Draft Copy

Draft Copy

May 08, 2009

MEDICAL DEVICES: SECTOR ANALYSIS

Submitted To

Department of PharmaceuticalsMinistry of Chemicals and Fertilizers

Government of India, New Delhi

By

NIPER - AHMEDABADNational Institute of Pharmaceutical Education and Research (NIPER),C/o B. V. Patel Pharmaceutical Education and Research Development

(PERD) Centre, Sarkhej-Gandhinagar Highway, Thaltej, Ahmedabad 380054 Gujarat, India

Phone: +91 79 27439375, 27416409, Fax: +91 79 27450449Website: www.perdcentre.com

http://www.perdcentre.com/

Draft Copy

Table of Content

EXECUTIVE SUMMARY........................................................................................................3

1.0 BACKGROUND.............................................................................................................6

1.1 Healthcare Industry.................................................................................................................6

1.2 Development and Current Status...........................................................................................6

2.0 AVENUES.......................................................................................................................7

2.1 Biomaterials..............................................................................................................................7

2.2 Cardiovascular and Diabetes..................................................................................................8

2.3 Orthopedics..............................................................................................................................9

2.4 Opthalmology.........................................................................................................................10

2.5 Oncology.................................................................................................................................10

2.6 Neurology................................................................................................................................11

2.7 Diagnostics and Imaging.......................................................................................................11

2.8 Miscellaneous.........................................................................................................................11

3.0 GLOBAL INDUSTRY SCENARIO...........................................................................12

3.1 Market Size.............................................................................................................................12

3.2 Segmentation..........................................................................................................................13

3.3 Major players.........................................................................................................................15

4.0 INDIAN INDUSTRY SCENARIO..............................................................................15

4.1 Market Size.............................................................................................................................16

4.2 Segmentation..........................................................................................................................17

4.3 Market Trends.......................................................................................................................19

4.4 Major Players in India..........................................................................................................22

4.5 Issues and Challenges............................................................................................................23

4.6 Critical Success Factors.........................................................................................................27

5.0 RECENT INDUSTRY TRENDS.................................................................................31

5.1 Artificial Limbs Market Set to Grow...................................................................................31

5.2 Italy Keen to Invest in Bio-Medical Sector..........................................................................31

5.3 Andhra Pradesh to Buy Forty Lakh Disposable Syringes.................................................31

5.4 Vascular Concepts Plans to Enter European Market........................................................31

5.5 New Products..........................................................................................................................32

5.6 Company Developments........................................................................................................32

NIPER-Ahmedabad Page 2

Draft Copy

6.0 REGULATORY ENVIRONMENT............................................................................36

6.1 Global Perspective.................................................................................................................36

6.2 Indian Outlook.......................................................................................................................36

7.0 SWOT ANALYSIS OF MEDICAL DEVICE INDUSTRY......................................38

7.1 Strengths.................................................................................................................................38

7.2 Weaknesses.............................................................................................................................38

7.3 Opportunities.........................................................................................................................38

7.4 Threats....................................................................................................................................39

8.0 GROWTH DRIVERS...................................................................................................39

8.1 Booming Economy.................................................................................................................39

8.2 Increasing Healthcare Expenditure.....................................................................................39

8.3 Changing Demographic Profile............................................................................................40

8.4 Increasing Incidence of Lifestyle Diseases...........................................................................40

8.5 Increasing Number of Medical Tourists..............................................................................41

8.6 Proliferation of Hospitals......................................................................................................42

8.7 Government Programmes and Support..............................................................................43

8.8 Outsourcing/Relocating of Medical Devices Manufacturing by Western Companies....44

8.9 User Friendly and Handy Devices........................................................................................45

8.10 Telemedicine...........................................................................................................................45

8.11 Industry Forecast...................................................................................................................45

9.0 FUTURE DIRECTION................................................................................................46

10.0 PHARMA CORRELATION.......................................................................................47

10.1 Combination Products: The Future of Medical Devices....................................................47

11.0 PRICING ISSUES........................................................................................................51

12.0 FEW PREMIER INSTITUTES / ORGANIZATIONS IN INDIA WITH RELEVANT EXPERTISE IN THE AREA...............................................................52

12.1 Sree Chitra Tirunal Institute for Medical Sciences and Technology, Chennai...............52

12.2 Indian Institute of Technology, Mumbai.............................................................................53

12.3 School of Medical Science and Technology, IIT, Kharagpur............................................53

12.4 Other Institutes and Facilities..............................................................................................54

13.0 A HELPING HAND: NIPER AHMEDABAD...........................................................54

13.1 Current Status of Technology and HR Gaps......................................................................54

13.2 Recommendations for NIPER, Ahmedabad.......................................................................55

ANNEXURE


Draft Copy

EXECUTIVE SUMMARY

Medical devices have extended the ability of physicians to diagnose and treat diseases,

making great contributions to health and quality of life and without any doubt, these

technologies have changed the mainstream practice of medicine. These devices include not

only diagnostic technology but also analytical techniques using high-resolution

chromatography, polymerase chain reaction (PCR), and monoclonal antibodies, providing

physicians with new, accurate, and rapid information. On the therapeutic side, devices save

lives and improve quality of life. Dialysis therapy extends lives for end-stage renal disease

patients, orthopedic implants enable patients to walk again, and minimally invasive

technologies allow surgeries that are safer, with less pain and trauma, requiring significantly

shorter hospital stays.

In light of its widespread applicability, the medical device market is experiencing explosive

growth. Currently valued at USD 336 billion, market growth will continue to accelerate as

demographics and market drivers increase their pressure for new and innovative product

offerings at affordable pricing. Market Drivers in the current global scenario includes the

aging population, advancement in technology and worldwide market penetration.

The medical device market is consolidating to respond to market needs. Consolidation will

promote accelerated time to market, greater returns on invested capital, and transformational

innovation while maintaining high quality and patient efficacy. The future is hence extremely

bright for this sector.

Indian medical equipment and supplies market is estimated for USD 1581 million in 2007-

2008. The market for low value medical supplies and disposables is dominated by the

domestic manufacturers, whereas importers dominate the costly and high end medical

equipment.

Historically, most Indians had very limited access to any type of modern medical service.

Today, however, the situation is much improved, for several reasons. First, there is a growing

awareness about health issues within India and an increasing demand for quality care at

affordable prices.

Imports constitute over 50% of the market. Most imported products have high gross margins;

however, the market is becoming increasingly competitive due to low entry barriers (for

MNCs), an increasing number of players and an expanding consumer base.


Draft Copy

Some of the issues and constraints that are found to cripple the industry are India’s

dependency on imports for supply of medical devices, strict industry regulatory environment,

low level of healthcare insurance and low levels of healthcare facilities and awareness

especially in rural areas.

The local market is still dominated by either imports or large MNCs whereas the local

manufacturers act as only small players in this market. The primary challenges facing these

local manufacturers include poor infrastructure for R&D and testing facility for efficacy and

safety. Further, there is a clear evidence of lack in trained personnel for serving in this

industry with sufficient technical as well as pharmacy-based knowledge, which is integral for

such a multidisciplinary sector.

Hence, measures to promote such facilities for not only testing and R&D but also for training

of professionals to serve in this segment, is the need of the hour to bring up this Pharma-

Allied Sector at par with the Pharma Sector in the coming years.

Recommendations for NIPER: NIPER(s) could assist the Medical Device Sector in the

following three ways:

Academic centres:

Meet the Technological and Regulatory demands of MD industry.

Introduction of relevant MD related courses (including market and business analysis,

basic engineering, electronics, material sciences and biomaterials, testing and

evaluation, etc.).

Interdisciplinary and combinatory research projects - to work in interdisciplinary

groups

Testing facility for devices:

Establishing a testing facility

Testing models for efficacy and quality control studies

Pre-clinical and clinical studies for medical devices:

Pre-clinical/clinical studies for MD (class 2B and III) as per regulatory guidelines.

For training the personnel and providing necessary facility for the SMEs.


Draft Copy

1.0 BACKGROUND

A medical device is defined as any healthcare product that achieves its primary intended

purpose not through chemical action or by being metabolized. Medical devices include

electro-medical equipment and related software, furniture, supplies and consumables,

orthopedic appliances, prosthetics and diagnostic kits, reagents, and equipment.

Medical devices and equipment industry plays a crucial role in a healthcare system. These

devices and equipments are used for diagnosis, therapy and patient monitoring. There has

been a significant growth in pharmaceutical and healthcare sectors in the recent years. In

accordance, therefore, the medical devices and equipments are set for a vibrant growth in

near future.

1.1 Healthcare Industry

Healthcare industry is one of the largest users of technology with its growing trends. The

primary arenas of application of technology in healthcare includes,

Micro-processor based implantable in patients

CPU-driven technology supported by artificial intelligence

Robotics in OTs

Robotics in Path-labs / Research

Laser technology in surgery

Instrumentation in medical and surgical practices

IT tools for net-working examination, diagnostics, treatment rooms and OTs

IT Tools along with artificial intelligence and microprocessor technologies for

equipment maintenance and trouble shooting

IT tools for generation of disease specific data

Biotechnology, Genomics, Molecular Biology and Stem Cell Research

1.2 Development and Current Status

The global medical devices market is estimated at USD 336 billion in 2008 which has grown

at a CAGR of 4.5% post 2000. Globally, medical equipments which include ophthalmic,

dental, imaging and other medical equipment account for about 42% of the total market

followed by Medical disposables (40%) and in-vitro (IV) diagnostics (12%) of the global

market.

Indian medical equipment and supplies market is estimated for USD 1581 million in 2007-

2008 with a growth of 4.7% over previous year. The market for medical supplies and


Draft Copy

disposables is dominated by the domestic manufacturers, whereas importers dominate the

costly and high end medical equipment.

The medical device market is about 50 percent of the world pharmaceutical market in terms

of relative size, but is also growing faster than its drug counterpart. It is dominated by U.S.

companies earning over 72 percent of the revenue. MX: Business Strategies for Medical

Technology Executives reported that market reached the size of USD 300 and USD 336

billion in year 2007 and 2008 respectively.

1.2.1 Medical equipments segment

The medical equipment market is presently pegged at Rs.1500 crore with a growth rate of 10-

15 % per annum. Surgeons, gynaecologists, urologists, and doctors are gradually adopting

techniques, which were once a specialty of certain physicians (like radiologists) only.

Increased simplicity of use has resulted in short-term training before commencement and

customer-user friendly operations. These simplistic operations have opened avenues for them

to increase revenues at a faster rate than through conventional business models.

The major promising sub-sectors include:

a) Medical Imaging Equipment

b) Cardiology Equipment

c) Laboratory Instruments/Supplies

d) Cancer Diagnostics and Treatment Equipment

2.0 AVENUES

2.1 Biomaterials

2.2.1 Degradable polymers

Polymers like poly (lactides), poly (glycolides) and their copolymers have excellent

properties and have thus been developed for the applications such as wound closure,

osteosynthesis, nets for support while wound is healing, degradable bandages and surgical

cord for reinforcement, hollow fibres for treatment of damaged nerves as well as prostheses

for anastomoses.

For example, a biodegradable intravascular stent prototype is moulded from a blend of

polylactide and trimethylene carbonate. Furthermore, these polymers are being considered for

the development of products for the treatment of paradontal diseases, fillers for tooth

extraction, artificial vessels and drug carrier systems.


Draft Copy

Besides eliminating the need for a second removal surgery, the biodegradation may offer

other advantages. For example, a fractured bone that has been fixated with a rigid, non-

biodegradable stainless implant has a tendency for refracture upon removal of the implant

while, an implant prepared from biodegradable polymer can be engineered to degrade at a

rate that will slowly transfer load to the healing bone.

Advances in polymers for biotechnology are numerous. Now polymers have gone to the

extent that the difference between synthetic and biological polymers has reduced to a great

extent. Genetic engineering methods are being used to produce "artificial" proteins with a

range of designed structures and functions. Traditional polymer synthesis techniques are

being coupled with biochemistry to produce materials that interact and control biological

systems and cells. Various new fields have emerged that club the role of polymer chemistry

with biotechnology.

