Current Market Trends
Capital: New Delhi
Population: 1.3 billion
GDP: $10.38 trillion (PPP)
Currency: Indian National Rupee (INR)
Language: Hindi, English
The Indian healthcare sector is experiencing rapid change. 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. Rapid economic growth, rising middle class incomes and a surge in lifestyle diseases have created a booming life science market. According to the World Health Organization (WHO), Indian per capita health spending stands at just $132 (on a PPP-adjusted basis), ranking 145th amongst WHO nations and less than 2% of the $8,632 spent in the United States.
Healthcare has become one of the India’s largest sectors – both in terms of revenue and employment. Healthcare in India comprises hospitals, medical infrastructure, medical devices, clinical trials, outsourcing, telemedicine, health insurance and medical equipment. The Indian healthcare industry amounted to US$160 billion in 2017 and is expected to reach US$370 billion by 2022, due to increased demand for specialized and quality healthcare facilities. The market is dominated by private players. The industry is rapidly developing and is being fueled by large investments from existing corporate hospital chains and new entrants backed by private equity investors. This growth will be driven by healthcare facilities, private-public projects, medical diagnostic and pathological laboratories, and the health insurance sector. In addition, changing demographics, disease profiles and the shift from chronic to lifestyle diseases in the country has led to increased spending on healthcare delivery.
Healthcare Policy Issues
India presents both opportunities and significant challenges in the healthcare sector. The medical device sector has immense long-term potential for U.S. firms, but currently faces a multitude of challenges. Non-tariff barriers, such as procurement requirements favoring domestic firms, regulation that treat medical devices as pharmaceuticals, and price controls on certain medical devices (with the prospect for more in the future), constrain U.S. exporter prospects. Weak intellectual property protection and enforcement inhibit market attractiveness for the pharmaceutical industry. While India’s market has undergone impressive economic growth over the last twenty-five years, it remains difficult to navigate. India is more than likely a part of an established company’s long-term business plan rather than a first-to-export destination for a novice exporter.
In India, healthcare is delivered through both the public sector and private sector. The private sector’s contribution to healthcare has been growing at a faster pace than the public sector. There are no restrictions on foreign direct investment in healthcare services. Import of medical equipment is allowed under the “Open General” category of the Import regulations, except for nuclear medicine. Customs duty levied on imported products depends on the product classification, for some devices the duty has been brought down from 25 to 5%. Products classified as “lifesaving equipment” have reduced duty applicable on them to encourage hospitals to import latest equipment.
Price, quality and after-sales service support are major factors in medical equipment purchase decisions. Letter of credit is usually the mode of payment for imports. Purchase decisions in government follow a tendering process and is time consuming, while it is faster in the private hospitals.
The Indian population of over one billion people is growing at a rate of 1.6% per year. An aging population of over 100 million, with rising incidences of lifestyle diseases combined with rising incomes and increased penetration of health insurance are fuelling growth of the industry. Considerable challenges exist in terms of service accessibility and patient care quality. As such, Government support would inherently play a significant role in the overall development and growth of the sector.
High upfront investments, long development periods, and rising real estate costs are compelling private players to innovate with business models and expand into under penetrated Tier II & Tier III cities. As a result, these private players can capitalize on the opportunity to expand. The private sector is likely to contribute 80-85% of the $86 billion healthcare investment required by 2025.
The Indian medical device market is worth an estimated $5.5 billion (without the inclusion of rural market potential) and is expected to reach $10 billion by the end of 2020. The medical device industry is a very attractive export sector for U.S. firms, which account for one quarter of exports to India. India imports nearly 80% of its medical devices and barriers to entry are low 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 high momentum in India. Currently 15% of the population is covered by government health insurance companies and 2% by private health insurance. For the purposes of regulation, health insurance companies are classified as non-life companies. General Insurance companies are called as Non-Life companies in India. This penetration of health insurance will significantly increase the affordability of healthcare services for the population. Several private insurance companies have entered the market and have enlisted 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 government or private sector, the private sector’s contribution to healthcare has been growing at a faster pace than that of the government. The medical infrastructure market is estimated to have a growth rate of 15%. Both the government and private sector are planning several new specialty and super-specialty hospital facilities, modernization of existing hospitals. India currently faces a chronic shortage of healthcare infrastructure, especially in rural areas and Tier II and Tier III cities, and it is expected that India will have a potential requirement of 1.75 million new beds by the end of 2025. The opportunity also exists for overseas organizations to set up hospitals in India through Foreign Direct Investments (FDI). The hospital services market, which represents one of the most important segments of the Indian healthcare industry, is currently valued at $80 billion and accounts for 71% of the industry revenues.
