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Enhancing accessto healthcarethrough innovation

Medical technology in India

www.pwc.com/india

June 2011


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Foreword

Medical devices equip healthcare providers with tools to perform their functionseffectively and ef ciently. They are considered crucial for the services offered inprevention, diagnosis, treatment and rehabilitation of illness and disease. Everycountry needs to establish systems for standardising and regulating them forpatient safety and for increasing access to quality healthcare.

With the convergence of breakthroughs in science and technology, the pace ofmedical invention is accelerating, inspiring better clinical outcomes with lessinvasive procedures and shorter recovery times. All of this helps lower costsettings thereby creating tremendous value. These changes drive demand fornew lower cost diagnosis, monitoring and treatment procedures.

According to WHO, India is expected to lose a whopping US$ 225 billion,over a fth of the countrys current GDP, in 10 years up to 2015 by way of thenational income foregone due to productivity loss from the increase of non-communicable heart disease, stroke and diabetes. This poses a huge challengefor the government and the healthcare industry in giving a llip to the medicaldevice industry and nding radical solutions for the abysmally low hospital bedsto population ratio, shortage of doctors and nurses.

Globally, nations are struggling to meet healthcare costs. This is a challengethat we need to meet without compromising on the sustenance of the business.The medical technology industry has been thriving on innovations. While thefocus has been on better outcome and quality of life, it is time that the focus alsoincludes affordability. This cannot be done only through technology but willrequire synergies across stakeholders.

I am delighted that FICCI is working closely with the medical device and

healthcare industry today. This report is a re ection of our deep commitmentand close involvement. I congratulate PwC on their work, and hope this report will present a viable way forward for the industry.

Warm Regards

Dr. Amit Mitra

Dr. Amit MitraSecretary-GeneralFICCI


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Foreword 2

Executive Summary 6

Introduction 8

The Global Context 9

PwC's Medical Technology Innovation Scorecard The race for global leadership

10

Growing Rapidly Medical technology in India

14

Relying on ImportsThe current scenario of Indian medical technology industry

17

Ushering in ChangeInnovation unleashed

18

Building SuccessThe Five Pillars

20

Our Recommendations 22

Conclusion 24

Appendix 1 26

Acknowledgements 31

Contents


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ExecutiveSummary Healthcare related goals form a sizable component ofthe Millennium Development Goals to which India isa signatory. Medical technology plays a vital role inthe delivery of healthcare services in India. Medicalprofessionals rely on medical technology for accuratediagnosis and effective therapy.

Medical technology innovation in the 20th century wasprimarily led by the US with its strong ecosystem supportiveof innovation. The innovation model is the core of themedical device and technology industry. Being unique andproductive, the impact of policy, regulation, government

focus and payment is signi cant for this industry. As arecent initiative, an innovation scorecard for nine countries, viz., the USA, the UK, Germany, France , Japan, Israel,India, China and Brazil was developed, to better informstakeholders of the innovation models being pursued andcritical factors for sustenance.

The medical technology innovation scorecard indicatesthat the epicenter of the innovation ecosystem is shiftingtowards emerging economies in general and India andChina in particular. This is because the advanced economiesin general do not have the need for frugal innovation. Also,


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emerging economies are expected to have a higher spendingon R&D in the future, something that will provide thetrigger for innovation. These economies will also have thehuman capital needed for multi-disciplinary research whichis integral to medical technology innovation. Emergingeconomies will also see more support from the investment

community through venture capital, private equity, etc..

The Indian medical technology industry is expected to growfrom US$ 2.75 billion in 2008 to US$14 billion in 2020.While strong drivers for this growth exist in India, there isalso a need for innovation in the medical technology marketgiven the ground realities. Many Indian and overseasmedical technology companies are launching innovativeproducts for the Indian market.

Success in medical technology innovation is dependenton ve pillars: Powerful nancial incentives Creating capacity for quality research Supportive regulatory system Demand and supply of health services Supportive investment community

Innovation in medical technology however faces a lot ofchallenges which need to be addressed by the government.