Environmentally responsive polymers for biotechnological applications

Biological production of polymers (e.g., polystyrene, polyesters)

Biopolymers and protein polymers

Polymers modified with biological -signals (e.g. adhesion peptides growth factors)

Bioactive, biomimetic, and bioinspired polymers

Supramolecular assemblies in biotechnology

Polymers in analytical biotechnology

Polymers scaffolds for tissue engineering

Biopolymer surfactants

Polymer and surface modification of tissue culture

Cell polymer interactions

Polymers for drug delivery and artificial organs

2.2 Cardiovascular and Diabetes

2.2.1 Cardiovascular device sector includes

Pacemakers

Defibrillators

Drug-eluting stents

Catheters

Valves

Grafts

Artificial hearts


Draft Copy

Angioplasty

Guidewires

Ventrical support systems

Echocardiography

Furthermore, latest research pertaining to artificial hearts brings hope to patients who are near

death from heart failure.

Artificial hearts work by pumping deoxygenated blood from the body to the lungs. The

device then pumps oxygenated blood through the body. The device newly approved by US

FDA, called AbioCor, made by Massachusetts-based Abiomed, uses an implanted hydraulic

pumping system to simulate a natural heart beat. But an alternative design, conceived by O.H.

"Bud" Frazier, a prominent heart surgeon and pioneer in the development of cardiac devices

at the Texas Heart Institute in Houston, pumps blood through the body continuously, rather

than with the periodic beat of the normal heart. Thus, research directed towards

cardiovascular aids seem to have a promising future.

2.2.2 Insulin metering devices

The various designs of insulin metering devices that are now available make diabetics more

independent and improve their quality of life. Using Opti Pen 2 developed by Hoechst

Marion Roussel the patients can inject the requisite amount of insulin into their bodies

themselves. The metering device administers exactly the stipulated amount of insulin,

releasing it on rotation. Acetal copolymers having good mechanical properties, good

mouldability and good slip properties are the best materials for such devices.

2.3 Orthopedics

2.3.1 Joint replacement

2.3.2 Fracture management

Plates

Nails

Dynamic Hip Screw

Screws

Hemi-Arthroplasty

2.3.3 Limb deformity correction

Paediatrics

Spine


http://www.orthoview.com/default/default/the-product.html#spine

http://www.orthoview.com/default/default/the-product.html#paediatrics

http://www.orthoview.com/default/default/the-product.html#limb

http://www.orthoview.com/default/default/the-product.html#frac

http://www.orthoview.com/default/default/the-product.html#template

Draft Copy

2.4 Opthalmology

Though several products are available for ophthalmic management, the Intra ocular lens

(IOL) is the product that attracts primary attention due to its maximum usage and

convenience in use. An intraocular lens (IOL) is an implanted lens in the eye, usually

replacing the existing crystalline lens because it has been clouded over by a cataract, or as a

form of refractive surgery to change the eye's optical power. It usually consists of a small

plastic lens with plastic side struts, called haptics, to hold the lens in place within the capsular

bag inside the eye. IOLs were traditionally made of an inflexible material (PMMA) though

this largely been superseded by the use of flexible materials. Most IOLs fitted today are fixed

monofocal lenses matched to distance vision. However, other types are available, such as

multifocal IOLs which provide the patient with multiple-focused vision at far and reading

distance, and adaptive IOLs which provide the patient with limited visual accommodation.

Insertion of an intraocular lens for the treatment of cataracts is the most commonly performed

eye surgical procedure.

Phacoemulsification cataract surgery is a procedure in which an ultrasonic device is used to

break up and then remove a cloudy lens, or cataract, from the eye to improve vision. The

insertion of an intraocular lens (IOL) usually immediately follows phacoemulsification.

Viscoelastics, also referred to as ophthalmic viscosurgical devices, or OVDs, are viscous

substances that makes phacoemulsification easier and safer. Once the first incision is made

into the eye, it has a tendency to collapse as the aqueous leaks out. The larger the incision, the

greater the propensity for the eye to collapse and the greater the risk to the patient. By

replacing the aqueous with a thicker viscoelastic, collapsing of the eye can be prevented.

At the end of surgery, it is important to thoroughly remove the viscoelastic from the eye.

Otherwise it can block the trabecular meshwork, and the patient will experience high IOP.

Use of a viscoelastic can make phacoemulsification easier for the surgeon as well as safer for

the patient. It is for this reason that is has become an integral part of surgeries.

2.5 Oncology

The field of oncology is greatly benefited by radiation technology in terms of diagnostics as

well as treatments. Several routinely used techniques along with newly defined procedures

increase patient safety as well as chances of survival.

Examples of recent developments in this field includes Radio Guided Neuro Surgery that will

benefit people suffering from brain tumour in which a gamma probe is used which localizes


Draft Copy

the tumour from the brain and is easy for the doctors to isolate the tumour as it sometimes

resembles the brain. Further, newer range of genetic diagnostic kits and reagents are also

being developed for diagnostic labs and medical research institutions across the country.

2.6 Neurology

Medical devices are becoming more important in the diagnosis and treatment of neurological

diseases. In the 1980s and 1990s, diagnostic technologies, in particular, computed

tomography and magnetic resonance imaging, improved the accuracy of neurological

diagnosis and helped to define new diseases. Now, medical devices are becoming an

important part of the treatment armamentarium for neurological diseases.

The most obvious examples are in the treatment of stroke. Coiling of aneurysms; angioplasty

and stenting of carotid, vertebral, and intracranial arteries; extraction of thrombus in patients

with acute stroke; and closure of patent foramen ovale are some prominent examples. Outside

the vessels, deep and surface brain stimulators have been used for a variety of conditions, and

neuroprostheses are also coming to the fore.

2.7 Diagnostics and Imaging

Techniques for diagnosis and imaging include Radiology, Ultrasound, CT, MRI, X-ray etc.

Medical Devices have advanced in the field of Cardiac imaging, CT Colongraphy, Digital X-

ray, Molecular Imaging, MRI, Musculoskeletal, Nuclear, Ultrasound, Women’s Imaging.

2.8 Miscellaneous

2.8.1 Medical disposables

Over the past three decades, the disposable medical market has undergone a variety of

changes including the types of devices produced, substrates selected, and sterilization

procedures employed. In the early 1970s, device manufacturers were utilizing materials such

as glass, rubber and metal to assemble syringes, surgical instruments, and other devices. Such

materials were typically assembled and fastened and /or machined or molded in the

appropriate configuration. In the 1980s, as medical technology advanced towards intricate

and high performance medical device designs, the need for engineering plastics became

apparent. During this same period, a shift to single use devices (due to advances in

contagious disease) forced design engineers to evaluate engineering plastics such as acrylic,

polycarbonate, and PVC.


Draft Copy

The following facts indicate the recent trends in the use of medical disposables:

Medical devices are becoming lighter, more portable and more user-friendly, with more

functionality.

A steady stream of new and innovative medical devices has been made possible by

advanced polymer research.

Advanced medical polymers are now capable of biological processes and can become a

functional part of living organisms.

A "Slight shift" from commodity thermoplastics has been predicted to engineering

resins, styrencis, thermosets, etc. Major non disposable markets include testing /

diagnostic equipment, surgical instrument and related equipment, prostheses / implants,

and dental / ophthalmics. Disposable products include syringes, lab ware, tubing, blood

bags, utensils, gloves, trays, and catheters.

Medical disposable products are used by practically all hospitals and private nursing homes

in the country, including diagnostic and pathological laboratories. In hospitals, disposables

are used, both in the ward as well as the OPD.

Some of the products being manufactured indigenously include fluid administration sets (I.V.

sets), I.V. cannulae, blood bags and products such as condoms and copper–T . Majority of the

low-end devices and disposables are manufactured by small-scale enterprises.

3.0 GLOBAL INDUSTRY SCENARIO

3.1 Market Size

The global medical devices market is estimated to be USD 330 billion in 2008 (Figure 1).

The market has grown at a compounded annual growth rate of (CAGR) of 4.5% post 2000.

New technological innovation in the treatment and diagnosis front; growing aging population

and shifting disease pattern, which needs long term medical care and diagnosis are some of

the major factors that drive the growth of global medical devices market.


Draft Copy

Figure 1: Global medical devices market size

US and Medical Device Market

US produces half of the world’s medical devices – USD 70 billion

Domestic Consumption = 40%

17 Biggest companies account for 65% of the total revenue

Total < 6000 medical device manufacturers

Nine of the top ten in the world are based in the US

Cardio vascular products form the single largest sector

Orthopedics - fastest growing

Spinal & Pain Management and Cosmetic & Elective surgical form the next

3.2 Segmentation

3.2.1 Segmentation by geography

Global medical devices market is classified in the following geographical markets -

a) North America (The US and Canada)

b) Europe (Germany, France, Italy, the UK, Spain, and the Netherlands)

c) Asia-Pacific (Japan, China, Japan, Singapore, India and Taiwan)

d) Rest of the World

North America, which includes the US and Canada accounts for 47% of the global medical

devices market (Figure 2). The US alone accounts for 45% of the total market. European

market, which includes Germany, France, Italy, the UK, Spain and The Netherlands,

accounts for 33% of the total market. Germany alone accounts for 13% of the total market.

Asia-Pacific market, which includes India, China, Japan, Singapore and Taiwan accounts


Draft Copy

for 17% of the total market. Japan alone accounts for about 10% of the total market. The rest

of the world, which includes Brazil and Russia accounts for 3% of the total market.

Figure 2: Segmentation of global medical devices market - By geography

3.2.2 Segmentation by application

Globally, medical equipment, which includes ophthalmic, dental, imaging and other medical

equipments account for about 42% of the total market. Among the medical equipment,

ophthalmic equipments account for 18% of the total market and the imaging and other

medical equipment account for 16% of the total market (Figure 3). Medical disposables

account for 40% of the total medical devices market followed by in-vitro (IV) diagnostics

accounting for 12% of the global market.

Figure 3: Segmentation of global medical devices market - By application


Draft Copy

3.3 Major players

Multinational manufacturers are consolidating in order to establish greater presence around

the world, and some of the largest medical device companies have a number of subsidiaries.

Examples include Johnson & Johnson (like Ethicon, DePuy, Cordis, J&J Medical, Critikon),

Boston Scientific (like SciMed, Microvasive, Schneider, EP Technologies) and Baxter (like

IV Systems, Edwards Division, Hyland Division, Clintec, Renal Therapy). Yet, many

countries lack access to high-quality devices and equipment that are appropriate for their

specific epidemiological needs. This is particularly true in developing countries, where health

technology assessments are rare and where few regulatory controls exist to prevent the

importation or use of sub-standard devices.

4.0 INDIAN INDUSTRY SCENARIO

Historically, most Indians had very limited access to any type of modern medical service.

Today, however, the situation is much improved, for several reasons. Firstly, there is a

growing awareness about health issues within India and an increasing demand for quality

care at affordable prices. Secondly, the government has made large investments in health

care, as part of a five-year-plan to provide better health-care facilities. And thirdly, a growing

middle class of approximately 200 million Indians are demanding more sophisticated medical

treatment, a demand largely answered by private institutions.

There are four types of Indian health-care facilities that use foreign medical equipment:

primary health centres and rural hospitals, government hospitals, private hospitals, and

teaching institutions. A majority of the Indian hospitals are located in major cities such as

New Delhi, Chennai, Mumbai, Kolkata, Hyderabad, and Bengaluru. Recently these have

spread beyond Metros to 2nd and 3rd tier cities like Lucknow, Ahmedabad, Indore, etc. which

have also developed superior private hospitals. Private hospitals outnumber state facilities by

two to one and purchase 40 to 50% of imported devices. Private hospitals tend to invest in

sophisticated foreign medical devices because the doctors there are mostly trained abroad,

particularly in Europe and the United States. India's Apollo Hospital in New Delhi, for

example, the world's fourth-largest hospital, is well stocked with high-technology medical

equipment from abroad. Indian doctors play an important role in purchasing medical devices

for hospitals and other health-care facilities, and their influence is growing. But their

demands for quality and sophistication in medical products are counterbalanced by another

key factor: price. Because most of the population cannot afford to pay for health care,

institutions in turn pay careful attention to costs in making their purchasing decisions.