The new specialty and super-specialty hospital facilities depend on the import of high-end medical equipment, accounting for over 65% of the entire market. There is a need for sophisticated hospital equipment, especially operation theatre products and training through simulation labs. In view of the relatively low customs duty rates (9.2-15%) combined with an increasing number of healthcare centers specializing in advance surgery, India offers opportunities for the direct supply of high-tech, specialized medical equipment, products and systems.
Biotech is one of the fastest growing segments of the life sciences sector and represents a diverse opportunity for foreign firms. The Indian biotech industry has an approximately 2% share of the global bio-tech industry. The industry is comprised of about 800 companies and is expected to grow from the current $5-7 billion to $100 billion by 2025. India has emerged as a leading destination for clinical trials, contract research, and manufacturing activities owing to the growth in the bio-services sector.
The boom in medical tourism in the Indian healthcare sector is encouraging hospitals and hoteliers to strike alliances with each other. The presence of world-class hospitals and skilled medical professionals has strengthened India’s position as a preferred destination for medical tourism. According to the industry estimates, the medical tourism market is expected to grow from $3 billion to $7-8 by 2020.
E-healthcare/Telemedicine, though in its infancy in India, is beginning to take root. Most public hospitals (funded by State governments) and private single and multi-super specialty hospitals have gone in for customized Hospital Management Systems and other medical based IT products. Given the poor availability of quality healthcare facilities outside the large and second tier cities, telemedicine is expected to become a viable business proposition. Several major private players like Apollo, AIIMS, and Narayan Hrudalaya have adopted telemedicine
services. With increased private participation, the healthcare sector has also witnessed a rise in FDI inflows. The Government of India (GOI) has permitted 100% FDI for all health-related services under automatic route.
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 than for new instruments. Some international companies operating in India also sell used medical laboratory instrument to their Indian customers. Also, Indian hospitals and agents demand continuous service support for these instruments and require spares when needed. U.S. companies in the used/refurbished medical instruments business may consider setting up liaison offices in India to 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 of 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% 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. While rates of customs duty vary from product to product, generally it is lower for used equipment as compared with new equipment.
The large private healthcare services providers are actively seeking growth by enhancing their reach across the country through the building of new hospitals and acquiring and upgrading existing hospitals. There are several groups operating hospital chains including Apollo Group, Fortis Healthcare, Manipal Group, Max Healthcare, Medanta-Medicity, and Wockhardt Hospitals. In the medical equipment segment, competition is from imports from Europe and Japan. With India being a price sensitive market, there is also competition from low-priced Chinese products.
The growing demand for quality healthcare and the absence of matching delivery mechanisms poses a challenge and certainly a great opportunity. In Infrastructure – building, equipping, managing and financing the super-specialty hospitals in India through the FDI route is another area for future growth. Some best sales prospects in the medical equipment market include medical and surgical instruments, medical imaging, electro medical equipment, orthopedic and prosthetic appliances, cancer diagnostic, orthodontic and dental implants equipment, ophthalmic instruments and appliances, Point of Care Testing (POCT) diagnostic devices.
A proper supply of equipment and medical consumables will also be an area with significant opportunity for American companies. Several leading U.S. purveyors 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 also classifying and certifying healthcare centers.
Other growth areas include diagnostic kits, reagents, hand-held equipment and simulation for operation rooms. Imports constitute 50% 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 60 million diabetics, which is expected to swell to 90 million by 2025.
Unit: USD millions
Medical Devices & Equipment
Total Market Size
Total Local Production
Imports from the U.S.
Total Market Size = (Total Local Production + Total Imports) – (Total Exports)
Data Sources: Statistical data are 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
The Central Drugs Standard Control Organization (CDSCO) is the key regulatory organization in India. Import of medical devices into India still remains largely unregulated, though the Indian government has adopted some measures in recent years to change that. With the final procedures and guidelines not being laid down as yet, things are actually pretty confusing at this stage. Currently, the Ministry of Health and Family Welfare, Government of India has notified only 14 devices that are regulated. The attached web link provides the list of the 14 regulated medical devices: http://cdsco.nic.in/Medical_div/list%20of%20notified%20medical%20device.0001.pdf Please review the web link http://www.cdsco.nic.in/forms/list.aspx?lid=1580&Id=1 for more information on import regulations and registration process for medical devices and diagnostic equipment.
The CDSCO drug controller contact information is provided below. Please write to the CDSCO office for detailed information on medical device import regulations and registration requirements:
Dr. S. Eswara Reddy – Drug Controller General India
Central Drug Standard Control Organization (CDSCO)
Ministry of Health & Family Welfare
FDA Bhavan, New Delhi – 110002
Phone: +91-11-23236965 (D)
Website: www.cdsco.nic.in http://www.cdsco.nic.in/forms/contentpage1.aspx?lid=1441
JOINT DRUGS CONTROLLER (INDIA)
Medical care in India is provided at cost for immediate payment. The Indian healthcare landscape is characterized by high out-of-pocket expenditure. This means that most Indian patients pay for their hospital visits and doctor appointments with cash after care with no payment arrangements. Health Insurance is slowly gaining momentum in India. Currently 15% of the population is covered by government health insurance companies and 2% by private health insurance.
