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This report provides the
highlights of the recent Ernst and Young study on the Indian healthcare
industry. The study was conducted in association with the Federation of Indian
Chambers of Commerce and Industry (FICCI) to evaluate the system, understand the
prevailing trends and suggest a reform road-map to the government. It was
released at the conference titled "Global Healthcare Conference : Promoting
Partnership" held on January 15 and 16, 2007 at FICCI, New Delhi in partnership
with UK Trade and Investment (UKTI).
The combined effect of a grossly
understaffed industry and an ever widening physical gap in infrastructure
presents an opportunity to foster foreign direct investment and for stakeholders
to align towards a common industry agenda. The industry highlights nine key
areas of opportunity.
Medical Equipment
The medical equipment industry
was estimated to be a USD 2.17 Billion (Rs. 9,765 Cr) market in 2006, growing at
15 percent per year, and is projected to grow to USD 4.97 Billion (Rs. 22,396
Cr) by 2012. Currently, imports account for more than 65 percent of the medical
device market, of which 85 percent are imported from the US, Germany and Japan.
Moreover, 65 Percent of the Indian manufacturers can be classified in the SME
sector, which means that their average annual sales volume is not more than Rs.
50 Lakhs. Therefore, forging partnership across borders is essential.
Engineering excellence, cost effective labor, increasing emphasis on
intellectual property rights and a fast growing domestic market makes India an
Ideal manufacturing base.
The following steps taken by the
government clearly show how the government is in the right direction to promote
this industry :
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Reduction on import duty on
medical equipment from 25 percent to 5 percent
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Increase in depreciation limit
from 40 percent to 25 percent
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Reduction on custom duty from
16 percent to 8 percent for medical, surgical, dental, and veterinary
furniture.
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Reduction on customs duty to 5
percent on 24 medical equipments including X-ray, goniometry and tele-therapy
instruments.
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Proposal of setting up "Medical
Parks" to enable manufacturing of health equipment on a large scale by the
Union Health Ministry.
Typically, medical device
suppliers arrange joint ventures of license agreements with Indian manufacturers
or employ local agents to enter the market. The Indian government encourages all
of these options. It has therefore become imperative for Indian manufacturers to
urgently develop trade and investment contracts as market entry costs will be
prohibitively expensive in the future. The Indian government needs to bring in
stringent quality standards and regulations for the industry in order for it to
be globally competitive. Also, arrangement of special economic zones (SEZs) is a
method that the government should utilize to encourage this industry. Cancer
diagnostics, medical imaging, ultrasonic scanning, plastic surgery equipment,
and polymerase chain reaction technologies are projected to be the best sales
prospects in the medical device market.
Medical Textiles
Growth in the medical
infrastructure industry would result in associated growth in this industry. The
industry size is expected to grow to USD 753 million (Rs. 3,388 Cr) by 2012 from
USD 405 million (Rs. 1,822 Cr) in 2002. The scope of this industry has increased
from the usual wound care and incontinence products, plasters, clothing and
bedding due to innovations in textile technology, the presence of a wide variety
of woven, non-woven and knitted forms of textile.
India has always been dependent
upon imported textile products for surgical and extra corporeal application. The
unorganized sectors have been catering largely to the third and the biggest
segment of healthcare and hygiene products. The Indian medical textile
opportunity clearly presents a wide array of opportunities for foreign investors
and domestic players.
(Ref : Medical Buyer February, 2007) |
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