Draft Copy

Public hospitals lack funds to upgrade their equipment and expand their services, while

domestic medical device manufacturers cannot produce high technology equipment essential

for such procedures. Consequently, the demand for high technology devices is met

predominantly by imports.

4.1 Market Size

The medical equipment industry plays a crucial role in healthcare system. These equipment

are used for diagnosis, therapy and patient monitoring. Apart from the pharmaceutical sector,

the medical devices and equipments are set for a vibrant growth. Medical equipment and

supplies market in India was estimated for USD 1581 million in 2007-08 with a growth of

4.6% over previous year (Figure 4). Market for medical supplies and disposables is

dominated by the domestic manufacturers, most of who are in unorganized market. Whereas

the high end medical equipment market is dominated by the MNCs. Though the demand of

these equipment is in double digit, the local production is only around 5% of the requirement

leading to increased imports.

4.1.1 INDIA – Facts and figures regarding the medical device market

The fastest growing Medical Devices market : Rs. 5750 crores

Growth Rate : 23% annually for next 5-6 yrs

4.1.2 Market segments

Diagnostic Equipment : Rs. 2000 crores

Surgical Equipment supplies : Rs. 1300 crores

Imaging : Rs. 1300 crores

Electronic treatment devices : Rs. 1000 crores

The medical devices market is showing a double-digit growth. In India, the growth of the

market is estimated to be between 10-15 percent. This is because of affordability by patients,

increased awareness on health care, improved hospital infrastructure and the increased

disease patterns. With steady growth in GNP, population numbers and standard of living,

India represents one of the most promising markets. The Indian market for medical

equipment and supplies is expected to reach USD 1.7 billion in 2010.

However, despite strong growth rates, the market remains disproportionately small, ranking

among the top 20 in the world, but with a very low per capita spending.


Draft Copy

Favourable factors for high quality medical devices are

Free market environment

A developed industry

Investment in health infrastructure

Firstly, rising income and health consciousness amongst the Indian population are driving

people to seek specialized care. The urban consuming class is expected to grow from 78

million in 2001 to 250 million in 2010. India’s increasingly affluent middle class is

demanding access to better healthcare; many Indians are now choosing to purchase health

insurance with either full or partial coverage, so a large percentage of the population can

afford to receive high technology treatment. Several corporate houses have expanded into the

hospital business, while leading healthcare providers such as Harvard Medical International

and Cleveland Clinic have entered India through joint ventures.

Figure 4: Medical equipment market in India

4.2 Segmentation

4.2.1 Medical equipments

Majority of the Indian medical equipment market is dominated by the medical instruments

and appliances used in specialties such as ophthalmic, dental and other physiological classes.

This segment accounts for 26% of the total market followed by orthopedic/ prosthetic goods

segment accounting for 19% of the total market (Figure 5). Medical supplies such as

bandages and disposables such as syringes, needles and catheters together constituted 21% of

the total market. The other equipments which are in demand are high end speciality electro


Draft Copy

medical equipments that accounted for 11% of the total market. X-ray apparatus accounted

for 10% of the total market.

Figure 5: Segmentation of Indian medical equipment market

4.2.2 Diagnostic kits

Diagnostic kits constitute a high growth segment in the medical devices market with a growth

rate of 30% and a market size of USD 133 million in 2005. They include the reagents and the

medical kits. With over fifty companies operating in diagnostic kits, the market has seen

several interesting trends. The market is dominated by Roche diagnostics followed by

Transasia, Bayer and others (Table 1). Indian companies like Nicholas Piramal, Orchid have

significantly consolidated their market position.

Table 1: Top 10 India Players in Diagnostics kits

Rank Players

1 Roche Diagnostics

2 Transasia

3 Bayer Diagnostics

4 Span Diagnostics

5 Nicholas Piramal

6 Orchid

7 Tulip Diagnostics

8 Zephyr Biomedical

9 Biorad

10 LiliacSource: biospectrumindia.com


Draft Copy

4.3 Market Trends

4.3.1 Outsourcing of laboratory services by large private hospitals

Large private sector hospitals have started to outsource their laboratory services. For instance,

Mumbai-based Metropolis Health Services manages the laboratory of Chennai based Malar

Hospital. Metropolis also manages the laboratory services of the Dubai-based Gulf Medical

College in Ajman.

4.3.2 Raising of private equity funds

Healthcare organizations in India raise funds through private equity to invest in their

aggressive expansion and infrastructure upgradation plans (Table 2).

Table 2: Equity funds raised by major healthcare organizations

Healthcare organization Equity investorValue of fund raised

(USD million)

Manipal Health Systems Private Ltd.

IDFC Private Equity Fund II 20

Metropolis Health Services Ltd.

ICICI Venture 8

Healthcare Global Enterprises Ltd.

IDFC Private Equity Fund II 11

Apollo Hospitals * - 115Source: Cygnus Research * Announced plans to raise funds

4.3.3 Increasing healthcare awareness

Increasing medical awareness among the urban population, which are the middle and upper

income groups and high dependence of the doctors on the laboratory reports have led to the

development of well-networked medical infrastructure in large Indian cities and urban

centres.

4.3.4 Imports and exports

Imports constitute over 50% of the market. Most imported products have high gross margins;

however, the market is becoming increasingly competitive due to low entry barriers (for

MNCs), an increasing number of players and an expanding consumer base. Currently, the

high value imported products include cancer diagnostic, medical imaging, ultrasonic

scanning, plastic surgery equipment and polymerase chain reaction technologies. Figure 6

gives category wise distribution of medical devices imports and Figure 7 gives year wise

imports of medical equipments by India.


Draft Copy

Figure 6: Medical devices import by category

Figure 7: Medical equipment imports by India

The demand of medical devices has greatly influenced its export potential (Figure 8 and 9).

With the growing demand for medical facilities across the country, the market for medical

equipment in India is fast expanding. The Medical devices market for exports from India is

estimated around USD 509 million with a CAGR of 22.15%. The exports mainly consist of

dental instruments, surgical items and other laboratory equipments. Indian manufacturers of

good quality mid tech products struggle with a stigma for unreliability. Indian purchasers are,

however, price-sensitive and seek value for money. The market for medical supplies and

disposable equipment is dominated by domestic manufacturers. Figure 10 gives the estimated

medical equipments export value in India.


Draft Copy

Figure 8: Medical devices exports by category

Figure 9: Medical devices exports by different countries


Draft Copy

Figure 10: Medical Equipment Exports from India

4.4 Major Players in India

Prominent MNC’s operating in the Indian market include B Braun, Becton, Dickinson and

company, Bayer, Johnson and Johnson, Phillips ,Roche, Siemens and GE. Some of the

domestic players hat have consolidated their market position include, BPL Healthcare,

Godrej Healthcare, Nicholas Piramal India Ltd., Opto Circuits India Ltd. and Advanced

Micronic Devices Ltd.

Moreover, benchmark institutions functioning in India for R & D in medical and surgical

products include Sree Chitra Tirunal Institute of Medical Sciences and Technology,

Thiruvananthapuram and Shriram Institute of Industrial Research, Delhi.

The key local units for manufacture and testing of medical devices in Gujarat are

a) Sahajanand Vascular Technoventions, Surat: Innovative drug eluting stent manufacturer

b) Omni Lens Pvt. Ltd., Ahmedabad: Wide range of quality IOLs from US FDA approved

raw materials using state of the art technology

c) Susruta Instruments, Ahmedabad: Microsurgical tools for Cataract and IOL implants

d) Nidhi Meditech Systems, Ahmedabad: High-tech urology products including

intracorporeal pheumatic lithotripter

e) Inmed Equipments Pvt. Ltd., Ahmedabad: Nerve locator and nerve mapper in locating

nerve joint position during anesthesia, oxygen analyser, high radio frequency bipolar units

f) Online Infocom Pvt. Ltd., Ahmedabad: Software systems for Tele-medicine, Continuous

medical education and complete patient monitoring and management


Draft Copy

4.5 Issues and Challenges

Some of the issues and constraints that are found to cripple the industry are India’s

dependency on imports for supply of medical devices, strict industry regulatory environment,

low level of healthcare insurance and low levels of healthcare facilities and awareness

especially in rural areas.

4.5.1 Dependency on imports

Indian medical devices supply is heavily dependant on the imports from other countries like

the US, Japan, the UK, France, Finland, Germany, etc. It is estimated that around 50% of

India’s medical devices sales is through imports. Although imports constitute over half of the

total Indian market, the proliferation of new joint ventures will erode this share slightly.

The Wipro-GE is a successful joint venture in India; foreign players like Roche Diagnostics

India, Johnson & Johnson Medical India (JJMI), B. Braun group are operating through their

subsidiaries. These joint ventures and other business collaboration modes are slowly

changing the landscape of the Indian medical devices industry. The import of some of high-

end technology medical devices and products during 2001- 06 is listed in Table 3.

Table 3: Import of some of high-end technology medical devices and products during 2001- 06

Products Import (INR m) CAGR %

LCDs, laser , other optical appliances & instruments 24.64 34.36

Instruments and appliances used in medical, surgical, dental and veterinary sciences including electro medical apparatus and sight testing instruments

601.96 15.65

Orthopedic appliances, artificial parts of the body: hearing aids & other appliances which are worn/implanted in the body to compensate defect/disability

68.28 23.23

Other appliances of previous class, Beta/Gamma radiation including radiotherapy apparatus, X- ray tube & Generators, high tension generators screens etc.

170.54 26.81

Parts & accessories for machines, appliances, instruments/apparatus

124.48 19.27

Total medical devices import 1116.33 17.69Source: DGFT, GoI

Typically, domestic production consists primarily of low technology products (like surgical

textiles and other medical supplies), whereas the demand for high technology devices is met

predominantly by imports. A further analysis based on the level of technology involved in the


Draft Copy

manufacture of devices indicates that the import of high-end technology products have

increased during 2001-06. Similarly, the import of LCDs, laser, other optical appliances &

instruments (34.36%), Instruments and appliances used in medical, surgical, dental sciences

including electro-medical apparatus and sight-testing instruments (15.65%), orthopedic

appliances and artificial parts of body (23.23%), radiotherapy instruments, X-ray generators

and screens (26.81%), parts used for advanced instruments (19.27%) have grown

tremendously. The import of a few other products like spectacles and goggles (50.83%) and

frames & mountings for spectacles (29.38%) during the same period have also increased. The

high volume of imports of medical devices and its consistent double-digit growth indicates

India’s dependence on imports for medical devices. One possible reason for higher

dependence on imports can be traced back to low level of R&D spending by Indian medical

devices industry. Moreover, import duty exemption for devices 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.

4.5.2 Low levels of health insurance coverage

The health insurance in the country presently covers only 1% of the population. The share of

health insurance in health financing accounts for a mere 1.2% of the total expenditure on

health.

In terms of high life insurance penetration, measured as % ratio of premium to GDP, South

Africa (11.43%) ranks first in world, whereas India had only 2.53% in 2004. The global

average life insurance penetration is 4.55%, higher than that of India’s. India’s life insurance

penetration is a paltry 15.7%, which is even less compared to the global average of 291.5%.

One of the reasons for low penetration of health insurance in India is the lack of regulations

in the health sector resulting in an exposure of the beneficiaries to various wrong practices

present in the system. Therefore, it is stressed that any regulation on health insurance should

ensure that the patient is provided with the choice of provider and insurer while managing the

cost environment.

Other measures to increase the health insurance coverage in India includes encouraging the

establishment of a stand-alone health insurance company with a minimum capital

requirement of INR500m to make it viable, allowing it to write Personal Accident covers as

combined and add-on covers, permitting them to sell overseas travel policies, to cover the

eventuality of sickness and accident while on overseas travel, allowing the agents of both life


Draft Copy

and general insurance companies to take up the agency of stand-alone Health Insurance

companies, and finally permitting foreign direct investment (FDI) in stand-alone health

insurance ventures up to 51%, etc. There is also lack of standardization of medical definitions

across all health insurance products from different companies, as inconsistent definitions by

the insurers result in inconsistent pricing and inconsistent incorporation of health insurance

products. Another reason for the low levels of health insurance coverage in India is the low

levels of awareness about the essentiality of health insurance in India and less popularity of

health insurance.

