On February 2, 2017, the government notified the new Medical Devices Rules, 2017, to reduce dependence on imported medical technology and boost to domestic manufacturing. India would require 600,000 to 700,000 additional beds over the next five to six years, indicative of an investment opportunity of around $25-30 billion.
Imports of medical equipment are rapidly rising in India. India imports nearly 80% of its medical devices and barriers to entry are low compared to other industries, despite a 4% additive import tax placed on most categories of devices since 2007. India remains highly dependent on imports for many types of medical devices, particularly higher-end products that include cancer diagnostics, medical imaging, ultrasonic scans, and PCR technologies.
The Indian hospitals are building high-end infrastructure to increase medical tourism in India. As per industry reports, the medical tourism market is expected to expand at a CAGR of 27% to reach $6 billion in 2018.
Midmark (India), a provider of medical, dental and veterinary equipment and solutions recently set up its first experience centre in Kolkata. This is the company’s first “state-of-the-art” experience centre in the eastern part of the country. The display centre will showcase a “Barrier Free” OPD room, advance hospital beds, and allied medical furniture. The company operates in four main business areas, namely, medical furniture (including hospitals beds and OPD spaces), diagnostics, homecare, and skill development. The company is planning to set up experience centres in 13 more strategic locations in north, west, and southern regions of India in the next two months. Midmark is working with few prominent hospitals in Kolkata like BM Birla, Fortis, Apollo, and Bellevue.
BE spoke to Sumeet Aggarwal, Managing Director, Midmark (India) Pvt. Ltd., about the scope of the healthcare industry in India and the challenges that are there in the sector
Q. How do you view the current status of the healthcare equipment industry in India? What is its growth prospect?
A. The Indian healthcare market has a huge potential to grow and be the manufacturing capital for the world. It can significantly impact the GDP of the country that will result in fulfilling the government’s vision of providing affordable and effective healthcare for all. India is beginning to look forward to being recognised as a global manufacturing destination. International companies are also setting up their manufacturing units in India. The last few years have seen an increase in domestic manufacturing of medical equipment. We would like to believe that our sector is growing at a faster annual rate of approximately 15% than the 10-12% growth seen in the healthcare sector.
The recently published National Health Policy explicitly captures the opportunities available for the industry. While the aim of providing two hospital beds per 1000 population is a herculean task, India has embarked on this journey. Banking on the available opportunity, we at Midmark are broadening our offering to include products and services that touch various “points of care” including hospitals, clinics and home care. Our new orthotic rehabilitation support division is poised to grow manifold across India in the next year and we are also aiming for growth of various products like Pro-tilt (motorized bed with lateral tilt), Digital ECG, Midmark OPD furniture and examination tables and casework. We expect Midmark India to maintain its leadership position in India.
Q. What are the major government policies that you think will benefit the healthcare equipment industry? Inthis regard, what is your view about the Budget 2017-18?
A. India’s current overall ranking at ease of doing business by the World Bank is 130th. For starting a business, we are ranked at the155th position. We need to initiate reforms and policies keeping the global business environment as the benchmark. Having said this, we are placing our trust on the new government to introduce policies that will benefit healthcare as well as other industries in the country. Government announcement of incremental spend of up to 2% of GDP for healthcare in the National Health Policy speaks volumes about their intention. This is a good environment for the equipment industry to flourish and reach new heights under the “Make in India” campaign.
The Budget of 2017-18 shows an increase of 23% in the allocation for healthcare as compared to the previous financial year. We are waiting to see some results in the decision to convert lakhs of sub-centres into health and wellness centres. We are in the era of epidemiologic transition when non-communicable diseases are becoming more common, even in the vast rural hinterland of the country. With the impending roll-out of the Goods and Services Tax (GST), the fiscal situation is expected to stabilize over the coming few years.
Q. What key challenges face the sector?
A. Like any other industry, we have a very nascent regulatory environment. We lack the standardised regulatory process, which results in ambiguity. We are in dire need of quality benchmarks at par with global standards. Our high dependency on imports and unfavourable duty structure restricts our ability to import raw materials and compete with foreign players. We feel that the government should incentivise Indian manufacturers by providing tax breaks or soft loans/grants for expansion or upgradation of manufacturing facilities.