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Photo: Bloomberg
Photo: Bloomberg

Lack of independent regulatory system stifling growth in medical devices: AdvaMed

The medical devices sector in India is highly import-dependent and fragmented with limited indigenous manufacturing

Hyderabad: The Advanced Medical Technology Association (AdvaMed), an international lobby group, says the lack of an independent regulatory system and price controls have impeded the growth of the medical devices industry in India.

Medical devices include adhesive bandages, drug delivery devices, diagnostics, implants, stair-walking wheelchairs, robotic surgical systems and magnetic resonance imaging devices.

The sector is expected to grow to around $7.8 billion by 2016, at a compounded annual growth rate of 15.5%, according to consulting firm Grant Thornton.

With 700 medical device makers, India’s medical device market is currently the fourth-largest in Asia after Japan, China and South Korea and ranks among the world’s top 20.

The medical devices sector in India is highly import-dependent and fragmented with limited indigenous manufacturing; imports constitute over 75% of the estimated market valued at 60,000-70,000 crore.

The government has made medical devices a priority area under ‘Make in India’, allowing foreign direct investment (FDI) up to 100% through the automatic route.

The average expenditure on medical technology is less than $3.33 per capita, one of the lowest in the world.

Though the under-penetration is a compelling market opportunity for medical device manufacturers, but regulatory industry complains that lack of independent regulatory pathway and price controls have stifled the industry growth in India.

“Medical devices are regulated as pharmaceuticals in India, making it somewhat unpredictable and less transparent," said Abby Pratt, vice president, global strategy and analysis at AdvaMed, in a telephone interview from the US.

Not having separate regulation appropriate for medical devices is a stumbling block companies to design, develop, test and launch a product in India, Pratt said.

These devices are currently regulated as “drugs" under the Drugs and Cosmetics Act of 1940.

Medical devices are very different from pharmaceuticals with a short product life cycle of 18 months to two years, compared to drugs, and rely on high degree of innovation, Pratt said.

The government is considering important modifications to the country’s Drugs & Cosmetics (Amendment) Bill 2013, which is before the Parliamentary Standing Committee.

Pratt also pointed out that price controls is also crippling innovation.

“The reduction of price will not impact the end user because it does not make much difference on overall procedure cost," Pratt said.

“Medical devices are a small proportion, only as much as 7%, of the overall healthcare expenditure in India, while the major burden of the expenditure comes from diagnosis, hospital stay, drugs and other related heads like travel and stay," Pratt said.

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