AiMeD Wants a Buy Indian Preference Purchase Policy for Indian Medical Devices as a Make in India enabler.
Mr. Rajiv Nath
Forum Coordinator of Association of Indian Medical Device Industry (AiMeD) and Jt. Mg. Director of Hindustan Syringes and Medical Devices Ltd (HMD)
In its quest for making healthcare affordable and accessible and non exploitive the Government has initiated possibly its most controversial reform with the slashing of stent pricing while also attempting to correct the skewed market place. Earlier high priced imported stents had enjoyed an unfair competitive advantage over equivalent Indian products and were favoured because of the more lucrative margins they offered the hospitals. The price Capping has taken away this unfair advantage and protected both patients and domestic manufacturers. The primary challenge before the government remains further bolstering Prime Minister Modi’s ‘Make in India’ program, to create a level playing field for domestic medical device manufacturers and to achieve long term self sustainability and access to low cost affordable high quality home grown products within India.
Although Indian medical devices market captures just 3 per cent of the world stage estimated at 350 Billion $, it is expected to grow over 10-15 per cent annually from its current market share of $10 billion. Unfortunately, it suffers a huge import dependency in medical devices, which is pegged to over Rs.25,000 Crore and translates to over 70 per cent general import dependency and 90 per cent in medical electronic devices. On the other hand India is a major exporter of medical devices with exports of over 1.3 Billion $ and though Indian brands have good acceptance internationally and growing exports, at 15% per year the same India-made devices lose out to imported devices due to flawed certification and tendering norms, a skewed market place and an image perception challenge. The Indian Medical Device market is fed by MNC importers, Original Equipment Manufacturers (OEM), Indian MSMEs and a few midsized corporations who have faced brutal and unfair competition from their foreign counterparts but still managed to bravely stay afloat.
In this scenario, the India government needs to address five strategic factors as part of a coordinated game changing National Medical Devices policy to turn ‘Make in India’ a reality. These factors comprise: Tariff correction with nominal 10% Duty protection, mandatory MRP on unit pack of sale (and tax based disincentive or self regulated price capping), a self certification based regulatory mechanism with voluntary Indian Certification for Medical Devices (ICMED) and preferential market access. Besides these, it’s critical to incentivise R&D and innovative indigenous product development.
Many countries like the US, have a Buy American policy to encourage domestic production while others like Malaysia, Uganda, Jordan and China provide 15 per cent (or even higher) price preference in public health procurement to medical devices made in their own country. This means that all technical parameters remaining the same, they will opt for a device that is made in their own country as long as it is not priced 15 per cent higher than the competing imported devices. In fact in the US, the ‘Buy American’ provisions under the American Recovery and Investment Act 2009 support its domestic manufacturers and uses provisions of the Trade Agreements Act to disallow foreign, low-priced competitors from China, India and South Africa from supplying to their Defence Forces Offset policy in defence procurement.
In this light, ‘Preferential Purchase Buy Indian Policy’ is a strategic driver that will not only fuel the domestic economy to higher ground, but also benefit consumers & stakeholders. Consequently, this will result in employment generation and fostering innovation & competition in the medical sector, where technology keeps evolving. It’s been introduced by Dept of Expenditure by amending clause 153 of its GFR rules and translated into Notifications by Ministry of Steel, Petroleum and even the Metro as Make in India enablers.
The government who has shown its keen interest in exploring ways to boost domestic production and sale of medical devices can make significant strides by revamping the Public Healthcare System with a “Buy Indian & Preferential Purchase Policy” for Made in India Medical Devices and opting for a Sustainable low priced competitive bidding process that does not just opt for the cheapest lowest price Bid but factors in Quality, Past Performance, Domestic Content and Indigenous Product development. The preference can be given to those with over 45% Value Addition and Substantial Transformation done in India to Boost Domestic Manufacturing. Another vital component in the new slew of reforms can be incentivising voluntary compliance to an ICMED Certification with a 15 per cent Preferential Pricing for Indian Origin Medical Devices with ICMED certification to fight unfair competition from China, wherein they have 17 per cent subsidy. A further incentive should be given to those carrying the Indian Design Mark – a scheme of DIPP for recognition of indigenous product development and R&D.
These steps will have a long term impact on business and consumers and stave off irrational aspects in the current system. Now that QCI has created the ICMED scheme for enabling low cost access to world class voluntary QA certification for Indian manufacturers it will lend greater credibility to Indian Products rather than getting expensive Overseas Certification like CE/USFDA. The other aspect to consider is that it will save the Indian manufacturers the unnecessary hassle of getting an expensive overseas certification and falling short of competition on their home soil as higher priced MNCs have managed to stake claim on many government tenders who carried unfair exclusionary and mandatory compliance clauses to include US FDA approval. It makes no sense to apply for a US FDA approval by a business which is focused within the Indian industry in its initial formative years and not targeting the US market. Consumer and Medical users will be able to have the confidence on ICMED certified products and manufacturers will be motivated to invest in quality.
Having implemented the 5 policy enablers as indicated above no one can stop India from being one of the Top5 medical devices suppliers, in the world. With government paving way for Preference for locally made and affordable ICMED certified medical devices ‘Make In India’ will create a benchmark which the private healthcare sector can emulate to help it become an attractive low cost medical tourism destination.