4.5.3 Recent stringent regulatory amendment

India’s medical devices market has been experiencing a healthy growth of 4.6% over the last

few years. However, this fast growing market has not been regulated until recently. The

controversy over the marketing of faulty imported drug-coated stents in Maharashtra has

forced the Central Drug Standards Controlling Authority of India to draft regulations for the

medical devices industry recently. However, these regulatory changes could have a

significant impact on the industry. While drugs and cosmetics have been regulated in India

since the passage of the Drug and Cosmetic Act in 1940, medical devices (until recently)

were largely unregulated. The issue of marketing of faulty stents prompted the Drug

Controller General of India (DCGI) to issue a notification in October 2005 reclassifying 10

types of medical devices as drugs so that they could also be regulated under the Drugs and

Cosmetics Act. In March 2006, the DCGI issued new guidelines regulating the import and

manufacture of those 10 medical devices mentioned in the October 2005 notification. Under

the new medical device regulations, importers of the notified medical devices are responsible

for applying for import licenses and filing product registrations with the DCGI, as a

pharmaceutical importer would normally do. The re-classified products list includes the

sterile devices such as cardiac stents, drug eluting stents, catheters, intra ocular lenses, I.V.

Cannulae, bone cements, heart valves, scalp vein set, orthopedic implants and internal

prosthetic replacements to be considered as drugs that require central clearance prior to

import, manufacture or marketing in the country with effect from March 1, 2006.

The new guidelines concerning the import of medical devices makes it mandatory to make

application for import and registration for the importers for which a period of 60 days would

be provided from the date of publication of these guidelines, which was later extended by

another 60 days. The guidelines also notified that in case of devices, which have not been

imported in the country before the date of notification, no import would be permitted without


Draft Copy

an approval of a competent authority. Further, in case of stents or drug eluting stents the

import will not be permitted if the applicant has not sold less than one thousand stents of the

particular specification prior to the date of issue of these guidelines. Such stipulations restrict

the entry of new players into the devices sector. The cause of concern for the industry is the

high cost of obtaining athe required documentation for these regulatory submissions. The

importer has to pay USD 1500 towards the registration of the manufacturer from whom he is

importing; and he has to pay a fee of USD 1000 for registration of a single Medical Device

(which may include variation in sizes or shape without any change in the material or method

of use) and an additional fee of USD 1000 for each additional device. The high fee could

become a burden for smaller manufacturers and also affect the available range of products in

India as the sales per device are usually quite small. It is expected that the cost of devices is

expected to rise primarily because of registration costs, which include the registration fee,

salary of additional staff hired to follow registration process and paperwork and increase in

countervailing duties to 4% announced in the 2006-07 budget. As there are increases in duty

and dollar appreciation, the financial burden will be passed down the value chain to patients,

rendering devices more expensive and treatment unaffordable for those without insurance

coverage. Smaller devices constitute approximately 5% of the total medical bill, so an 8%

increase is marginal and barely noticeable. However, for larger devices such as stents, that

constitute 70% of the total medical bill, any increase in cost will definitely make treatment

significantly more expensive. This should be viewed on the background of price sensitivity of

Indian market and low coverage of health insurance. A high registration fee can create a

barrier to innovation by local and smaller manufacturers to develop low cost devices suited

for the Indian market. Also the requirement for imported devices to conform to local labelling

requirements may create a issue of logistics for supplies while increasing the cost of surgical

products.

4.5.4 High import duties to escalate the cost of medical devices

A 4% Special Additional Duty for medical devices and instruments announced in the Union

Budget 2006-07, is expected to increase the cost of diagnostic scans and high-end tests.

Therefore, after the new impost, medical instruments such as CT Scanners, MRI machines,

Cathlab and ventilators which was earlier under the 5% Customs duty slab will now attract

9% duty while ultrasound machines, patient monitors, defibrillators and blood cell counters

will be charged under the 26.8% Customs duty category. In conjunction with various taxes at

the State-level, the cost on patient will increase by 10-20% in diagnostics. Another point of


Draft Copy

contention is that the duty exemption for diagnostic kits used to detect life threatening

diseases continues to only apply to basic techniques that are increasingly replaced by newer

and more precise methods like the Polymerase Chain Reaction (PCR) test. At present only

tests like the ELISA and CLIA enjoy the duty waiver while the PCR kits attracts 37%.

Customs duty in spite of applications in the diagnosis of diseases like TB, Hepatitis or bird

flu, increase the cost of tests done using the advanced technique. These budgetary tax

measures coupled with an already anomalous customs tariff structure are expected to escalate

the cost of treatments and burden the patients and ultimately constraint the delivery of

modern healthcare. Though increased cost of treatments will not affect the insured patients,

but the coverage of health insurance which is less than 1% then becomes a concern.

From a company’s perspective, margins are expected to shrink, as device companies have to

accommodate a 4% increase in custom duties. The other possible fall out is that India may

loose its cost advantage in medical tourism in a country that is mostly dependent on imports

for medical devices supply, if higher investments to sustain the imports for medical tourism

requirements results in higher treatment costs to visitors.

4.5.5 Poor medical infrastructure facilities and low level of awareness in rural India

Major medical infrastructure facilities like hospitals, testing labs and diagnostic centres are

concentrated in urban areas whereas the rural areas do not possess equally such facilities. The

doctors and healthcare specialists are neither well acquainted with the new technologies and

equipments nor afford to purchase such high cost equipments. The affordability by the rural

population of the costly healthcare treatments is also less, hence the scope of establishing and

running costly medical infrastructure facilities and equipments is not bright. Considering the

fact, that 72% of Indian population lives in rural areas, non or underavailability of such

medical infrastructure in rural areas leads to missing opportunity.

4.6 Critical Success Factors

The Indian medical devices industry is a growing sector. Though the strong demand factors

are driving the industry, the criticality of certain factors determines the sustaining demand for

the industry and hence the growth of the industry in the future. The success-determining

factors are as below:

4.6.1 Striking alliances with overseas companies

The high-end, precision technologies and the corresponding device manufacturing

technologies are not readily available in India. Most of medical devices and diagnostics that


Draft Copy

are manufactured in India involve low- to mid-end technologies, while majority of high-end

technologies and devices are still imported from countries like the USA, Japan, Germany and

France. Reasons could be technical superiority of foreign companies acquired from their vast

experience spanning over years, lack of R&D in Indian companies, lack of skilled workforce

in high-end R&D in India, apart from other geo-economic considerations of the foreign

companies. Therefore, Indian companies are looking forward to having alliances with foreign

companies either to import and distribute their products in the Indian territory or become

licensed manufacturers and distributors of the foreign companies. Therefore striking an

alliance with foreign manufactures is beneficial in the following ways-

1. Licensed manufacturing and distribution mode virtually eliminates the huge import

logistics and distribution costs incurred by domestic companies.

2. Domestically manufactured products can be priced typical of those of region. The

products can be competitively priced among the other locally manufactured products as

well as against imported products. It also helps to widen penetration of the hitherto less-

penetrated Indian medical devices market.

3. It also helps the foreign companies to reduce their unnecessary costs involved in

importing parts of devices into their country, then assembling and labelling them as

‘foreign-manufactured’ and sending them back to the country of manufacturing in order to

be sold.

4. Domestic companies have better understanding of the local markets and can devise and

implement suitable business strategies than the foreign players.

One of the successful alliances by Indian medical device manufacturers is Wipro-GE, which

distributes GE’s products in Indian territory apart from Wipro’s own products. Philips,

Siemens and Roche Diagnostics are operating through their Indian subsidiaries. Companies

like Trivitron are distributing products of a number of foreign companies like Hamilton

Medical (Switzerland), Bio-Med Devices (USA), Nihon Kohden Corporation (Japan),

Thermo Electron Corporation (Finland), Sebia (France), Radiometer (Denmark), Electra

Medical Corporation (USA), DPC (USA), and INOVA (USA). Nicholas Piramal India Ltd

(NPIL) has R&D alliance with Morvus Technology Limited (UK), and scientific

collaboration agreement with BioSyntech. Span Diagnostics Ltd is the distributor of the

world’s leading diagnostic companies like Associates of Cape Cod Inc., Remel Inc., Hitachi

Chemical Diagnostics Inc., and BBI Biomedica Inc. etc. These alliances and associations are

viewed to be greatly beneficial to Indian companies. Therefore having an alliance with


Draft Copy

overseas companies gives an edge to the Indian companies in terms of huge product basket,

advanced products & technologies and technical expertise which actually widen their

business scope. Getting into an alliance with overseas companies gives a competitive edge to

Indian companies and mutually beneficial to both. Hence domestic companies should look

for alliances to harness mutual benefits in the years to come.

4.6.2 Investments in R&D

Medical devices industry is an innovation-driven industry. Advanced medical technology can

not only save and improve patients’ lives, but also lower health care costs, improve the

efficiency of the health care delivery system, improve productivity and reduce the economic

cost of illness. Therefore, to deliver this value to patients, the industry invests heavily in

medical technology R&D. A past study indicates that 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 8.4% in 1995, to 12.9% post 2000. This level of spending is

on par with spending by the pharmaceutical industry. Generally, it is complained that Indian

medical device manufacturers spend less than their western counterparts. It is also observed

that western companies prefer to have R&D facilities in India- GE and Siemens have set up

their major R&D centres in Bangalore. The share of R&D expenditure to sales of medical

device and diagnostics manufactures in 2005 is listed in Table 4.

Table 4: The share of R&D expenditure to sales of medical device and diagnostics manufactures

R & D expenditure % share R & D expenditure to

net sales in 2005

Johnson & Johnson ( Medical devices division ) 2.05

Roche diagnostics Ltd ( Diagnostic division) 8.72

Bayer AG (Group business) 6.88

Godrej group 1.42

NPIL (Group business) 5.76

Becton and Dickinson ( Group business) 5.02

Beckman Coulter ( Group business) 8.55Source: Respective company website and Cygnus Research

Investing in R&D holds a competitive edge for manufacturers as the advanced technologies

and devices will have a clear value advantage over the existing and competitive

technology/products. It is also realized that making a breakthrough innovation is more


Draft Copy

incentivising than making incremental innovation. The R&D efforts also have to be selective;

for products that command premium price ask for a larger pie of the total R&D efforts.

Therefore, investing in R&D is strategic to both domestic and foreign companies, in their

country or in any of the cost-effective locations. More than 50% of India’s medical device

demand is met through imports from overseas companies, which could also be a reason for

laxity on the part of Indian companies to rely on foreign companies for technologies and not

focus on their own R&D. Indian companies need to gear up their R&D efforts in

product/technology development, manufacturing, products designing, so as to sustain their

business and reduce dependency on imports.

4.6.3 Low cost devices

It is a known fact that the cost of medical devices that involves high-end technology and

sophistication are much costlier in India. This is partially attributed to the fact that most of

the medical devices and diagnostics are imported hence logistic cost, cost of technology

import duty and other taxes, which add up the cost of devices, leads to a spiralling of the cost

of the device. The other costs that include technical know-how fees/royalty charges and user

fees in case product/technology are patented. However, from the manufacturers’ point of

view, the present day’s medical devices and diagnostics industry faces intense competition.

Products range from commodities to highly specialized equipment, and each offering must

be manufactured to stringent quality standards, but at the lowest possible cost, which is

almost difficult to balance. Moreover, the industry is precision-centric and needs high levels

of process automation, which also increases the production cost (that includes fixed and

variable costs). Adding to the woes are the new regulations that make it mandatory for the

Indian importers to register their foreign manufacturers as well as the devices with the Indian

authorities, which proves to be too costly for the Indian importers. On the demand side, the

high cost of medical devices and diagnostics devices, affects the level of penetration of

medical devices in India and other developing/less developed countries. It also affects the

affordability of treatments, in a country where the health insurance coverage is already poor.