Some of the steps which the government can take includethe following: Increase public spending in healthcare from one per

cent of GDP to three per cent of GDP. Usher further reform in the insurance sector to

stimulate health insurance.

Set up a venture investment fund to address the lack ofearly-stage venture capital for medical technology

Ensure a level playing eld for all companies with adistinct regulatory pathway for medical technologyfree of ambiguities.

Make medical technology research a rewardingcareer option.

Reform the medical education system to include

medical technology education. Evolve clusters with common facilities for the bene tof small entrepreneurs who want to set up medicaltechnology companies

Assist existing manufacturers to upgrade their qualitysystems to international standards.

Medical technology innovation requires a vibrant andparticipative ecosystem comprising patients, medicalcentres, universities, medical technology industry, healthinsurance companies and the Government. All stakeholdersin the ecosystem have to act in concert for the sustainedgrowth of the medical technology industry. How well

the stakeholders work together will determine the future ofthe Indian medical technology industry.

Enhancing access to healthcare through innovation - Medical technology in India


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India is a signatory to the Millennium Development Goals(MDGs). These goals, agreed to by a community of nationsand international organisations in 1992 represent the mostcomprehensive and speci c development goals ever agreed uponby the world. MDGs represent the will of the worlds nations toachieve development objectives by the year 2015. The importanceof healthcare in the MDGs is highlighted by the fact that threeout of eight goals, six out of 21 targets and 18 out of 60 indicatorspertain to healthcare. India is also a signatory to the Alma AtaDeclaration which promised Health for All by the year 2000.

Medical technology plays a vital role in delivery of healthcareservices in India. Medical professionals rely on medicaltechnology for tests and investigations to aid their clinicaldecision making. Medical technology also plays a critical rolein the treatment of patients and their return to normal life.Innovation in medical technology can therefore be crucial for theIndian healthcare system to improve access, enhance quality andreduce costs.

Medical technology is a nascent sector in India and theopportunities for innovation-led growth are immense. Thesector however does face signi cant challenges. The size andstructure of the sector in India, the growth projections, the needfor innovation, the ve pillars which facilitate innovation, thechallenges to innovation and the critical role the governmentneeds to play in ensuring sustainable growth are the areas that will be addressed in this report.

Introduction


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The goal of every healthcare system is to improve access,enhance quality and reduce costs. In the US over 45 millionpeople are unable to get access to healthcare for want of healthinsurance. With the recent economic crisis and increase inunemployment, it is likely that more Americans today have noaccess to healthcare since employer-provided insurance is thenorm in the US. Lack of insurance is not usually a constraintin single-payer systems seen in Europe. The ageing populationand rising healthcare costs however are a cause of concern forgovernments with already high scal de cits.

Healthcare systems the world over are thus looking to medicaltechnology companies for innovative solutions which will helpin the following:

Improve access to healthcare Perform diagnosis early so that cost of healthcare can be

reduced Provide effective therapies which facilitate shorter

hospitalisation and convalescence Monitor therapies to ensure compliance Reduce medical errors

The GlobalContext


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Innovation in medical technology was primarilyled by the US with its strong ecosystem supportiveof innovation. However, European countries as well as emerging economies like China, India andBrazil pose a strong challenge to the leadershipposition of the US.

PwC1 has developed the Medical TechnologyInnovation Scorecard for nine countries. Thesenine countries include developed economies likethe US, the UK, Germany, France and Japan,a quasi-developed economy Israel and threeemerging economies including India, China andBrazil. The purpose of the Medical TechnologyInnovation Scorecard is to better inform allstakeholders of why the innovation model isunique and productive, and the impact of policy,regulation, government focus, payment on it. A second purpose of the scorecard is to guidedecision-making based on historical trend dataand competing views of the future in two

different scenarios.

