08 May 2018

Focus on India Medical Devices Sector

The global medical devices industry is estimated to be around $400 billion in 2017

GLOBAL OVERVIEW

The global medical devices industry is estimated to be around $400 billion in 2017. US continues to be the largest market for medical devices accounting for more than 40% of the world medical device market, followed by EU and APAC.

Medical devices comprise surgical equipment & appliances, diagnostic & imaging devices, ophthalmic equipment, laboratory devices & diagnostics, dental equipment, medical disposables et al. In fact the Global Medical Device Nomenclature classifies medical technologies in 12 categories and 10,000 generic groups, gathering a total of some 500,000 different products. 

INDIAN SCENARIO

The Indian Medical Devices industry is estimated to reach a market size of US $ 6 billion in 2018 and it is growing at a pace of ~ 16% which is more than double of the global industry growth rate of 4-6%.

 

Source: The Department of Pharmaceuticals, Govt of India

The Indian medical devices market is among the top 20 in the world by market size, and 4th in Asia after Japan, China and South Korea. However, as per a report by Deloitte, the per capita spend on medical devices in India at $3 is the lowest among BRIC countries ($7 in China, $21 in Brazil and $42 in Russia). It is significantly behind developed economies like the USA ($340). 
The Indian supplier base for medical devices is highly fragmented and there are roughly 750 government approved manufactures spread across India. 

India imports almost 75 % of the medical devices and the imports are mainly from US, Germany and Japan. Most of the high-end medical devices are imported. The high-tech end of the medical device market is dominated by multinationals with extensive service networks however the market for ‘medical supplies and disposable equipment’ is dominated by domestic manufacturers. 

 

           Source: Report by The Department of Pharmaceuticals, Govt of India

Health care industry in India is categorized as sunrise industry with huge investments expected in coming years. Almost all the leading international companies have set up manufacturing facilities in India, including Bausch & Lomb, 3M Medical, J&J, B. Braun, Becton Dickinson, Dräger, GE Medical Systems, Siemens, Terumo, and Zeiss et al. Though imports will continue to dominant for many years, however in the last 5 years or so many Indian companies, through frugal engineering concept, are now making low cost X-ray machines, imaging equipment, ECG scanners and even robots to cure cancer, blindness and heart diseases. 

TOP 10 MEDICAL DEVICES COMPANIES IN INDIA

  1. Johnson & Johnson Medical India (JJMI) Ltd.
  2. GE Medical Systems
  3. Medtronic Inc
  4. Siemens India Ltd.
  5. Baxter India
  6. Koninklijke Philips N.V
  7. Novartis International AG
  8. B. Braun Medical (I) Pvt. Ltd.
  9. Becton Dickinson India
  10. Opto Circuits (I) Limited

REGULATORY FRAMEWORK IN INDIA

The primary entity is the Medical Devices Division of the CDSCO (Central Drugs Standard Control Organization -  www.cdsco.nic.in ) which is part of Ministry of Health and Family Welfare (MoHFW). Companies must register with CDSCO before launching any product in the market. CLAA (Central Licensing Authority) which is part of CDSCO serves as the main regulatory body for classifying the category of medical devices and approving the manufacturing licenses.        

It takes approximately 6-9 months to complete the medical device registration process in India. Once granted the licenses (under the new 2017 Rules) are perpetual, meaning they will continue to be valid unless they are cancelled. The manufacturer simply has to pay a renewal fee every five years if the product still is being marketed. (Earlier license used to valid for 3 years only). 

As mentioned earlier India imports around 75% of its medical devices. Imported medical devices that already have been approved in the United States and/or European Union, or that have been deemed equivalent to a CE Mark and FDA-approved device, will be allowed on the Indian market without undergoing separate conformity assessment procedures. The full technical documentation used to support those submissions i.e. 510(k) application, CE Technical File/Design Dossier, Health Canada Medical Device License) must be provided with the device application. This form must be submitted per medical device family.

MAIN STEPS FOR IMPORTING AND MARKETING OF MEDICAL DEVICES IN INDIA

STEP1: Determine if the products requires registration

STEP2: Appoint Authorized agent in India

STEP3: Submit regulatory dossier under “Form40”

STEP4: Obtain registration certificate in “Form41”

STEP5: Obtain import license in Form 10

STEP6: Start Marketing in India

ICAC Mark: Medical devices sold in India should, as a general rule, bear the ICAC mark (Indian Conformity Assessment Certificate) (similar to the “CE" mark in Europe) to indicate their conformity.