Moreover, in a country where private healthcare service providers share a larger share of 63%

of total healthcare services with the remaining delivered by public services, efforts to bring

down the cost of medical devices will be a boon to the Indian healthcare industry in a larger

perspective. However, it is also argued that though the cost of devices is brought down by

way of cutting duties and taxes, the benefit is not expected to be passed on to the patients

because test charges are levied based on the number of times the devices can be used.


Draft Copy

Therefore, to bring down the cost of medical devices or manufacturing low cost devices can

be achieved through intensive and continuous R&D efforts, high levels of process automation

in the manufacturing facilities, striking manufacturing alliances 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.

5.0 RECENT INDUSTRY TRENDS

Primary areas of research and development pertaining to Medical Devices have shown

consistent growth in the following arenas in the recent years:

5.1 Artificial Limbs Market Set to Grow

The Indian artificial limbs market is estimated to grow by USD 7.5 billion in 2009 from USD

2.5 billion in 2005. The share of artificial limbs and joints in the overall growth of the market

is also expected to be about 80% in the next five years time. One indicator for such a rapid

growth is the rise in orthopedic surgeries registered in the country in the past five years. It has

been estimated that close to 0.5-0.6m orthopedic surgeries per year are being performed in

the country. With a sedentary life-style on the rise, this number is expected to grow by 6%

annually in the next five years.

5.2 Italy Keen to Invest in Bio-Medical Sector

The Italians are collaborating with Indian companies to set up four plants to manufacture

safety syringes, Four Italian companies and seven to eight Indian companies are likely to be

involved in the project and the first batch of 100m syringes would be manufactured.

5.3 Andhra Pradesh to Buy Forty Lakh Disposable Syringes

The Andhra Pradesh Government bought 4m auto disable (AD) syringes for Phase-I

immunization in 22 districts of the State from Hindustan Syringes & Medical Devices Ltd

(HSMD). The State Government would again buy 4m AD syringes for its phase-II

immunization program.

5.4 Vascular Concepts Plans to Enter European Market

Leading stent manufacturer Vascular Concepts is planning to enter the European market with

its `Pronova' brand of drug-coated stents. The company plans to set up a chain of distribution

network in various European countries. Vascular has a 35% share in the Indian stent market.


Draft Copy

5.5 New Products

5.5.1 New device for tumor surgery

The Manipal Institute of Neurological Disorders and the Department of Nuclear Medicine at

Manipal Hospital have jointly introduced Radio Guided Neuro Surgery that will benefit

people suffering from brain tumour. A gamma probe is used which localizes the tumour from

the brain and is easy for the doctors to isolate the tumour as it sometimes resembles the brain.

5.5.2 Life- saving device for heart patients

Wockhardt Heart Hospital, which has launched specialize services for heart care in

Hyderabad in association with Kamineni Hospital, has successfully implanted life saving

automatic implantable cardioverter defibillator (AICD) or a pacemaker on a patient. This

device sends alerts if there is any abnormality in heartbeat and would help initiate preventive

care early. This device when implanted in a patient can detect their potentially fatal rhythm

disorders and correct them by delivering a well-synchronized direct current shock directly to

the heart. This is typically done for patients who face high risk of developing ventricular

tachycardia/ fibrillation.

5.5.3 Modern CT scanner installed at Sunrise hospital, Kochi

The Sunrise hospital at Kochi has installed a modern diagnostic system Light Speed Volume

CT Scanner which is the first of its kind in South India. This Scanner can capture images of

any organ in the human body in less than 10 seconds. The significant application of this

technology will be the non-invasive imaging of the heart and coronary arteries.

5.5.4 Single system to diagnose dengue

The Dengue Genotyping kit, developed by the Korean bio-company Seegene, uses a

multiplex Polymerase Chain Reaction (PCR) system based on their trademark Dual Specific

Oligonucleotide technology to detect multiple pathogens at one time. This diagnostic kit not

only detects chikungunya or dengue at an earlier stage of illness than most other kits, but also

identifies if its chikungunya or any one the four stereotypes of dengue, all in a single test.

5.6 Company Developments

5.6.1 GE-health launches hi-definition magnetic resonance system

GE Healthcare's engineering and scientific set-up in Bangalore launched the High Definition

Magnetic Resonance (HDMR) system. The HDMR system has been priced in around INR55-

60m range in India. The HDMR system would provide the doctors high-resolution image

clarity in cases where patients are difficult to manage on account of movement, including


Draft Copy

uncontrollable patient motion owing to Parkinson's disease, trauma, stroke and pediatric

patients who do not respond to sedation.

5.6.2 Chitra Tirunal Institute to set up test centre for medical devices

The Thiruvanathapuram based Sree Chitra Tirunal Institute for Medical Sciences and

Technology (SCTIMST) has plans to set up a national test centre for medical devices. The

national test centre for medical devices, which would be established with funds provided by

the Union Government, will provide comprehensive testing services under `good laboratory

practices' to the Indian medical devices industry. Major areas of testing that will be covered at

the facility include functional and safety evaluation of medical devices using in-vitro

simulated systems, functional and safety evaluation using small and large animal models,

evaluation of device packaging including aspects such as shelf life.

5.6.3 Widex launches new hearing aid

Widex India Private Ltd has introduced in India a `user-friendly' digital hearing aid having

certain features to meet the needs of people with hearing loss that are not available in the

relatively cheaper versions. The company, which imports hearing aids from its partner Widex

A/S of Denmark, expects the market for hearing aids, estimated to be around INR300m to

grow at an annual rate of 10% in the country.

5.6.4 Opto Circuits buys German stent company

The Bangalore-based Opto Circuits (India) Ltd has acquired Germany's EuroCOR, a

company that designs and manufactures stents for INR60m. EuroCOR has about 120

employees and a manufacturing facility at Bonn (Germany).

5.6.5 Corning launches distribution channel

Corning India Pvt. Ltd., in collaboration with Prime Ophthalmics Products Ltd, launched a

new distribution channel in Chennai. Corning India is a subsidiary of Corning Inc, a leader in

ophthalmic technology. Prime Ophthalmics will exclusively manufacture glass lens at its

Chennai laboratory for Corning India, which will in turn distribute these products to

opticians, wholesalers, dealers and other distributors in India. The company also launched

prescription lenses under the brand name, Visual Eyes, for the Indian market.

5.6.6 Indo-US venture to launch cancer detection tools

Genetics Specialties' a new Indo-US venture in cancer diagnostic tool kits in cancer

diagnostic tool kits was launched in Bangalore in February 2006. The company introduced a

range of genetic diagnostic kits and reagents to diagnostic labs and medical research


Draft Copy

institutions across the country. Genetics Specialties' future plans include manufacturing

reagents in the country after a few years.

5.6.7 Indian medical devices market regulated

The government of India in 2004 constituted an advisory committee which suggested for the

creation of a specific medical devices division within the central drug standard control

organization (CDSCO).This division addresses the management, approval, certification and

quality assurance aspects of the medical devices. The CDSCO has made some guidelines

mandatory since June 29, 2006 in order to regulate the medical devices sector. The rules

specify that all the importers, stockists and retail sellers of medical devices should obtain

appropriate license from the concerned state licensing authorities by September 2006.

5.6.8 US Company develops device to monitor autonomic nervous system

DyAnsys Incorporation, a leading US based company has developed a device called

ANSiscope to monitor the autonomic nervous system (ANS). Its first big application came in

diabetes for the detection of a complication called diabetic autonomic neuropathy (DAN). By

early screening and detection of dysfunction in DAN, it could be possible to take steps to

prevent damage to organs like the heart, kidney etc., which diabetes tends to impact.

5.6.9 GE healthcare plans radio pharmacy centres

Medical diagnostics major GE Healthcare plans is setting up a radio pharmacy centre in Delhi

to provide nuclear medicine for hospitals around the capital. Similar centres would follow in

Mumbai, Bangalore and Hyderabad, according to a release here. The main objective is to

provide the imaging systems based on nuclear medicines which are used to detect a range of

diseases from cancer, coronary artery disease, infection, renal disease, Parkinson's,

Alzheimer's diseases, epilepsy and stroke.

5.6.10 Poly Medicure applies for eight new patents

Poly Medicure Ltd, manufacturers of medical devices and disposables under the brand,

Polymed, applied for 8 new patents and two USFDA (Food and Drug Administration)

approvals for its new range of safety syringes and safety blood collection holders.

5.6.11 GE Healthcare hopes to double revenues

Global healthcare equipments major GE is targeting to double its revenues from its South

Asia operations to USD 800 million in the next three years. About 90-95% of the revenues

come from India. The company would focus on making need-based investments in India in

manpower, manufacturing and technology. The company also plans to increase its manpower


Draft Copy

in India. The company has around two thousand employees in India, who form about 40% of

the company's global engineering and technology expertise, and would be employing about

10% more.

5.6.12 Zydus to market diagnostic kits

Sarabhai Zydus Animal Health Ltd is set to launch high-tech diagnostic kits to diagnose and

control newly emerging infectious animal diseases that include avian influenza (bird flu) and

bovine viral diarrhoea. The Immuno-diagnostic Reagent kits will be sourced from Lillidale,

UK, which holds marketing rights for Veterinary Laboratories Agency (VLA) diagnostics

kits. VLA is one of the reputed referral laboratories based in the UK. The diagnostic kits will

enable Indian animal health researchers in differential diagnosis of different of pathogens

present anywhere in the world.

5.6.13 Strides acquires Warsaw-based sterile unit

Strides Arcolab has announced that its Polish subsidiary has acquired a Warsaw-based sterile

manufacturing unit formerly owned by ICN Valeant, a mid-sized US speciality pharma

company. The Bangalore-based Strides group will install additional capacity in sterile dose

form at the Warsaw plant and increase its workforce. Strides Polska will supply globally as

well as in Europe.

5.6.14 EuroCOR gets CE okay for products

EuroCOR, a wholly owned subsidiary of Opto Circuits (India) Ltd (OCIL), has received CE

approval for marketing and sale of Amadeus Super cross, a coronary dilation catheter and

EWire, a guide wire for interventional use. Both products are used in Coronary Angioplasty

(Percutaneous Transluminal Coronary Angioplasty — PTCA). The two products are expected

to add 3-5m and 1m, respectively, per year to Opto's top line.

5.6.15 GE Healthcare ties up with Manipal Health

Medical diagnostics major GE Healthcare has roped in Manipal Health Systems as its India

partner for its ongoing global clinical studies on its diagnostic products. These are imaging

agents being tested for diagnosis in oncology, neurology and cardiology. In the study starting

in September, a GE integrated development centre (IDC) equipped with GE medical devices

is to be set up at Manipal Hospital, Bangalore. Using its doctors as investigators, Manipal

will conduct 1,000 scans a year, initially contracted for three years, and return the raw data

from these imaging’s to GE.


Draft Copy

6.0 REGULATORY ENVIRONMENT

6.1 Global Perspective

Clinical investigations of medical devices must comply with the Food and Drug

Administration (FDA) informed consent and Institutional Review Board (IRB) regulations.

Federal requirements governing investigations involving medical devices were enacted in the

US, as part of the Medical Device Amendments of 1976 and the Safe Medical Devices Act of

1990. These amendments to the Federal Food, Drug, and Cosmetic Act (the Act) define the

regulatory framework for medical device development, testing, approval, and marketing.

6.1.1 Industry classification

Medical devices are generally divided into class I, II and III, based on the level of risk to

users/patients, corresponding to logical risk evaluations conducted by the FDA. Class I

devices are the lowest risk classification and include general consumables such as crutches

and band aids, while class II controls are more specialized, such as wheelchairs. Class III

devices require pre-market approval, as they are known to present hazards requiring clinical

demonstration of safety and effectiveness. Devices in this category include heart valves,

catheters, cardiopulmonary resuscitation (CPR) devices and various implants.

6.2 Indian Outlook

The regulation of medical devices is often complicated by legal technicalities. In India, the

Department of Health has nominal jurisdiction over medical devices, evident from the illegal

re-processing and re-packaging of used syringes for re-sale and the availability of equipment

that fails minimum safety and quality standards. Unsterilised implants could cause infections

and stents coated with immuno-suppressant drugs are capable of impairing the body’s

immune system.

