National Institute of Pharmaceutical Education and Research (NIPER) latest analysis found that fast growing Indian medical equipments industry should increasingly focus on setting up partnerships with multinational companies (MNCs) and add thrust to the research and development (R&D) activities to provide modern equipments at low cost, in order to win the market and reduce dependence on imports.
The Indian medical equipments market is projected at INR57.5 with a growth rate of 23% expected in the coming years. The market for medical supplies and disposables is dominated by the domestic manufacturers. The diagnostic equipment market is reported at INR20 billion, surgical equipment supplies and imaging services at INR13 billion each and electronic treatment equipments at INR10-20 billion, according to a latest sector analysis conducted by NIPER. The total medical equipments supplies and services market is estimated at INR74.55 billion with a growth of more than 4% from previous year, according to the analysis.
However, around 50% of the market needs are satisfied with imports, mostly of specialised products, from countries like US, Japan, UK, France, Finland and Germany whereas the Indian companies are catering low cost common medical equipments to the Indian healthcare market, comments the NIPER.
Currently, high value medical equipments products like cancer diagnostic, medical imaging, ultrasonic scanning, plastic surgery equipment and polymerase chain reaction (PCR) technologies are mostly imported in India. The analysis based on the level of technology involved in the manufacture of equipments indicates that the import of high-end technology products have increased during 2001-06.
For example, the import of LCDs, laser, other optical appliances and instruments has increased at 34.36%, instruments and appliances used in medical, surgical, dental sciences including electro-medical apparatus and sight-testing instruments at 15.65%, orthopaedic appliances and artificial parts of body at 23.23%, radiotherapy instruments, X-ray generators and screens at 26.81%, during the period.
Study explains that one possible reason for higher dependence on imports can be traced back to low level of R&D spending by Indian medical equipments industry. Moreover, import duty exemption for equipments and technologies that are not available in India in turn encourages the import rather than investing in domestic R&D and manufacturing; also, domestic manufacturers cannot offer their products at a competitive price against that of the imported products that have the benefit of tax exemption.
Having a partnership with abroad companies will give an edge to the Indian companies in terms of huge product basket, advanced products and technologies and technical expertise, which will help the domestic players in turn, to widen their business scope. Partnerships like Wipro-GE and R&D partnerships like Piramal Healthcare-Morvus Technology Ltd are some of the examples of successful partnership models for Indian medical equipments companies.
Additionally, the level of R&D spending should also be addressed by the Indian firms. According to the study, the level of R&D spending in the medical device and diagnostics industry, as a percentage of its sales, has been consistently increasing from 5.4% in 1990 to 12.9% in post 2000. While western companies are ready to conduct their R&D in India in collaboration with local partners, the Indian industry is seldom investing in R&D, it shows.
The industry, which is planning to bring in low cost products affordable to the end users, has to raise their R&D efforts for cost effective techniques of developing products.
Reducing the cost of medical equipments or manufacturing low cost equipments can be accomplished through intensive and continuous R&D efforts, high levels of process automation in the manufacturing facilities, striking manufacturing partnerships with foreign companies to manufacture them locally so as to cut logistics and other import-related duties and taxes, lowering product registration fee and other documentation costs.
The low levels of health insurance coverage, recent strict regulatory amendment in the country, high import duties which tends to raise the cost of medical equipments, poor medical infrastructure facilities and low level of awareness about the latest technologies in rural parts of the country are the challenges in the growth of medical equipments segment, according to the study.