players through aggressive focus, India is on the right path to provide quality healthcare to one and all.