All devices carry a certain degree of risk therefore, the Global Harmonization Task Force

(GHTF) has identified potential areas of hazard that warrant consideration. These include

degree of invasiveness, duration of contact, the body system affected, and local versus

systemic effects. An invasive device is usually considered to have higher potential hazard

than an equivalent non-invasive one. Similarly, devices that have a long duration of contact

are assigned higher classes of potential hazard or risk.

The Ministry of Health and Family welfare under Gazette notification S.O. 1468 (E) dated

6th October 2005 declared the following sterile devices to be considered as drugs under

Section 3 (b) (iv) of the Act.


Draft Copy

1. Cardiac Stents

2. Drug Eluting Stents

3. Catheters

4. Intra Ocular Lenses

5. I.V. Cannulae

6. Bone Cements

7. Heart Valves

8. Scalp Vein Set

9. Orthopedic Implants

10. Internal Prosthetic replacements

It was also notified vide GSR 627 (E) dated 7th October 2005 that control over manufacture

of these devices would be exercised by CLAA (i.e.) DCGI under the said Rules. The Ministry

of Health and Family Welfare have now approved the following procedures to be adopted

with respect to licensing of import as well as manufacture these Medical Devices in the

country.

6.2.1 Current guidelines for manufacturing of medical devices

1. Application for the grant of licence for manufacture of these notified sterile Devices in the

country shall be made in Form 27 to the State Licensing Authority, accompanied by the

requisite fee in the Form and manner as prescribed in the said rules along with a copy to

the office of DCGI.

2. A period of 60 days would be provided for making the application for manufacture from

the date of publication of these guidelines.

3. In case of devices belonging to the above said categories, which have not been

manufactured in the country before the date of notification, no manufacture would be

permitted hence forth without the approval of the competent authority as per norms

prescribed.

4. The applicant shall provide the following information alongwith the application for

consideration of the licensing authority.

6.2.2 Guidelines for import of medical devices

1. For the purpose of import of Devices specified above, the procedure for registration and

import licence as prescribed under the Drugs and Cosmetics Rules shall be followed.


Draft Copy

2. A period of 60 days would be provided for the importers to make application for import

and registration from the date of publication of these guidelines. However, on 28/04/2006,

it is further extended by another 60 days (i.e) till 29th June, 2006.

3. In case of devices which have not been imported in the country before the date of

notification no import would be permitted without the approval of the competent

authority.

4. For the time being and for a period upto six months, until an application is approved for

rejected, whichever is earlier, the devices which are currently in use will be permitted to

be sold. In case of stents or drug eluting stents, the import will not be permitted if the

applicant has sold less than one thousand stents of the particular specification prior to the

date of issue of these guidelines.

5. Separate committees consisting of subject experts and representative of DCGI office

would be setup for their expert advice for evaluation of specific categories of devices. The

expert committees would formulate their own benchmarks and procedures for evaluations

and the standards to which such devices should conform.

6.2.3 Sale of medical devices in the country

The importers, stockist and retail sellers of Medical Devices shall obtain appropriate sale

licences from the State Licensing Authorities for these Medical Devices.

7.0 SWOT ANALYSIS OF MEDICAL DEVICE INDUSTRY

7.1 Strengths

Potentially Huge market with growing urban middle class population

Growing private hospital sector aiming to attract health tourists

7.2 Weaknesses

Low per capita expenditure

Lack of implementation of government policies and infrastructure

Untapped rural markets

Excessive dependency on imports

Academic know-how is not well developed in this sector

Support system from R & D not available

7.3 Opportunities

Overseas companies investing in India to set up research units and develop new

products


Draft Copy

Increasing Joint ventures and agreements

Overseas aid assisted projects to improve healthcare infrastructure

Regulations to improve market for domestic manufacturers.

7.4 Threats

Regulation policies may slow down the development of the market

Unorganized market for medical disposables

Lack of regulations in Medical disposables and surgical items leading to spurious

products.

8.0 GROWTH DRIVERS

The growth of Indian medical devices and diagnostics industry is driven by a host of factors.

8.1 Booming Economy

The absolute value of GDP for the Indian economy is found to be increasing during the last

decade, while its growth rate over previous year has been fluctuating. The continuous

positive growth of economy (and the correspondingly increasing per capita GDP) has led to

increased personal income and higher standards of life. Moreover, the ever increasing ‘class

shifting’ of Indian population from ‘aspirants and climbers’ (annual per capita income

between USD 100-500) class to ‘consuming’ class (annual per capita income between USD

1000-5000), which is a spill over effect of growing economy, has also increased the demand

for access to better healthcare. These factors have cumulatively pushed up the demand for

medical devices and diagnostic industry in the recent years.

8.2 Increasing Healthcare Expenditure

In India, the role of Central Government is limited to family welfare and disease control

programs, while the state governments are responsible for primary and secondary medical

care with a limited role in specialty care. In India, healthcare expenditure constitutes about

12% of the national annual expenditure. Of this, 82% of the total health expenditure comes

from the self-paid category, while employers account for 9% and insurance covers 5% of the

total healthcare expenses.

There are two types of healthcare expenditure spent by Indian households; payments to the

healthcare providers, which constitute a major 98.5% of total healthcare expenditure while

the rest is the expenditure towards payments to health insurance premiums. Therefore, the

Indian population is spending a majority share of healthcare expenditure towards healthcare


Draft Copy

service providers such as hospitals, thus indicating a potential for medical devices industry

for its supply of medical equipments and diagnostics to these healthcare service providers.

8.3 Changing Demographic Profile

Improvement of overall health status and socio-economic pressures has resulted in changes in

the demographic profile. With a decline in birth rates, the population aged 0-14 has declined,

while on the other hand improvement in life expectancy has led to an increase in old age

population in recent years, which is projected to continue in future (Figure 11). On an

average this past trend has led to higher per capita demand for health services, and has had a

positive impact on the demand for medical devices.

Figure 11: Age group-wise percentage distribution of population

8.4 Increasing Incidence of Lifestyle Diseases

The type of healthcare service requirement and thus the demand pattern for medial devices in

India has changed due to a rise of lifestyle-related diseases such as diabetes, cardiovascular

diseases, and diseases of the central nervous system. There are around 0.7 million new cases

of cancer each year and approximately 2.5 million cases. It is estimated that there are around

40 million people in India with diabetes, 5.1 million HIV/AIDS patients, and 14 million

tuberculosis cases. In the past year, the Indian pharmaceutical industry witnessed a growth of

7%, the cardio-vascular segment (15-17%) and the anti-diabetes segment (10-12%). The

increasing incidences of these life style diseases eventually increase the demand for medical

devices and diagnostics.


Draft Copy

Ophthalmology: The annual incidence of cataract in India, the cause of 80% of blindness, is

3.8 million cases. The total potential for surgical cataract removal is 1.75 million cases per

year.

Cancer: The total number of cancer cases in India was estimated at 924,790 in 2001. This is

projected to increase to 1.22 million by 2011 and to 1.56 million by 2021.

Cardiovascular diseases: The mortality rate due to cardiac arrest and related causes was

estimated at 2.4 million . With increasing urbanization the problem is on the rise.

Hypertension, diabetes and renal diseases: These stress and lifestyle related disorders are on

the rise. The diabetic population in India is projected to increase from 40 million of 2001 to

47 million people in 2010. Hypertension is lower in rural areas but on an increase in urban

cities. Both hypertension and diabetes further cause renal disorders.

Neurological and psychiatric disorders and addictions: The current prevalence rate for

neurological disorders is 15 to 20 people per thousand. The most common ailments are

epilepsy, migraine, cerebrovascular disorders, Parkinson’s disease and peripheral

neuropathies. It is estimated that 1% of the population is suffering from serious psychiatric

illnesses, 10-15% have neuro-disorders, and 2.5% are mentally retarded.

8.5 Increasing Number of Medical Tourists

India is fast becoming one of preferred destinations for medical tourism- patients going to a

different country for either urgent or elective medical procedures. Reasons vary for medical

tourism; a USA patient seeking treatment at a quarter or sometimes even a 10th of the cost at

home, long waiting times for medical services in Canada or patient who can’t wait for

treatment by the National Health Service but also can't afford to see a physician in private

practice are coming to India for their treatments with a tropical vacation. Patients are coming

from poorer countries like Bangladesh where treatment may not be available. Other countries

that actively promote medical tourism include Cuba, Costa Rica, Hungary, Israel, Jordan,

Lithuania, Malaysia and Thailand. The entrants are Belgium, Poland and Singapore. India's

National Health Policy declares that treatment of foreign patients is legally an "export" and

deemed "eligible for all fiscal incentives extended to export earnings." Given India’s top of

the line hospital facilities, diagnostic facilities and medical practitioners, this has become a

virtual growth sector. According to the Confederation of Indian Industries, India has a

potential to attract 1m health tourists per annum, currently growing at an annual rate of

around 25% that is predicted to bring in at least USD 2 billion within the next 6–7 years.

Another report projected that the industry is to grow by 30% annually. The positive fall out of


Draft Copy

this would be an up gradation of medical facilities, in terms of new equipments, diagnostic

lab reports, equipments etc. The growth of medical tourism industry is to complement the

growth the medical devices and diagnostic equipments industry. Orthopedic or arthroscopic

surgeries are some of the medical procedures for which India has become a popular medical

tourism destination. Therefore, the demand for orthopedic devices in India is likely to

increase in future. Many corporate hospitals in India are also entering in to medical tourism

field and offer services to foreign patients. One among them is the Apollo Hospital

Enterprises, which is one of the pioneers in providing medical tourism services in India.

Elective treatments, such as cosmetic surgery, corrective vision surgery, and dental

procedures, generally not covered by insurance, also attract many western citizens to India.

Moreover, some U.S. insurance companies, such as BlueCross BlueShield, have begun

collaborating with some hospitals in India. The recent regulation on medical devices, which

is set to increase the cost of medical devices and the test services, are predicted to be

detrimental to the growth of medical tourism industry earlier. It is argued that India could

lose some cost advantage as a healthcare destination, as medical devices constitute a major

portion of total hospitalisation costs.

However, contrary to perceptions, the medical tourism industry has not been affected as

majority of the hospitals catering to medical tourism are tertiary in nature and have existing

pre-requisites for USFDA/ CE certification, prior to device purchase. In fact, the enforcement

of certification of medical devices will be beneficial, as foreign patients will be able to avail

locally manufactured devices that are certified, expanding the domestic market significantly.

Patients availing of medical tourism are willing to pay higher device costs to ensure safety

and quality, as overall healthcare is considerably cheaper in India. Moreover, a 5-10% cost

increase will not affect medical tourism much, as treatment itself is two to three times

cheaper in India. The regulation has indeed increased the popularity of India as a destination

for medical tourists due to the above reasons.

8.6 Proliferation of Hospitals

Indian healthcare system has two components, public and private services. The public

healthcare system offers three-tier services at primary, secondary and tertiary-levels with

differentiated units like sub-centres, PHCs, CHCs, and at village, block, and district levels.

The subcentres, PHCs and CHCs have grown considerably. The tertiary care service is

provided by 117 medical collages and hospitals in the country. Over 4,049 public sector

hospitals and 11,344 private hospitals are providing services. In India, the private healthcare


Draft Copy

service providers delivers 63% total healthcare services while the remaining 37% healthcare

service is delivered by public healthcare system like governmental agencies. The increasing

thrust on private healthcare services results in burgeoning number of private hospitals which

corresponds to an increasing demand for essential medical devices and diagnostics.

Therefore, increasing medical infrastructures like hospitals, specialised diagnostic centres,

tele-medicine centres, laboratories are expected to fuel the demand for medical devices in

future.

8.7 Government Programmes and Support

Though the role of government in the promotion and development of medical devices

industry in India is limited, its welfare programmes and few policy measures are indirectly

supporting the industry.