THRUST FROM GOVERNMENT

The most significant recent development concerning the medical devices industry has been the notification of Medical Devices Rules, 2017 (MDR 2017), which became effective from January 1, 2018. Prior to the notification of these rules, there were no specific rules governing the manufacture of medical devices. This notification rule finally puts an end to the regulatory absence, and provides a clear set of norms governing the medical devices industry. It provides for a risk-based classification of medical devices. Now all medical devices will be placed into one of four classes based on the intended use of the device and the potential risk that comes with its use. Here are the classifications:

  1. Class A (low risk)
  2. Class B (low moderate risk)
  3. Class C (moderate high risk)
  4. Class D (high risk)

Each class has different regulatory processes. The higher the risk, the more strenuous the approval process. Apart from the above the new MDR will ease the ability to obtain a license, renewal of licence (now perpetual), and conduct clinical trials; this new MDR will also reduce the manufacturer-regulator interface with the implementation of a digital platform. This new rule have also eased and clarified process related to Product standards, Shelf Life, labelling, clinical investigations et al. (details can be read at www.cdsco.nic.in/writereaddata/Upda%20FAQ%20MDR_2017.pdf) 

SOURCING & CONTRACT MANUFACTURING FROM INDIA

Apart from part/component sourcing, India is also catching up as destination for contract manufacturing for medical devices. Following are the advantages of Indian manufacturing offers:

  • Significant cost savings (upto 1/5th)* can be achieved at each stage of Product Life Cycle starting from development to engineering, to manufacturing. *AYMING internal analysis. 
  • Availability of English speaking skilled people/engineers
  • Easy availability and low cost of basic raw materials like plastics, rubber, steel et al. 
  • Compared to other LCC countries India’s has better record for protecting intellectual property rights. India provides protection to Intellectual Property Rights in accordance with its obligations under the TRIPS Agreement of the WTO.
  • The suppliers understand GMP (good manufacturing practices) and comply with international standards such as ISO 9000-2003, ISO 13485, US FDA & Japan MITI certifications. 

EXAMPLES OF “LOW COST” GLOBAL QUALITY PRODUCTS ARE DEVELPOED IN INDIA BY GLOBAL AND LOCAL MEDICAL TECHNOLOGICAL COMPANIES: 

International players have set up centers to focus on medical technology innovation for emerging markets in general, and India in particular. Examples include GE’s John F Welch Technology Centre in Bangalore, Stryker Corporation’s Global R&D Centre in Gurgaon, Philips Innovation Campus in Bangalore and Johnson & Johnson’s R&D Centre for Medical Devices in Mumbai. And many of the global players who have R&D and manufacturing facilities in India are now benefitting from these lower costs. Some concrete examples are as below:

  • GE’s Mac series, an ultra-portable electrocardiogram (ECG) machine was conceptualized, designed and manufactured in India.
  • Philip Healthcare is using its recent acquisitions in India to develop and launch a low cost devices. Their Cath Lab equipment designed and manufactured in India is selling well globally. 
  • The Sushrut Adler Group (now acquired by Smith & Nephew plc (LSE: SN, NYSE: SNN) has developed an external fixator.  
  • Johnson and Johnson has successfully developed  low cost knee implant as well as a reusable stapler for use in surgeries at price points, which are suitable for the emerging countries globally.

Few examples of low cost successful innovation, in Medical Devices, by local Indian companies:

  • Bhabha Atomic Research Center scientists, who developed a credit card-sized Tele-ECG machine that can transmit an ECG over mobile phones to save lives and it is a low-cost, affordable solution, which can reach remote corners of India.
  • Transasia Biomedicals has developed in-vitro diagnostic equipment through its R&D base in Mumbai. 
  • Indian company MediVed  has developed  Pacemaker at a cost much  below the comparable pacemakers produced by international companies
  • Bigtec Labs has developed MicroPCR  which is a miniaturized, no-frills and portable version of the bulky PCR (polymerase chain reaction) machine costs  fraction compared to a conventional PCR’s 
  • Perfint Healthcare has developed PIGA-CT which uses robotics to make image-guided, soft-tissue biopsies simpler, safer and more accurate machine. It is less expensive than other imported alternatives— such as fluoroscopes - which are double the cost
  • Skanray has developed X-ray imaging systems. This high-frequency digital X-rays with radiation leakage control which costs a fraction of the imported equipment.

GROWTH DRIVERS AND KEY CHALLENGES (In India)

GROWTH DRIVERS

  • Increase in the Healthcare Expenditure 
  • Improvement of overall health status
  • Increasing of Medical Tourists
  • Increasing of medical infrastructures like hospitals, specialized diagnostic centers, laboratories
  • Economic growth leading to higher disposable incomes 
  • Increasing lifestyle diseases 
  • Increased Penetration of Health Insurance 
  • Emergence of new models of healthcare delivery 

KEY CHALLENGES

  • Dependency on imports
  • Accessibility (poor infrastructure)
  • Affordability is low 
  • Low Awareness ( huge gap in Urban and Rural India) 
  • Nascent Regulatory Environment 
  • Low investment in R&D   
  • No Distinct Status of the Industry 
  • High Capital requirement