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Repository of Trust in Healthcare: Global Names in the Industry Benefitting Millions

Repository of Trust in Healthcare

Healthcare in India is witnessing a high growth trajectory not only in terms of market size (fourth in Asia), but also reaching the last mile. The catalyst in this growth— Ayushman Bharat, the world’s largest public healthcare scheme with the ambition to cut out-of-pocket expenditure and scale the quality of care is definitely a step in the right direction. From ensuring quality treatment to insuring 500 million peopleunder the scheme, the government has taken dedicated steps toward improving health for all. However, despite such outstanding schemes, the sector is still crippling under infrastructural and policy challenges. India has one of the lowest doctors to patient ratio at 1:11,082 and spends an abysmal 1 percent of its GDP on healthcare. The lack of public investment in healthcare pushes the goal of making India the healthcare innovation hub to the backseat. The result is, there is no antidote to the ever-increasing burden of non-communicable diseases. Amidst the scare of rising disease burden and evol
ving disease profiles, the only respite comes from tailor-made therapeutic solutions. This is precisely the reason why India meets over 70 percent of its sophisticated medical equipment demand from imports. The global manufacturers are invested in aiding India to achieve its goal of providing Universal Health Coverage. In times, when the world is riding on the innovation curve, India’s fight to improve public health demands cutting-edge technologies— a promise that global manufacturers are fulfilling.

Why the Reliance on Global Medical Devices Manufactures is Set to Grow in the Future

India has 17% of the world’s population and bears 21% of the global disease burden. NCDs alone constitute 63% of overall disease burden in India and their increasing incidence will adversely impact the economy to the extent of 230 billion INR in a decade.To counter human capital loss as well as loss to the country’s public health, the government in its previous term, in 2015, announced 100 percent FDI in medical devices. A glimpse of which can be witnessed in the strategic partnership between the US and India. An estimated 30% of the entire 80% of medical devices imports are routed from the US.

As Indian medical devices industry is still at a nascent stage, the global partnership is essential in securing the health of 1.3 billion citizens. The investment from trusted players not only fuels India’s UHC efforts, but also help in creating high-skilled employment opportunities. It will also help the small and medium industries of the country to contribute to R&D so that they can do value additions to their medical devices. The FDI-enabled manufacturing firms also pay a higher wage per rupee of net fixed capital as compared to domestic manufacturing firms as they require highly skilled professionals for handling high-end technology. This, in turn, contributes to employment and higher economic impact. Output-capital ratio is also higher in FDI firms than in domestic firms. These investments have a lot of spillover effects due to huge forward and backward linkages in terms of boosting the supply chain of medical devices thereby creating a demand for high-quality products.

At the heart of the matter lies a patient in the hope of better quality treatment. The strategic partnership between trusted names in the industry and government can pave the way for improving patient outcomes as well as overall infrastructural revamp. From more hospitals, doctors and caregivers to a stronger public-private partnership towards building up of more medical institutions, the existing medical infrastructure is in a dire need of a revamp in all its aspects— quality, accessibility, and affordability.

While the intent is to attract more FDI, the inward-looking policies and the protectionist regime is driving the investment out of India to more welcoming nations in the South-east Asia region.

Learning from the Past Mistakes for a Healthier Tomorrow

Apart from an investor-friendly environment, global players are also looking for a stable regulatory regime that does not encourage unprecedented changes such as ‘blanket price cuts’. On the one hand, we talk about the multi-trillion investment hub that India is, on the other, specific policies are discouraging these companies from investing. To deal with the healthcare roadblocks that pervade in India, we need the market to be open to foreign investments, because technology is making health care better around the world, and why should India be left behind? For instance, fixing the price of stents below their cost of production does not offer an economic incentive for firms to continue production. No wonder many reliable multinationals that supply stents in India threatened to pull out of the market, with some refusing to bring their latest innovations to India. The concept is simple— investors judge the attractiveness of an investment based on its expected return compared to other investments. Thus, as long
as price caps affect relative returns, it would change the amount and urgency of investments into bringing new products into market making stents.

At a time when India relies heavily on imports for medical devices, we must ensure that the ecosystem supports this exchange of technology. As the government strengthens its resolve to make affordable healthcare a new reality for its population, in the absence of quality healthcare, the efforts fall flat. What we need are consistent and remunerative policies where investors can make long-haul plans for India. There is a huge disease burden that needs to be addressed with quality treatment which is possible if trusted brands are allowed to sustain in the domestic market.

(Writer is Dr Bhabesh Hazarika, a health economist. Views expressed are a personal opinion.)

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