The central and state government has been operationalizing various health and family

welfare schemes throughout India over years. Schemes to control communicable

(especially AIDS control programmes) and non-communicable diseases (for cancer,

etc), initiatives on telemedicine, National Diabetics programme, modernisation of

hospitals, family welfare schemes like family planning and contraception programmes,

etc are operated by the central government in the secondary and tertiary healthcare

service delivery. The primary healthcare service is the responsibility of the state

governments. The budgetary support for these schemes in both central and state sector

is continually increasing over years mainly due to an increasing span of population to

be covered under these schemes and increasing incidence of diseases. This could be

correlated to corresponding increase in the demand for medical devices and diagnostics,

the trend of which is expected to continue in future.

The National Health Policy (NHP) – 2002 announced by the Government envisages

increasing public health investment to 2% of GDP by the year 2010 from the existing

level of 0.9% and the total health investment to 6% from the current level of 5.2%. The

NHP-2002 welcomes the participation of the private sector in all areas of health

services-primary, secondary and tertiary.

The government is also extending concessions to charity organisations, hospitals in

terms of duty-free import of medical devices, in case if the device/technology is not

available in India and import is unavoidable. The concessions under Export Promotion

Capital Goods (EPCG) are also availed by importers and distributors of medical devices

and diagnostics.


Draft Copy

8.8 Outsourcing/Relocating of Medical Devices Manufacturing by Western Companies

European and USA medical devices companies are actively considering outsourcing or

relocating their manufacturing to Asia especially India and China to take advantage of its

significantly lower costs for skilled labour. Moreover, if India could provide these medical

devices that meet quality requirements and international standards, then it would be highly

attractive to an increasing number of healthcare providers in western countries who are

struggling to contain costs and facing tightening budgetary restraints. Another advantage of

relocating manufacturing to India is that it puts them in an ideal location to penetrate the

vastly underdeveloped Asian medical devices market, while also keeping product prices

closer to those typical of the region. In Bangalore, Siemens India Ltd set up a new R&D

facility in 2004 to expand research in the medical and information technology sectors for

developing user-friendly medical imaging systems in order to leverage India’s advantage of

low cost of production and highly skilled manpower. The favoured destinations for

outsourcing the manufacturing of medial devices are China and India. However, there are

certain hiccups like lack of awareness on complying to international manufacturing

guidelines and standards by most of Indian manufacturers, and fear of Intellectual property

protection for devices/technologies, etc. The Asian medical devices market does not have to

follow any particular standards, unlike European companies, which have to comply with the

Conformité Européene Mark (CE Mark). However, increasing number of companies in India

have started to comply with International Organization for Standardization (ISO) and the

good manufacturing practice (GMP) standards and getting certifications like Trivitron and

Wipro-Biomed. Indian Manufacturers in Asia are realising that pursuing CE Mark

certification can help them compete more effectively with companies producing higher-

quality goods for sales into Europe. The other concern of foreign manufacturers outsourcing

to India is regarding Intellectual property rights protection. Of late, contract research

organisations (CROs)- which are research and development (R&D) outsourcing companies-

are starting to introduce intellectual property standards to increase confidence levels of

foreign companies and to promote greater outsourcing interest in both R&D and

manufacturing in Asia. Therefore, with the popularity of being the preferred outsourcing

destination for other services, India can attract more foreign companies for contract

manufacturing of medical devices, once the above-mentioned constraints and apprehensions

are addressed. Indian medical devices manufacturing industry will benefit largely from the

outsourcing activity in future.


Draft Copy

8.9 User Friendly and Handy Devices

With the increase incidences of lifestyle diseases and increasing general awareness, the

handheld, simple, convenient, user- friendly devices for measuring and monitoring various

healthcare parameters are on the rise. Medical devices such as blood glucometers, digital BP

meters, digital thermometers, digital weighing machines and nebulisers are few popular

examples of handy devices for monitoring various parameters. These devices are economical,

time-saving and convenient with a user-friendly interface and hence become popular.

8.10 Telemedicine

Telemedicine is a method by which specialist doctors can examine, investigate, monitor and

treat patients in remote areas through satellite video conferencing. Telemedicine is used to

transmit patients' medical images, records, output from medical devices and live two-way

audio and video. With the help of these, specialist doctors can advise, online, the doctors or

paramedics at the patient's end on medical care, or even guide the doctor during a surgery. In

a vast territory like India where rural areas are not having comparable healthcare

infrastructures, telemedicine has come to rescue. Government of India is also interested in

promotion of telemedicine in India, which is evident from budgetary allocation of INR 15

crore for 2006-07. Private healthcare service providers such as Apollo Telemedicine Network

Foundation, and Narayana Hrudayalaya and Heartcare India, etc and charity hospitals like

Amrita Institute of medical sciences and Sankara Nethralaya, are prominent in the Indian

telemedicine scene. Therefore with the public and private sector efforts, the telemedicine is

expected to expand in India. With the growth of telemedicine services in India demand for

diagnostic medical equipment such as X-rays, CT-scanners, Dopplers, ultrasound and

electrocardiographs is also expected to grow. Some of the telemedicine providers are

importing the peripherals like medical film scanner, video microscopy system, ECG machine,

electronic stethoscope, spirometer integrated with the application due to their unavailability

in the Indian market. Therefore, the systematic growth of telemedicine in India is

encouraging the production of high-end technology products like those that have been

mentioned above as technology development is the need of the hour, which ultimately helps

in the further evolution of medical devices industry in India.

8.11 Industry Forecast

In the coming years, the medical equipment market in India is expected to have high growth

rates. The key factors contributing to this are:

Increasing urban middle class population who are demanding better healthcare services


Draft Copy

Expansion of corporate hospitals and research institutes in the country India is a key

market for medical equipment devices.

The current trends show that the demand for the medical devices has been going up by 15-

20% in the recent years. Thus, the supply needs to be in proportion to meet this demand and

if the local manufacturers are unable to provide quality products in sufficient quantity at par

with imported devices, then the dependency on imports will increase to an extent wherein the

local companies totally lose the market to the International companies.

Thus, if a condition of minimum value addition and variability in pricing exists for long, the

profits are sure to dwindle soon leading to almost certain downfall of the local manufacturers.

9.0 FUTURE DIRECTION

The Indian market for medical equipment and supplies was valued at USD 1318 million in

2005 and it is estimated the market to become USD 2028 million by 2010 with an annual

growth rate of 9%. The industry has seen tremendous growth over the last decade and the

current development and the pace will trigger the market to reach the estimated market size.

The market has opened up for new entrants with mainly importers dominating the market.

Lot of joint ventures, agreements and loan licensing procedures have influenced the market.

The market is largely dependent on the private sector where investment is not a major

concern. Continuous innovation in developing new products has created high demand in the

market. Many multinational firms import equipment as they see a profitable growth in the

Indian market. Some overseas companies have also established their manufacturing plants in

India. The government has also taken several reforms to develop the market by regulating it

to bring out more transparencies and by allowing foreign investments to participate in the

events. Importers and distributors utilize the opportunity of the events to establish a direct

network with the consumers. These events mainly help in customer awareness, new product

launches and in direct sales of the products.

In a nutshell, continued investment in private sector infrastructure, coupled with increased

healthcare funding from the government, have resulted in a steady increase in the market for

medical equipment and supplies. It is estimated that the market will continue to grow by an

average of 9% over the next five years, driven largely by health tourism and the size of the

Indian middle class. The recent liberalisation of trade and investment laws, together, with a

growing commitment to national healthcare, makes India one of the most promising

emerging markets for medical device manufacturers.


Draft Copy

Figure 14: Future growth of medical equipment market in India (USD million)

10.0 PHARMA CORRELATION

In 2004, the Mashelkar Committee called for the creation of a specific medical devices

division within the Central Drugs Standard Control Organisation (CDSCO) to address the

management, approval, certification and quality assurance of all medical devices in India.

These regulations work within a similar framework as medical ‘drugs’ (or combination

products) and aim to enhance the requirements for devices that were subject to few or no

controls, reduce duplication of devices previously assessed by foreign regulatory bodies and

place increased emphasis on manufacturer quality, risk management systems and post-market

surveillance.

10.1 Combination Products: The Future of Medical Devices

Combination Products is an emerging innovation that has resulted in benefits to patients &

has attracted many life sciences companies, physicians, and investors. The combination

products combine the benefits of drugs, biologics & medical device by converging

pharmaceutical & medical device manufacturers. Technological advances in drugs, medical

devices, and biologic-based products continue to lead to the development of products aimed

at improving patient outcomes and extending human life. Marrying two or more of these

healthcare products into a combination product, such as a drug-eluting stent, demonstrates

patient benefits like:


Draft Copy

Innovative ways to extend lifecycles of existing products for manufacturers

Reduced toxicity in patients

Fewer side effects for patients

Higher rate of efficiency

Improved patient compliance

10.1.1 FDA definition of combination products

The term combination product includes:

1. A product comprised of two or more regulated components, i.e., drug/device,

biologic/device, drug/biologic, or drug/device/biologic, that are physically, chemically, or

otherwise combined or mixed and produced as a single entity

2. Two or more separate products packaged together in a single package or as a unit and

comprised of drug and device products, device and biological products, or biological and

drug products

3. A drug, device, or biological product packaged separately that according to its

investigational plan or proposed labeling is intended for use only with an approved

individually specified drug, device, or biological product where both are required to

achieve the intended use, indication, or effect and where upon approval of the proposed

product the labeling of the approved product would need to be changed, e.g., to reflect a

change in intended use, dosage form, strength, route of administration, or significant

change in dose

4. Any investigational drug, device, or biological product packaged separately that according

to its proposed labeling is for use only with another individually specified investigational

drug, device, or biological product where both are required to achieve the intended use,

indication, or effect.

Technological advances in drugs, medical devices, and biologic-based products continue to

lead to the development of products aimed at improving patient outcomes and extending

human life. Marrying two or more of these healthcare products into a combination product,

such as a drug-eluting stent, demonstrates patient benefits like :

Innovative ways to extend lifecycles of existing products for manufacturers

Reduced toxicity in patients

Fewer side effects for patients

Higher rate of efficiency

Improved patient compliance


Draft Copy

10.1.2 Combination products: Categorization

a) Traditional drug-delivery systems combine or package drugs together with injection

devices to improve convenience of administration. This includes prefilled syringes, pen-

based delivery systems, drug pumps, and auto injectors. Because the drug-device interface

is relatively simple in these products, the components can be developed separately and

then integrated during later stages of their development cycles. These components can

also be regulated separately using the established regulatory regimes for drugs and

devices.

b) Novel drug-delivery systems (e.g., patches, transdermal or intradermal injections,

inhalation devices, sprays, and drug-eluting disks) typically combine existing drugs with

new delivery devices. These are designed to improve convenience and comfort of

administration, improve drug effectiveness through localized administration, or enable

delivery of a drug through a non-traditional route (other than oral or subcutaneous and

intramuscular injections). Although the complexity of these products is typically

moderate, changes to administration, drug formulation, and bioavailability can increase

the technology of drug development. Because their primary therapeutic mode of action is

drug related, these products are primarily governed by the regulatory pathway for drugs.

c) Drug-enhanced devices, such as drug-eluting stents, coated catheters, anti-infective

sutures, bone cements with antimicrobial agents, and other devices with antimicrobial

coatings enhance the functionality, efficacy, or performance of devices. In many cases,

these products combine existing devices with existing drugs. Although the complexity of

the device component could vary depending on its function, the drug-device interface is

often novel and is critical to the performance of the combination product. Consequently,

development is much more complicated than similar device-only products. Because the

primary therapeutic action stems from devices, device regulators primarily govern these

products, with a secondary review from drug-related regulatory agencies.

d) Regenerative medicinal products combine devices with biologically active substances to

facilitate healing and regenerate damaged tissues. The device often serves as the

scaffolding for the growth of the biologic component and the product is often an implant.

Examples include Dermagraft (human fibroblast-derived dermal substitute), coated

absorbable meshes for bone growth, spinal fusion cages with recombinant human bone

morphogenic proteins, and the artificial replacement organs (e.g., bioartificial pancreas).

These are the most complex combination products because they have to take into


Draft Copy

consideration the interaction between the product and the body's response to it. The

development process for such products is also the most complicated and integrated

because the components under development must be tightly coupled. The primary mode

of action varies on a case-by-case basis, as does the lead review and oversight agency.

