Healthcare Resource Guide: India

Last Updated: October 2019

India Statistics


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Summary

Policy Issues

Market Entry

Current Market Trends

Main Competitors

Current Demand

Registration Process

Reimbursement

Barriers

Procurement & Tenders

Trade Events

Best Prospects

Local Associations & Government Links

FAQs

CS Contacts

Capital: New Delhi

Population: 1.3 billion

GDP: $10.38 trillion (PPP)

Currency: Indian National Rupee (INR)

Language: Hindi, English

Summary

Indian healthcare is experiencing a 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. Rapid economic growth, rising middle class incomes, and a surge in lifestyle diseases have created a booming life science market.

Healthcare in India comprises hospitals, medical infrastructure, medical devices, clinical trials, outsourcing, telemedicine, health insurance, and medical equipment. The Indian healthcare industry amounted to $150 billion in 2018 and is expected to reach US $280 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.

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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 non-tariff barriers, such as regulations that treat medical devices as pharmaceuticals, and price controls on medical technologies constrain U.S. exporter prospects. For pharmaceuticals, price controls and weak intellectual property protection and enforcement inhibit market attractiveness for the pharmaceutical industry. However, recent regulatory changes on clinical trials for innovative pharmaceutical products may encourage the return of clinical research organizations. While India’s market for pharmaceuticals and medical devices 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.

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Market Entry

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 investment by the government. 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. The 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 a reduced duty applicable to them to encourage hospitals to import the latest equipment.

Price, quality and after-sales service support are major factors in medical equipment purchase decisions. A letter of credit is the usual mode of payment for imports. Purchase decisions by the government follow a tendering process and are time consuming, while the process is faster in private hospitals.

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Current Market Trends

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, an increase in lifestyle diseases, rising incomes, and increased market penetration of health insurance are fueling growth in 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 gestation periods, and rising real estate costs are compelling private players to innovate with business models and expand in Tier II and 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 $9 billion and is expected to reach $14 billion by the end of 2025. 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 momentum in India. Currently 15% of the population is covered by government health insurance companies and 2% by private health insurance. For the purpose of regulation, health insurance companies are classified as non-life companies (general insurance companies are called non-life companies in India). Increased use of health insurance will significantly increase the affordability of healthcare services for the population. 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 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%. Both the government and private sector are planning several new specialty and super-specialty hospital facilities, as well as 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 potentially require 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 investment (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 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 advanced surgery, India offers opportunities for the direct supply of high-technology, specialized medical equipment, products and systems.

Biotech is one of the fastest growing segments of the life sciences sector and represents a diverse set of opportunities for foreign firms. The Indian biotech industry has an approximately 2% share of the global biotech industry. The industry is comprised of about 800 companies and is expected to grow from the current $5-7 billion market to $100 billion by 2025. India has emerged as a leading destination for clinical trials, contract research, and manufacturing activities owing to 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 industry estimates, the medical tourism market is expected to grow from $3 billion to $7-8 billion 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 shown interest in 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 to 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 amount 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. For this reason, demand for refurbished and reconditioned equipment is high across a range of industry sectors. The best opportunities for U.S. firms to pursue are in the industry sectors of construction, mining, medical, machine tools, plastics, steel, oil refining, computers, printing, packaging, and dairy equipment. While rates of customs duties vary from product to product, generally they are lower for used equipment as compared with new equipment.

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Main Competitors

The large private healthcare services providers are actively seeking growth by enhancing their reach across the country through building 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 the imports from European companies and Japan. India being a price sensitive market, there is also competition from low-priced Chinese products.

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Current Demand

The growing demand for quality healthcare and the absence of matching delivery mechanisms pose 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, and Point of Care Testing (POCT) diagnostic devices.

A proper supply of equipment and medical consumables will also be an area with significant potential 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 classifying and certifying healthcare centers.

Other growth areas include diagnostic kits, reagents, hand-held equipment and stimulation 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.

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Registration Process

The Central Drugs Standard Control Organization (CDSCO) is the key regulatory organization in India for medical devices and pharmaceuticals. The Drug Controller General of India (DCGI) is the key official within the CDSCO. The DCGI is responsible for the approval of the manufacturing of certain drugs (vaccines, large volume parenteral, blood products, r-DNA derived), specific medical devices, and new drugs. In India, the manufacturing, import, sale and distribution of medical devices are regulated under India’s Drugs & Cosmetic Act and Rules (DCA).

Please visit https://www.cdsco.gov.in for more information on import regulations and registration procedures for medical devices and diagnostic equipment.

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Reimbursement

Medical care in India is provided at-cost for immediate payment. In India’s healthcare landscape, high out-of-pocket expenditures are common. This means that most Indian patients pay for their hospital visits and doctors’ 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.

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Barriers

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 is: devices 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 July 2017, the GOI introduced price controls on cardiac stents capping the selling price to 70% lower than the prevalent market rate. The order was followed by a similar pricing cap on knee implants later in the year. The devices were price capped after being included in the National List of Essential Medicines (NLEM). Currently, 23 medical devices have been notified as drugs and are regulated under the Drugs and Cosmetics Act. Of these, cardiac stents, drug-eluting stents, 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.

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.

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Procurement and Tenders

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Trade Events

Name of event: Medical Fair India + Clin Lab India, March 5-7, 2020

Location: Mumbai

English language website: https://www.medicalfair-india.com/, https://www.medicalfair-india.com/en/Visitors/Specials/Clin_Lab_India or http://scherago.com/clinlab-india/

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 2020. Clin Lab India is the exhibition & conference on the topic of laboratory medicine, Point of Care Testing, molecular medical diagnostics and clinical chemistry. The show is aimed to promote recent developments and market trends in the IVD sector.

Name of event: Medicall, July 24-26, 2020

Location: Chennai

English language website: http://medicall.in/medicall/index.php

Description: This event will advance the goals of the 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 Medicall 2020

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Best Prospects

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

  • Medical Infrastructure
  • Medical and Surgical Instruments
  • Medical Imaging
  • Electro Medical Equipment
  • Orthopedic and Prosthetic Appliances
  • Cancer Diagnostics
  • Ophthalmic Instruments and Appliances
  • Orthodontic Equipment and Dental Implants
  • Point of Care Testing (POCT) Diagnostic devices

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Local Associations and Government Links

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FAQs

1. What is the size of the industry in India?

The Indian medical device market is worth an estimated $9 billion and is expected to reach $14 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, and 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 has launched 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 ($71000) in insurance coverage to each family. The initiative is being undertaken by the Government of India in its pursuit of providing the best healthcare to the poor. The project was launched on September 25, 2018.

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Best Prospects

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

  • Medical Infrastructure
  • Medical and Surgical Instruments
  • Medical Imaging
  • Electro Medical Equipment
  • Orthopedic and Prosthetic Appliances
  • Cancer Diagnostics
  • Ophthalmic Instruments and Appliances
  • Orthodontic Equipment and Dental Implants
  • Point of Care Testing (POCT) Diagnostic devices

Unit: $ millions

Medical Devices & Equipment

2016

2017

2018

2019 (Estimated)

Total Market Size

7620

8929

9490 (est.)

10194

Total Local Production

3950

4542

4700 (est.)

4935

Total Exports

160

192

210 (est.)

241

Total Imports

3830

4579

5000

5500

Imports from the U.S.

751

800

856

882

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

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U.S. Commercial Service Contact Information

Name: Ruma Chatterjee

Position: Commercial Specialist

Email: Ruma.Chatterjee@trade.gov

Phone: +91-22-26724136


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