Vaccination will provide a boost to the Med-Tech Sector, says Rajiv Nath, AiMED
Healthcare Executive interviews Rajiv Nath, Forum Coordinator, Association of Indian Medical Device Industry (AiMeD) about the impact of COVID-19 on the Med-Tech Industry.
How did COVID-19 reshape the med-tech industry? What is the current status of the sector?
The COVID-19 pandemic has exposed the med-tech industry's soft underbelly due to disruption of imports. The medical devices sector has over 80% import dependency and Rs 42000 Cr imports. The Government of India had to go for a lockdown due to the pandemic to prepare for manufacturing and healthcare delivery infrastructure. Medical Devices became a focal point for the country. "Make in India" initiative relied heavily on the Indian manufacturers to meet the rising demand for essential healthcare equipment for the country, pushing the Indian medical device sector to become self-reliant.
The Association of Indian Medical Device Industry relentlessly worked at the forefront to combat the crisis. The Central Govt.– DOP, DPIIT, NPPA and Invest India worked furiously to help address any manufacturing-related bottlenecks during the lockdown under Cabinet Secretary's coordination. The team worked with QCI to expedite finalisation of ICMED Plus Certification and Consultants Consortium to provide online training on Quality Management System Certification. The certification is for new entrepreneurs from automakers, garments, textile, auto parts industry, who had ventured into medical devices manufacturing to build capacity and capabilities to meet QCI's ICMED Certification. Regulatory Compliance would give them the confidence to seek Global Certification of CE and US FDA Compliance for enabling Global Competitiveness.
While entrepreneurs stepped forward to manufacture COVID-related medical devices, the government came out with a Production Linked Incentive (PLI) scheme to accelerate investments in 4 priority high technology medical devices and a scheme to support 4 Med-tech Parks in various states. PLI is based on specific criteria to be met by the state government of these parks.
The Software Technology Parks of India (STPI) soft-launched Med-Tech - A Center of Excellence in Lucknow to promote research and startups in medical electronics and health informatics. The project will be spread over a built-up area of 18,000 sq ft. The centre will nurture 50 startups over five years. It will stimulate R&D in medical electronics and health informatics and facilitate an entrepreneurial ecosystem. The Medtech software park is reportedly aiming for Rs. 10,000 crore market creations.
With COVID-19 many hospitals were forced to scale up its critical infrastructure, didn't it push up demand for med-tech?
COVID-19 has put the Med-tech industry at centre stage with unprecedented demand for COVID-related diagnostic tests, personal protective equipment (PPE), ventilators, and other critical medical supplies.
The COVID situation has revolutionised the Indian medical system's digital evolution and healthcare facilities. There are also massive opportunities for the healthcare sector in AI-based diagnostics and remote healthcare management. India has shown its rapid product development capability during the COVID-19 pandemic and has a stronghold in the IT domain. We can build sophisticated software products in the healthcare domain.
The in-vitro diagnostics (IVD) is recorded to mark a year on year growth of 30% in 2020, which will be double the market rate in average ten years. The size of the IVD industry in the year 2019 was Rs 7500 crore which was slated to grow at a CAGR of about 15% before the COVID crisis.
Has COVID19 pushed innovation into the industry?
COVID-19 crisis has shown that the Indian medical devices sector can rise to the challenge. When imports got disrupted, specific devices detailed with quantified production shortages and a focused Inter-Ministry Group coordinating with domestic manufacturers via AiMeD had addressed production bottlenecks and challenges. Not only capacity got utilised but also ramped up rapidly. Innovative manufacturing processes and material and specs were encouraged by DBT, DST, Birac, IKP and Venture Centre, and the IITs for ventilators, masks, PPE kits, oxygen administration etc.
Indian Med-tech industry is gaining traction for bringing unique propositions to address some of the healthcare system's challenges during the pandemic.
Would vaccination provide a boost for the sector?
COVID-19 and now the vaccine will definitely boost the domestic med-tech manufacturing industry and even the national economy. The impact will be felt beyond drug delivery syringes & needles or waste disposal medical accessories. Once people get vaccinated, they will overcome the fear of accessing standard preventive healthcare and clinical services or elective surgeries that are currently being avoided, leading to suppressed demand in many product lines. The pandemic has allowed India's med-tech firms to expand. India has shown its capability of rapid product development during the COVID-19 pandemic.
What are the significant challenges for the sector?
The key challenges faced by the Indian medical device industry at the onset of COVID pandemic include supply chain issues, operational challenges, infrastructure-related issues, policy challenges, serum sample availability related challenges and limited indigenous capacities as against the requirements to effectively address the massive upsurge in unprecedented demand during the pandemic for specific medical devices.
Once the entrepreneurs added manufacturing capacity to match and exceed market demand, they were challenged by falling prices below remunerative levels, completion from zero-duty imports, and pre-owned second-hand medical equipment. The new entrepreneurs are being challenged by the Drugs Act's complexities and international regulatory approvals and certificates needed before they can enter many of the export markets.
The ethical manufacturers are challenged to compete with imports like digital thermometers or oxymeters that do not carry MRP or have an artificially jacked up MRP going up to 10-20 times the import landed prices to induce hospitals and retailers to push their brand.
The 85% import-dependent medical devices industry is finally having the needed focus and interest taken by the Govt. of India to make medical devices in India a rewarding experience. The PLI scheme by DOP is designed to attract investors to select four high technology segments of medical devices where import dependence is very high. AiMeD is in discussions with states to avail DOP's scheme to set up medical devices parks and infrastructure and strengthen existing clusters.
The medical device industry seeks flexibility in labour laws and tax incentives. Like Andhra Pradesh Medtech Zone (AMTZ), many exclusive medical device parks were required to be developed and supported, which will serve as medical device manufacturing hubs for the country.
The penal system in the Drugs Act is a disincentive for med-tech investors. The Act is not appropriate for innovative engineering products like medical electronics. Multiple new manufacturers could not have made ventilators in a matter of 3-4 weeks, had the Drugs Act already been applicable on ventilators. At the same time, consumers do need access to high-quality PPEs and ventilators. An appropriate legal framework envisaged by the NITI Aayog is awaited as a medical devices law that would de-criminalise most oversights and regulatory lapses and risk-proportionate penalties. The law will encourage new entrants to venture into medical devices.
The med-tech industry is also being affected by the dramatic drop in elective medical procedures, many of which are being postponed or cancelled so that hospitals can focus resources on treating COVID-19 patients. Another concern is when the recovery begins; it could be accompanied by a sharp resurgence of demand for both elective and delayed essential procedures, straining business models and financial resilience.