In order to help in determining the most appropriate regulatory pathway, the FDA developed

a categorization scheme for combination products. Under this scheme, a product is placed

into one of nine categories:

Convenience kit or co-package

Prefilled drug delivery device/system

Prefilled biologic delivery device/system

Device coated/impregnated/otherwise combined with drug

Device coated or otherwise combined with biologic

Drug/biologic combination

Separate products requiring mutually conforming labelling

Possible combination product based on mutually conforming labelling of separate

products

Other type of combination product

10.1.3 Example of combination product: Drug eluting stent (DES) and targeted drug

delivery

As an alternative to systemic therapy, local drug delivery offers the advantages of allowing

high concentration of drug at the treatment site while minimizing systemic toxic effects.

Delivering medication directly to the site of vascular injury via polymer coated stents is a

rational approach to achieve adequate local drug delivery.

Artificial or natural polymers that are biocompatible and biodegradable are often used for the

preparation of particulate systems. Such polymers include polylactic Acid (PLA), polylactic -

co-glycolic acid (PLGA), Acrylic Polymers or Co-polymers, hyaluronic acid derivatives and

alginates. Among the available biodegradable polymer, the PLA and PLGA are the most

widely used. Drug compounds are mixed in the polymers matrix and gradually become

released as the polymer is dissolved in the tissue.

The drug polymer coating can be applied by dipping or spraying of solution, consisting of

drug and polymer, mixed in desired proportion, using evaporative solvent material of

relatively high vapour pressure to produce the desired viscosity, and quickly established


Draft Copy

coating layer thickness. Dip coating is often undesirable for coating complex geometries like

stents, since coating solution may get entrapped, in the device structure which may typically

cause bridging, i.e. forming of a film across the open space between structural members of

the device. This can interfere with the mechanical performance of the stent, such as

expansion during deployment in a vessel lumen. Bridges tend to delaminate and rupture the

coating film during expansion and provide sites that activate platelet deposition by creating

flow disturbances in the adjacent homodynamic environment. In addition, delamination may

cause particles to dislodge from the stent surface, potentially leading to other complications.

Also multiple layer coating of drug - polymer solution is not possible with dip coating

technique, as the freshly coated layer diffuses within the previously coated layers causing

there dissolution.

The research on developing coating technique was made at university of Texas health science

centre at San Antonio, TX, USA, research and development division using stent of

Sahajanand Medical Technology, India, to develop a four layer drug - polymer matrix,

programmed to achieve controlled drug released and that can be spray coated by means of air

suspension technique on the cardiovascular stent. Unlike the multiple layer coating , single

layer coated stents offer constant drug release profile, which is not desirable in the case of

local drug delivery where drug demand decreases from the time of stent implantation.

To ensure the proper coating integrity stents were subjected to balloon expandability test.

Drug coated stents were crimped on the balloon by means of crimping machine. The crimped

stents were expanded by expansion device. Sterile fluid was pumped as an expansion media.

Stent was crimped on the balloon and expanded at rated pressure of 6 atm.

11.0 PRICING ISSUES

Pricing strategies need to balance the demands of the market with the needs of the company.

Pricing objectives need to be closely linked with organizational and marketing objectives, as

well as taking account of cash-flow requirements, profit objectives and return on investment

(ROI). In addition, they must take into account the market’s price sensitivity. In view of the

complexities involved in pricing obtaining an efficient pricing strategy is an important issue

for all medical device and diagnostic companies.

The Government is bringing in a medical devices Act in a bid to regulate prices of healthcare

equipment. Thirty to forty percent of healthcare costs comprise of diagnostic kits and other

medial equipment and hence the Act will ensure an ISO certification procedure for medical


Draft Copy

equipment and it will make manufactures of medical devices adhere to proper standards. This

initiative will reduce the cost of healthcare considerably by making it more competitive

because as currently we import them instead of letting our own industry manufacture the

devices. Thus, once we have the demographic advantage of having the lowest cost in

healthcare, then we can take leverage of that in the international market.

Further, industry experts recommend that all devices that are USFDA or CE certified should

be fast-tracked and not have to go through the entire regulatory process in India, as the

amount of regulations and cost of healthcare in a country are directly proportionate. This can

be demonstrated by the example of Japan which is the most regulated market consequently

having the highest cost of healthcare. For example, a certified mechanical bi-leaflet heart

valve sells in India for USD 1000, Europe for USD 4000, US for USD 7000 and in Japan for

USD 12000. Not only are high costs passed down the value chain to patients but also restrict

the availability of devices, as those which do not accrue a minimum revenue to cover costs,

do not make business sense to import.

12.0 FEW PREMIER INSTITUTES / ORGANIZATIONS IN INDIA WITH

RELEVANT EXPERTISE IN THE AREA

12.1 Sree Chitra Tirunal Institute for Medical Sciences and Technology, Chennai

A multidisciplinary team of scientists and engineers along with the supporting staff work here

in multidisciplinary areas from biomaterial development and characterization to medical

device development, testing and evaluation. A technical facility exists for the pilot production

of medical devices as a link between the institute and industry. The biomedical technology

wing has implemented a quality system to meet the requirements of international ISO/IEC

17025 standards and several tests have also received international accreditation. The facilities

available include instruments for Material Characterization, Biomaterials, Biomedical

Engineering, Biological Evaluation and other general facilities like FTIR, Thermal Analyzer,

GC, HPLC, X-Ray Diffractometer, Bio-ceramics laboratory, Scanning Electron Microscopy,

biosurface technology, polymer technology and analysis, Artificial organs development, ,

modelling and prototyping, dental products, polymer processing, precision fabrication

facility, Implant Biology studies, cell culture, toxicology, histopathology, microbiology,

electron microscopy facility, molecular medicine, thrombosis, animal surgery, in vivo animal

models and testing.


Draft Copy

12.2 Indian Institute of Technology, Mumbai

The Indian Institutes of Technology (IITs) have developed world-class capabilities for

education relating to science, technology and engineering that are well recognised.

The Indian Institute of Technology, Mumbai has established a new School of Biosciences and

Bioengineering. This school integrates the existing bio-related activities of various science

and engineering departments of the Institute and provides a new thrust to them. This

department covers biomaterials and bioengineering, biochemical engineering, and genetic

engineering. Their strengths in the physical sciences, in engineering, and in information

technologies provide powerful inputs for work relating to the new biotechnologies. Various

facilities available at the institute include some important instruments like Liquid

Scintillation Counter, Ultracentrifuge, Spectrophotometers, Thermal Cyclers, Electroporator,

FPLC Lyophilizer, HPLC30, DNA Sequencer, etc.

12.3 School of Medical Science and Technology, IIT, Kharagpur

The School of Medical Science and Technology at IIT Kharagpur was started with the

objective to provide a platform of interdisciplinary teaching and research in biology,

medicine and technology. Its mission is to provide a platform of interdisciplinary teaching

and research in the field of medical science & technology, which can lead to a better

integrated healthcare delivery system in India.

The School has a number of well-equipped state-of-the-art laboratories and is supported by

an excellent faculty, in addition to many other faculty members from different departments of

the Institute who have contributed considerably in building up these programs. The school

has Medical Imaging & Image Processing Lab, Embedded Systems Lab for Medicine,

Medical Instrumentation Lab, Bio-material, Tissue Engineering & Translational Wound

Research Lab, Cell and Molecular Biology Facilities, Bioinformatics and Proteomics

Facilities, Telemedicine lab and other Shared Facilities at Central Research Facility (CRF).

Some of the important instruments present in these labs are Ultrasound scanner & 3D & 4D

(with Colour Doppler), Picture Archival & Communication System (PACS), Scanning

Electron Microscope, FPGA based Medical Chip design facility, ECG and EEG recording

systems with test probes, FTIR , PCR machine, HPLC, ELISA reader, Fluorescence

Activated Cell Sorter, Automated DNA Sequencer, MALDI-ToF Mass Spectrometry and

Telemedicine software supporting live medical teleconsultation related to cardiology/

radiology/ pathology/ oncology/ tropical diseases over ISDN and lease lines and integration

with various medical instruments for diagnosis and treatment.


Draft Copy

12.4 Other Institutes and Facilities

Few UG & PG Teaching Program in Biomedical Engineering/Bioengineering are available in

India as below:

B. Tech/ B.E -27

M. Tech/ M.E-18

Ph.D.-52

UG program at Private Engineering Colleges

PG Government aided Colleges

Ph. D in Universities

However, these UG & PG programs focused mainly on instrumentations, material sciences

and software.

Research pertaining to R & D in Medical Devices is also undertaken at the All India

Institute of Medical Sciences (AIIMS), New Delhi for developing new heart valve design

(patented by AIIMS) for human use, ICMR and CSIR funded projects for low vision

enhancing devices, clinical trials for medical devices and biomaterials, etc. Further, AIIMS in

collaboration with Indian Institute of Technology (IIT) Delhi and Stanford University, USA,

has also launched a fellowship programme — Stanford-India Bio design (SIB) — to improve

the Indian medical technology industry.

13.0 A HELPING HAND: NIPER AHMEDABAD

13.1 Current Status of Technology and HR Gaps

Under the current scenario, the manufacturers of medical devices in India are well versed with the

latest technology. The products manufactured by them are at par with the imported ones but these

are quite cost competitive compared to their imported counterparts. They are also proven for their

safety and efficacy. So though the technology available is adequate and in a state of further

development, there is a serious lacuna in terms of skilled manpower in the various aspects of the

industry. A review of the academic courses available for training personnel for a career in the

medical devices industry was undertaken and it was observed that being a multidisciplinary field,

currently the industry employs people of various backgrounds. There are no dedicated academic

courses either short term or long term available in India for providing focussed education in Medical

devices. The only courses which may provide some basic knowledge in either engineering or

biomedical aspect of medical devices can be listed as below

No. Course Description Remarks


Draft Copy

1. Bioengineering

Biomaterials, Biomechanics, Bioinformatics, Bio-transport, Telemetry, Imaging, Anatomy & Physiology

BITS, Pilani, BE degree

2. Technical Cardiac, Neuro, Medical Imaging, etc.

Diploma courses at Paramedical institutes

3.Biomedical Engineering

Biochemistry, Anatomy & Physiology, Instrumentation, Control theory

BE degree at several engineering colleges

4.Biomedical Technology

Instrumentation and Methodology, clinical biology, molecular and cell biology

Diploma and Degree courses at University post graduate level

5.Instrumentation & control

BE degree at several engineering colleges

Thus, though increased investment for technological and infrastructural development is of

great importance, the need of the hour for the efficient growth of this sector is to generate

skilled manpower with both technical as well as pharmacy based understanding and training.

13.2 Recommendations for NIPER, Ahmedabad

The medical devices sector has been most often alienated from the Pharma sector being

considered more of an engineering based technical field. However, the wide range of

applicability in drug delivery and other therapeutic aspects clearly shows us that both Pharma

and Medical devices industry need to walk hand in hand for mutual benefit and to also bring

up the Medical Device sector at the level of the Pharmaceutical Industry.

Based on the above industry analysis the following recommendations can be considered for

NIPER, Ahmedabad to be evaluated further and considered for establishment.

13.2.1 Academic centres

Academic Institutions are required to match the technological and managerial demands of the

medical device industry. An up-gradation of existing educational and scientific levels to

match the needs of existing medical devices industry with steps to upgrade the curriculum not

only at the theoretical level but also in ancillary areas like intellectual property portfolios,

patents, licensing issues, literature and publication studies, hands/on training, etc. would be

of primary importance.

Combinatory research projects between different disciplines must be developed to get post-

graduates used to work in groups with different disciplines.

13.2.2 Testing facility for devices


Draft Copy

Establishing a testing facility for medical devices with testing equipments, testing models for

efficacy and quality control studies which would in turn provide hands-on training to the

students.

13.2.3 Pre-clinical and clinical studies for medical devices

Execution of pre-clinical/clinical studies necessary for medical devices (class 2B and III) for

the industry following regulatory guidelines for training the personnel and providing

necessary facility for the SMEs.


Draft Copy

Documents

medical device market

local market

supplies market

market drivers

market growth

market needs

medical device sector

supply of medical devices