THE MEDICAL MEDLEY
A keen look at the Medical Devices industry in India, with a light shed on the recent changes and challenges.
The Medical Devices industry today is a monstrous 4.9 Billion-Dollar industry in India. Over the recent years, the industry has grown at a steady 17% CAGR with a higher growth rate predicted in the near future. This has been made possible thanks to the regulations that have been put into action by the Government to aid the sector as a whole. Apart from the regulations, the sector is seeing its fair share of success due to other factors like the ageing population of the country, active Government provisions being made to provide healthcare at more reasonable rates and an increased rate of lifestyle-related diseases being diagnosed every day.
Seeing as how the opportunities in the Indian industry of medical devices are rising, many international players are making their way into the country which are offering top-of-the-line products and services. This prospect has been made particularly attractive by the Government after allowing 100% FDI in the field. Most of the FDI in this industry is attracted by consumables, medical equipment and instruments. Some of the key players who are making the most of these opportunities are GE Healthcare, Philips Healthcare and the Danaher Corporation.
As in any industry, the medical devices industry has its stars and washouts, considering the volume of products sold across the nation. Certain verticals perform well, while others may lag behind. The industry is no stranger to its challenges and shortcomings as the reigning philosophy applies to it, just as any other industry- Demand and obtainability together rule the market.
The demand-wise performance of products can be broken down into four segments:
The top performers, which constitute of Imaging and Diagnosis equipment. These comprise of Ultrasound machines, MRI machines, CT scanners and dentistry equipment.
The runners up, which constitute of high-volume consumables like needles, catheters, syringes and other products from the medical surplus segment.
The slow-moving products, constituting of medical implants like dental fixtures, hip and knee replacement products and joints.
The low volume products constitute of patient aids, like hearing aids and pacemakers.
The industry is also no exception to strengths and weaknesses that govern manufacture and distribution. In India, certain states perform better in terms of a certain product as compared to other states. This is vastly dependent on the political, and sometimes, Geographical factors of the states. For instance, Medical IT and Cardiac Stents have been Karnataka’s protuberant strengths for decades, owing to the availability of highly skilled professionals in technology. Tamil Nadu leads critical life support segment due to the same reason. Low-end consumables and dental equipment, on the other hand, require cost-effective labour, which are Haryana’s prominent strengths.
In the recent times though, the industry has seen its share of trials. Post the implementation of GST, the taxes on many healthcare devices has gone up. The costs of several vital machines like Dialysis Machines, optical correction equipment and orthopaedic support devices have increased. This surge in prices is currently borne by the healthcare providers, but this comes at the cost of several other developments. For instance, the increased cost limits their ability to expand into additional geographies, which may result in insufficient medical treatments being made available in rural areas and other locations that are hard to reach. One may even expect the cost to the patient being higher in the future, to make up for the rising cost in medical equipment and consumables. But on the positive side, the implementation of GST may see higher profitability in the medical field and may encourage medical tourism with higher quality of service. The down side would be the impact of this move affecting the common man’s budget.
The medical devices industry is going through some good changes for sure. But the shadow of economic challenges remains a concern. Both, the positive and negative effects are significant and will decide the fate of the industry in the future.
Which side are you looking at?