To ensure quality healthcare in October 2005, the Government of India (GOI) increased the list of medical devices covered under the Drugs and Cosmetics Act of 1940, bringing fourteen categories of implantable devices under regulatory control. These include hypodermic syringes and needles, cardiac stents, drug eluting stents, heart valves, catheters, intra-ocular lenses, hip and knee implants and bone cements, I.V. Cannulae, scalp vein set, in- vitro diagnostic devices. An improved central licensing authority must license these devices for manufacture, sale or distribution. Hospitals are also seeking quality accreditations like JCI, NABH and ISO.
Procurement and Tenders
Name of event: Medical Fair India, February 21-23, 2019
Location: New Delhi
English language website: http://www.medicalfair-india.com/
Description: This event will advance the goals of India Commercial Engagement Strategy (ICES) in the medical/healthcare sector. Companies will also have an option to participate in the U.S. pavilion at the Medical Fair India 2019.
Name of event: Trade Winds Indo-Pacific Forum and Mission, May 6-13, 2018
Location: New Delhi, Mumbai, Chennai, Ahmedabad, Hyderabad and Kolkata
English language website: https://2016.export.gov/tradewinds/
Description: Trade Winds, the largest annual U.S. Government-led trade mission is headed to India! Companies will have an opportunity to Network with key industry contacts, schedule individual meetings with U.S. Economic Diplomats, gain first-hand market insight and solidify your Indo-Pacific business strategy during the U.S. Commercial Service Trade Winds Forum and Mission in New Delhi, May 6-8, 2019. Customize a business matchmaking schedule to meet one-on-one with pre-screened buyers, agents, distributors and joint-venture partners in New Delhi, Mumbai. Ahmedabad, Chennai, Hyderabad and Kolkata from May 8-10, 2018.
Name of event: Medicall, July 26-28, 2019
Location: Chennai English language website: http://medicall.in/medicall/index.php
Description: This event will advance the goals of India Commercial Engagement Strategy (ICES) in the medical/healthcare sector. Companies will also have an option to participate in the U.S. pavilion at Medicall 2019.
The most promising sub-sectors in the healthcare and medical equipment sector are:
Local Associations and Government Links
1. What is the size of the industry in India?
The Indian medical device market is worth an estimated $5.5 billion (without the inclusion of rural market potential) and is expected to reach $10 billion by the end of 2020. The medical device industry is a very attractive export sector for U.S. firms, which account for one quarter of exports to India. With about 700 medical device makers, India’s medical device market is currently the fourth-largest in Asia (after Japan, China and South Korea) and ranks among the world’s top 20.
2. How much of India’s demand for medical devices is met by imports?
Imports constitute a substantial part of the medical device market in India. An estimated 80% of India’s demand for medical devices is currently met by imports, nearly 30% of which are supplied by the United States. Imported medical devices are often those that are critical, innovative and high-risk in nature - either life-saving or life-enabling - and therefore undergo rigorous testing. These complex, innovative devices are designed to address the growing expectations of India’s population in the country’s rapidly evolving healthcare system.
3. What are the major regulatory challenges faced by the medical device industry in India?
The medical device industry in India has grappled with challenges for several years around recognition and regulation. While the Global Medical Device Nomenclature (GMDN) lists more than 14,000 different product types, the current regime only regulates a relatively modest portion of these products. Moreover, these devices/products are regulated as “drugs” under the Drugs and Cosmetics Act of 1940. This is problematic because medical devices are very different from drugs in terms of diversity, product development, patent structures, types of failures, scientific disciplines involved in assessing performance/efficacy. In addition to the arbitrary application of the rules for drugs to medical devices, which hinders the development, quality of and access to medical devices, there is also a lack of predictability in the regulatory system. The industry is also concerned about the lack of standardization in line with global best practices.
4. What is Ayushman Bharat Scheme or National Health Protection Scheme of India?
India is set to launch the world’s largest healthcare scheme, Ayushman Bharat, covering 100 million underprivileged five-member families. The Government of India announced this flagship project on India’s 70th Independence Day, August 15, that provides INR 5 million ($71,000) in insurance coverage to each family. The initiative is being undertaken by the Government of India in its pursuit of providing best healthcare to the poor. The project is expected to launch on September 25, 2018 when then full roll out of the scheme will be announced.
U.S. Commercial Service Contact Information
Name: Ruma Chatterjee
Position: Commercial Specialist
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