PwCs Medical Technology Innovation Scorecard The race for global leadership

For a given market, the scorecard will enable companies,regulators, governments and patient advocacy groups tobetter understand and drive changes in the following:

Patient access to innovative medical technology,

Development of innovative medical technology, and

Delivery of innovative medical technology

To develop the scorecard, PwC identi ed, measuredand analysed 86 metrics across 10 dimensions relatedto innovation capacity and capability that impactthe medical technology industry. The scorecardincorporates data from interviews with executives within leading medical device rms and aggregatesthird-party data for most of the key metrics from2004 to 2010.

A summary of the ndings of the report is provided inthis section.

Source: The World Bank, World Health Organization, PwC Analysis

Figure 1: Total Health Expenditure vs. Health Expenditure per Capita: 2003, 2007, 2020F

1 In association with AdvaMed

Finding #1: The US continues to lead in health spending, with no expected bending of the cost curve. China is expectedto be in second place by 2020

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Finding #2: The US will continue to lead in R&D spend, but China is eclipsing Japan and closing in fast.

Finding #3: China is now #2 in research output and #5 in university leadership (but not far behind Germany, Japan, UK)

Source: Thomson Reuters, Academic Ranking of World Universities

Figure 2: R&D Spending ($USD) as a % of GDP vs. Total R&D Spending ($USD): 2000, 2007, 2020F

Source: Thomson Reuters, Academic Ranking of World Universities

Figure 3: Research output vs. Number of Top 500 Universities

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Finding #4: China lags in patent applications relative to # of researchers, but will close the gap aggressively asdevelopment progresses

Finding #5: Emerging markets are becoming more entrepreneurial and gaining greater access to venture capital.

Source: United Nations Educational, Scienti c and Cultural Organization; World Intellectual Property Organization

Figure 4: Research Vs Medical Technology Patent Applications

Source: Global Entrepreneurship Monitor, Economist Intelligence Unit, and The World Bank

Figure 5: Early-Stage Entrepreneurial Activity vs. Venture Capital Investment as % of GDP

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l y - S

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Researchers (in thousands)

Medical technology patentapplications

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Finding #6: Developing markets are the only ones gaining in perceived commercialisation opportunity.The US is falling fastest.

Source: PwC Survey

Figure 6: Future Expected Attractiveness of the Commercialisation Opportunity(1) Much Worse (2) Worse (3) Same (4) Better (5) Much Better

India ranked eighth out of nine countries surveyed.Indias innovation score was higher than Brazils but

lower than those of China and all other developedcountries surveyed.

Signi cant efforts are therefore needed by allparticipants in the medical technology ecosystemto stimulate innovation in this space so that theopportunities in the Indian market can be capitalisedon by medical technology companies, thus bene ttingthe patient.

Interestingly, the medical technology marketcommercialisation opportunity in India isthe highest among the countries surveyedindicating a pressing need for medicaltechnology innovation to meet the demandsof the local market.

The future of medical technologyinnovation is bright and India andChina will be the stars of the 21 stcentury.

The ndings are as follows:

The epicenter of the innovation ecosystem isshifting towards emerging economies in generaland India and China in particular since theadvanced economies and the US in particular, donot have the need for frugal innovation.

Emerging economies will have a higher spendingon R&D in future providing the trigger forinnovation.

Emerging economies will also have the humancapital needed for multi-disciplinary researchneeded for medical technology innovation

Emerging economies will also see more support

from the investment community through venturecapital, private equity, etc.

1

Brazil

2

China

3

France

4

Germany

5

India

Israel

Japan

United Kingdom

United States


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PwC14

Growing RapidlyMedical Technology Sector in India

The medical technology sector in India was valuedat US$ 2.75 billion in 2008 (NIPER Ahmedabad)and is expected to reach US$ 14 billion in 2020 at acompounded annual growth rate of approximately15% (Industry Analysis, PwC estimates).

The market can be broadly segmented as follows:

Medical equipment Medical implants Medical disposables & furniture

The medical equipment segment constitutes thelargest share of the medical technology sector withover 55% of the total size of the market. This segmentincludes the following:

Imaging equipment like SPECT, MRI, CT In-vitro diagnostic equipment Equipments used for therapy like linear

accelerators, gamma knife, cath labs etc.

