India - Commercial Guide
Healthcare and Medical Equipment

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2020-08-25

Overview                                                                                                                            

The Indian Healthcare sector is experiencing rapid change and has become one of India’s largest sectors - both in terms of revenue and employment.  Though this change has been underway for many years it has become significantly visible in the last decade, with a renewed thrust from both the government and a growing market for healthcare services and products.  The Indian population of over one billion is growing at a rate of 1.6 percent per year with an elderly population of over 100 million.  Rapid economic growth, and rising middle class incomes, and increased market penetration of health insurance are all fueling growth in the industry.   In addition, changing demographics, disease profiles shift from chronic to lifestyle diseases in the country has led to a boom in spending on healthcare.

The Indian healthcare industry amounted to $160 billion in 2018 and according to the India Brand Equity Foundation (IBEF), it is expected to reach $370 billion by 2022 due to increased demand for specialized and quality healthcare facilities.  The products and services driving the growth in the India market consist of hospitals, medical devices, clinical trials, telemedicine, medical tourism, health insurance and medical equipment.  The industry’s rapid development is fueled by large investments from existing corporate hospital chains and new entrants backed by private equity investors. Considerable challenges exist in terms of service accessibility and patient care quality.

According to the Global Burden of Disease Study (GBD), released by Lancet Medical Journal in 2018, India ranks 145th among 195 countries on the healthcare index.  India’s healthcare access and quality (HAQ) index has seen improvements over the years and increased from 30.7 in 1990 to 44.8 in 2015 and 67.3 in 2020.

The Covid-19 pandemic crisis is a reminder of the importance of investing in the healthcare sector for any country.  Hence, most industry experts believe that there will be a big thrust on healthcare in India in the next few years.  Currently, India spends only 1.2 percent of its GDP on healthcare, but the Government of India (GOI) is planning to increase public healthcare spending to 2.5 percent of the GDP with a special focus on the underprivileged by 2025As the expenditure on the Indian healthcare sector increases there will be a corresponding growth in the medical equipment sector. 

The medical device industry is an attractive export sector for U.S. firms despite many challenges.  Non-tariff barriers and the expansion of price controls to medical devices have constrained market prospects.  Weak intellectual property protection and enforcement hinder exports for the biopharmaceutical industry.  While India’s market has undergone significant economic growth over the last twenty-five years, it remains difficult to navigate. 

India imports nearly 80 percent of its medical devices and barriers to entry are lower compared to other industries.  India remains highly dependent on imports for many types of medical devices, particularly higher end products that include cancer diagnostics, medical imaging, ultrasonic scans, and PCR technologies. Imports are growing rapidly as world-class hospital groups such as Max, Hinduja Group, Fortis, and Apollo build high-end infrastructure and open India to medical tourism, which now adds $2 billion to the Indian healthcare market.

Health insurance is gaining momentum in India.  Currently, 15 percent of the population is covered by government health insurance and 2 percent by private health insurance.   Several private insurance companies have entered the market and have petitioned hospitals to provide cashless treatment to subscribers of insurance companies.

In India, healthcare is provided through primary, secondary, and tertiary care hospitals. The first two categories are fully managed by the government.  While the tertiary care hospitals are owned and managed by either the government or private sector, the private sector’s contribution to healthcare has been growing at a faster pace than the government.  The medical infrastructure market is estimated to have a growth rate of 15 percent.  Both the government and the private sector are planning several new specialty and super-specialty hospital facilities, as well as modernization of existing hospitals.  India faces a chronic shortage of healthcare infrastructure, especially in rural areas, and second and third tier cities.    Current estimates are that India will require up to 1.75 million more hospital beds by the end of 2025.  This creates an opportunity for overseas organizations to set up hospitals in India through foreign direct investment (FDI).  According to the industry sources, the hospital industry in India is growing at a CAGR of 16-17 percent and is expected to touch the $130 billion mark by 2022-23. 

Biotech is one of the fast-growing segments of the life sciences sector and represents a diverse opportunity for foreign firms.  The Indian biotech industry is approximately two percent of the global biotech industry.  The industry is comprised of about 800 companies with a current market size of $5-7 billion depending on the source.  India is a leading destination for clinical trials, contract research, and manufacturing activities owing to the growth in the bio-services sector.

Digital healthcare/Telemedicine is in its infancy and is expanding rapidly in India due to the Covid-19 pandemic.  People are slowly adapting to new health technologies and intelligent solutions to reduce barriers between hospitals and patients. Telemedicine technology and artificial intelligence (AI) pose a great opportunity for U.S. firms in the years to come.  Several major private players like Apollo, AIIMS, and Narayana Hrudayalaya have adopted telemedicine services.   The Ministry of Health and Family Welfare with NITI Aayog has recently released official guidelines for telemedicine practices that allow  registered medical practitioners to provide remote consultation under the supervision of the Medical Council of India (MCI).   As India recovers from and adjusts to a post-COVID era, the government and companies in India are expected to focus even more on the digitization of healthcare by improving efficiency and better patient care.

Refurbished medical laboratory instruments also find a ready market in India.  These instruments are used as back-up machines in top-of-the-line hospitals. Less sophisticated hospitals and district hospitals view refurbished medical laboratory instruments as optimal for their laboratories because the investment cost is substantially lower.   Some international companies operating in India also sell used medical laboratory instrument to their Indian customers.  Indian hospitals and agents demand continuous service support and spare parts for these instruments.  U.S.  companies in the used/refurbished medical instruments business should consider setting up liaison offices in India to service and promote their products.

