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Medical Devices Manufacturing Industry
Not much is widely known about the market size and dynamics of the Indian medical devices industry. The size of the market for medical devices and equipment in India and its dependence on import is estimated. The market size of medical devices and equipment has been estimated for the period from 2010–11 to 2013–14, which was found to have accelerated from $2.7 billion to $4 billion, while imports served 70% of the total domestic needs in 2013–14. The share of medical devices-based diagnosis in households’ out-of-pocket expenditure on health has increased from 2.2% in 1993–94 to 7.6% in 2011–12. Regulatory mechanisms must be put in place to bring all key medical equipment under price control in order to drive down prices.
A preliminary draft of this paper was presented at the International Conference organised by the Indian Health Economics Association, 2013 and PHFI Fourth Research Symposium, 2014. The authors also thank the organisers, as well as the participants of the workshop for critical discussions. A preliminary draft of this paper was published as a working paper under the ISID-PHFI Collaborative Research Programme in 2013.
The authors would like to thank the anonymous referee for comments on an earlier draft.
Health technology has come to play a critical role in prevention and treatment of disease conditions in modern- day health systems. After the 60th World Health. Assembly in 2007 (WHO 2007), it has been widely acknowledged that health technology, in particular medical devices and equipment, is necessary for an efficient and effective healthcare system in terms of equipping healthcare providers with more tools for diagnostic, preventive, and curative care. Medical devices can range from a simple surgical needle, to complex orthopaedic implants or sophisticated ultraviolet or infrared ray apparatus used for medical purposes. In vitro medical devices are one subclass of medical devices that are used for the in vitro examination of specimens derived from the human body solely or principally to provide information for diagnostic, monitoring, or compatibility purposes. The term “medical devices and equipment” used in this paper stands for medical devices (including in vitro medical devices) as well as accessories used together with the devices.
Past literature suggests that there is an increasing diffusion of medical devices in the Indian health system over time (Mahal et al 2006; Mahal and Karan 2009). It is also recognised that the use of medical devices is one of the major drivers of healthcare expenditure growth. Experiences of the Organisation for Economic Co-operation and Development (OECD) countries suggest that with increasing dependence on medical technology in health, costs of healthcare provisioning have gone up significantly (Sorenson et al 2013). A World Health Organization (WHO) study also reveals that 95% of medical devices in developing countries are actually imported (WHO 2006). An increase in the use of imported medical devices and equipment with a limited domestic medical devices manufacturing industry can accelerate the catastrophic health expenditure in developing countries, where out-of-pocket (OOP) health expenditure is colossal. There is limited academic literature addressing the issue of diffusion of medical devices and potential increase in health expenditure in India (Mahal et al 2006; Mahal and Karan 2009), but there are very few studies addressing the supply-side scenario of medical devices in India (Chakravarthi 2013), largely designed by private consultancy firms and chambers of commerce. Developing countries like India have much to gain from effective use of advanced medical technology. But, whether diffusion of health technology will help in enhancing access to healthcare or only add fuel to the inflation of medical expenses would critically depend on few basic factors, namely domestic production capacity and import intensity, as well as how well the government is regulating the market to promote the interests of public health.
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