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Medical device industry in India marred by import-export anomaly: Study
Marred by adverse regulatory policies, India’s $3.5 billion worth medical device industry is facing severe challenges of inadequate quality standards coupled with huge reliance on imports, time delays and other related hassles resulting in hindrance for new product development thereby making the business non-viable and non-lucrative for the industry, according to a recent ASSOCHAM study.
“Unfavourable duty structure for imports and exports is another significant impediment in the growth of domestic medical devices’ industry as higher import duties for raw materials than finished goods has established an ‘import-export anomaly’ whereby devices manufactured in India become expensive owing to high raw material costs making them uncompetitive against low priced Chinese goods,” noted a study titled ‘Access to Healthcare: Indian Perspective,’ released by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).

“Besides, unlike China, our country does not provide any incentive on setting up medical device production bases to encourage medical device manufacturing, as such significant steps to overcome these anomalies are imperative to boost the domestic medical device industry thereby reducing our high dependence on exports,” said D.S. Rawat, secretary general of ASSOCHAM while releasing the findings of the chamber’s study.

“There is an urgent need for a single window clearance system to spur growth in new product development as the limitation of medical device falling under preview of the Drugs and Cosmetics Act, 1940 has been the major deterrent in the medical devices’ sector growth,” said Mr Rawat.

“Low research and development (R&D) spends, lack of innovation promotion including low medical device funding from Department of Science and Technology/Department of Biotechnology, inadequate quality standards and others are significant challenges faced by the industry.”

If the aforesaid challenges are addressed effectively and efficiently, the medical device industry in India is expected to touch $5 billion mark thereby clocking a compounded annual growth rate (CAGR) of about 15 per cent, further noted the ASSOCHAM study.

“The Indian medical device industry is highly fragmented with close to 1000 domestic firms primarily manufacturing low technology products,” the study added. “However, of late companies have expanded operations to produce cost-effective, medium-end medical devices thereby signaling a paradigm shift in the industry players’ approach as more and more Indian companies are becoming technology intensive thereby producing high quality and cost-effective medical devices.”

The present landscape in Indian medical device industry is primarily import driven with imports contributing close to 75 per cent of the market, noted the ASSOCHAM study. “The domestic market caters to low-value disposables and supplies space, whereas importers dominate the costly and high-end medical equipments with extensive service networks.”

Owing to huge cost pressures and competition from China and Asia-Pacific countries, Indian companies have started transitioning up the value chain into the ‘medium technology’ segment, highlighted the ASSOCHAM study.

“This augurs well for medical devices’ future in India as this would imply technology innovation and high margin product portfolio and the ‘high value’ space would still be governed by MNCs and these products would be primarily imported into India.”

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