There are several restrictions on the import of used equipment in India prescribed by India's import-export policy.  Second-hand capital goods with a minimum residual life of 5 years can be imported by actual users of such equipment without a license.  The importer is required to furnish a self-declaration to the customs department specifying the residual life of the second-hand capital goods in a prescribed format.   The refurbished equipment shall not be transferred, sold or otherwise disposed  within a period of 5 years from the date of import, except with prior permission of the Director General of Foreign Trade (DGFT).  While selling, U.S. firms should remember that valuation of used equipment is a very technical area with frequent disputes between customs and the importer.   Spares, including accessories and tools for the maintenance and operation of such equipment, can be imported to the extent of 15 percent of the value of the equipment.   India is a high-cost economy for capital equipment, and Indian manufacturers and investors constantly seek to reduce their capital costs. 

To ensure quality healthcare, in October 2005 the GOI increased the list of medical devices covered under the Drugs and Cosmetics Act of 1940, bringing several categories of implantable devices under regulatory control. This list was further revised in October 2018, bringing several additional categories of implantable devices under regulatory control.  The new classification of Medical Devices: Device with lowest risk – Class A; devices with low-moderate risk – Class B; devices with moderate-high risk – Class C; and devices with high risk – Class D.  In January 2020, the GOI categorized all medical devices as ‘Drugs’ bringing the range of devices including instruments, implants and software, intended for medical use for humans or animals under the purview of Drugs & Cosmetics Act, 1940. 

In July 2017, the GOI introduced price controls on cardiac stents capping the selling price up to 70 percent lower than the prevalent market rate.  The order was followed by similar pricing cap on knee implants later in the year.   The devices were price capped after including them in the National List of Essential Medicines (NLEM).  Currently, 37 medical devices have been notified as ‘Drugs’ and are regulated under the Drugs and Cosmetics Act.  Of these, cardiac stents, drug-eluting stents, knee implants, condoms, and intra-uterine devices—are included in the NLEM and are subject to notified price caps.  The remaining medical devices are not under any form of price regulation.

In June 2020, the Department for Promotion of Industry and Internal Trade (DPIIT) amended its Public Procurement Order of 2017, giving priority to local companies having 50 percent or more local content.  Companies with less than 20 percent of local content are categorized as ‘non-local suppliers’ and cannot participate in most government tenders.

In addition, the new GOI Rules have eliminated the need for constant re-approval of manufacturing and import licenses and these licenses have now been made valid for perpetuity unless the license is suspended, terminated, or surrendered.  An approved central licensing authority must license these devices for manufacture, sale, or distribution.  Hospitals are also seeking quality accreditations like JCI, NABH, and ISO.

Unit: $ millions

 

Medical Devices & Equipment

2018

 

2019

 

2020 (est)

Total Market Size

8,500

8,974

11,280

Total Local Production

4,700

5,100

5,300

Total Exports

1,100

1,480

1,520

Total Imports

4,900

5,354

7,500

Imports from the U.S.

1,225

1,338

1,875

Total Market Size = (Total Local Production + Total Imports) – (Total Exports)

Data Sources:  Statistical data include unofficial estimates from trade sources and industry. As this industry has not been well documented in the Indian context, the estimates of industry size vary significantly across different sources.

Imports from the U.S.: United States Census Bureau

Imports from U.S. do not include the goods that U.S. firms export from Singapore and other Asian countries into India.

Note:  Due to the impact of Covid-19, there will be an increase in import of testing kits, PCR technologies, proposed vaccines in the year 2020-21.

Leading Sub-Sectors                                                            

The most promising sub-sectors in the healthcare and medical equipment sector are:

1)  Medical Infrastructure

2)   Medical and Surgical Instruments

3)  Medical Imaging

4)  Electro Medical Equipment

5)  Orthopedic and Prosthetic Appliances

6)  Cancer Diagnostics

7)  Ophthalmic Instruments and Appliances

8)  Orthodontic Equipment’s and Dental Implants

9)  Point of Care Testing (POCT) Diagnostic devices

10) Digital healthcare, Health IT and Telemedicine

Opportunities                                                                                   

The growing demand for quality healthcare and the absence of matching delivery mechanisms pose a challenge and an opportunity.  In Infrastructure, building, equipping, managing, and financing of super-specialty hospitals in India through the FDI route is another area for future growth.

A proper supply of equipment and medical consumables will also be an area with significant opportunity for U.S. companies.  Several leading U.S. manufacturers of hospital equipment and supplies have opened Indian operations to cater to this growing market.  India has become one of the leading destinations for high-end diagnostic services with tremendous capital investment for advanced diagnostic facilities.  Health insurance and hospital administration is another area in which U.S. companies can make a difference.  This opportunity includes introducing and maintaining industry standards, and classifying and certifying healthcare centers. 

Other growth areas include diagnostic kits, reagents, hand-held diagnostic equipment, and simulation for operating rooms.  Imports constitute 50 percent of this market.  Hand-held/portable diagnostic equipment (e.g. for blood sugar, blood pressure testing, etc.) is also a fast-growing segment since India has around 45 million diabetics, which is expected to swell to 70 million by 2025.

For more information about opportunities in this sector contact: Commercial Specialist Ruma Chatterjee