India’s medical device caps: what they mean for the market

30 April 2018 (Last Updated April 30th, 2018 15:35)

On 15 March, India’s Department of Pharmaceuticals (DOP) proposed a new set of guidelines to limit the proportion of medical devices publicly sourced from foreign manufacturers.

India’s medical device caps: what they mean for the market
The proposed medical device guidelines build on the ‘Make in India’ initiative. Credit: Narendra Modi

On 15 March, India’s Department of Pharmaceuticals (DOP) proposed a new set of guidelines to limit the proportion of medical devices publicly sourced from foreign manufacturers. This proposal builds on the ‘Make in India’ initiative and marks the next step in a series of recent changes to the country’s medical device market.

The proposed guidelines set proportions of domestic product requirements for different categories of medical devices. While local products must make up at least 50% of publicly procured disposable and consumable devices, the requirements for implants; diagnostic reagents and in vitro diagnostics (IVD); and medical electronics, hospital equipment, and surgical equipment sit at 40%, 25%, and 25%, respectively.

This new initiative follows closely behind price caps set in 2017 on coronary stent and knee replacement implant products. These guidelines aim to make healthcare more accessible and affordable to Indian patients, while also promoting local business and boosting the economy. However, the short-term effects of the price caps and limited foreign products might not be as positive.

Domestic Indian manufacturers have long provided cheaper alternatives to imported devices, but these products often lack the technological innovations found in foreign-made products. To truly grow the value of healthcare in India, local manufacturers will need to shift focus from cheap ‘me too’ products and begin incorporating high-end capabilities into their devices, particularly if more widespread price caps occur, triggering foreign manufacturers to remove high-end products from the Indian market. Additionally, domestic players will likely see increased demand as a result of the new initiatives, and will need to adjust manufacturing capabilities to keep up with market requirements. These are all new concerns for the local market, and at present there is a distinct lack of resources to assist players in keeping up with the new standards.

Concerns for foreign manufacturers

Concerns are present too for foreign players, which have traditionally seen emerging markets such as India as an area of high growth. To remain competitive in the evolving market landscape, foreign companies will need to reevaluate their strategy.

One potential solution to the domestic cap guideline would be for foreign players to acquire a local player and distribute products through the acquired company; however, this is likely a temporary solution. Similar practices in China have led to a reclassification of acquired companies as foreign, rather than domestic.

The price caps present problems as well. In response to the cap set on coronary stent prices, several large multinationals including Medtronic and Abbott applied to remove their stents from the Indian market, citing the price cap as much too low for the technology offered. Although the applications were denied and foreign stents remain on the market, it is a matter of time before an exit strategy is reached, after which Indian patients may lose access to novel technologies.

As the general population in India continues to age, access to advanced medical devices will become more important than ever. The new guidelines proposed and set forth by the India DOP will benefit the Indian market in the long run by growing the local market and increasing patient access to needed healthcare. In the short term, though, the process looks to be bumpy, and may even cost patients access to advanced technology.

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