The medical implants segment constitutes the nextbiggest segment with over 25% of the market. Thissegment includes the following:

Cardiac implants such as stents, pacemakers,heart valves

Orthopedic implants for knee, hip, spine Eye implants such as intra-ocular lenses Ear Implants such as cochlear implants Dental implants

Medical disposables and furniture constitute around20% of the market and comprises items such as thefollowing:

Medical Disposables like - Catheters - IV cannula, infusion sets

- Medical drapes - Surgical masks - Sutures - Syringes etc

Medical Furniture like - Patient beds and examination couches - Patient trolleys - Operating tables - Wheel chairs

Drivers for Growth

Growth in the medical technology sector is obviouslydependent on the growth of the healthcare sector.The healthcare sector in India is expected to grow atapproximately 15% over the next ve years. The keydrivers of growth are the following:

Economic growth leading to higher disposableincomes

Burden of disease Increased public spending in healthcare Increased private investment in healthcare Increased penetration of health insurance Emergence of new models of healthcare delivery

Strong Economic Growth

The Indian economy has shown strong growth in thelast few years notwithstanding the global recessionsince 2008. Disposable incomes have increased andthe spending power of the Indian middle class hasincreased. Health-seeking behaviour of the populationhas improved and awareness of disease is increasingevery day.

Figure 8: NIPER Ahmedabad Medical Devices Sector Analysis 2009

55%

MedicalEquipment

25%

Medical

Implants

20%

MedicalDisposablesand Furniture

The Medical Technology Sector in India


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Burden of Disease

India has achieved notable successes in healthcare overthe last 60 years. Guinea worm infection and small-pox have been completely eradicated. There have beenconsiderable improvements in other health indicators(FICCI HEAL 2008, WHO):

Life expectancy at birth which has improved from37 years in 1951 to 63.6 years in 2006

Infant mortality rate from 146 in 1951 to 57in 2006

Maternal mortality rate from 400 in 1997 to301 in 2003

Crude birth rate from 42 in 1951 to 24 in 2003 Crude death rate from 25 in 1951 to 7.6 in 2005 Total fertility rate from six in 1951 to 2.7 in 2006

Notwithstanding these successes, India faces signi cantchallenges at both ends of the healthcare spectrum.Diseases such as diarrhoea, tuberculosis, malaria andpneumonia continue to take their toll while non-communicable conditions such as heart disease, cancerand stroke are on the rise in India. India also has thedubious distinction of being the diabetes capital ofthe world with over 41 million diabetics in 2008 (PwC

Report Global Pharma Looks to India). The numbersare projected to touch 73.7 million in 2025. Studieshave also indicated that by 2015, India will be hometo 60% of cardiac patients with over 64 million people(National Commission for Macroeconomics in Health)likely to be affected by this condition.

Increased Public Spending in Healthcare

Public funding in healthcare has been less than oneper cent of GDP for the last 30 years. Lack of adequatefunding and ineffective management of public healthinstitutions have led to a crisis which can seriously

impact our sustained economic growth.The government, in an effort to correct this imbalancelaunched the National Rural Health Mission(NRHM)in 2005. The government aims to increase its spend inhealthcare from one per cent of GDP to between two tothree per cent by the year 2012.

Increased Private Investment in Healthcare

Alongside increased public spending is the continuingtrend of higher private investments in healthcare. Indiafaces an enormous shortage of hospital beds with just0.9 beds for every 1000 population (WHO) as againsta world average of 3.96 beds per 1000 population(Technopak). As the burden of chronic ailments like

heart disease, hypertension, diabetes and cancerincreases, the need for tertiary care beds will increase.Given the absence of a gate-keeping mechanism toregulate demand in healthcare, pressure on tertiaryfacilities in large cities is bound to increase. Privateinvestment in the healthcare sector is expected toexceed US$ 50 billion (CRISIL Research, industryreports) by the year 2012.

Increased Penetration of Health Insurance

Financing mechanisms for healthcare in India are weak, with a signi cant portion of health-related expenditure

being out-of-pocket. Health insurance schemes werelargely sold for tax incentives and not as a cover forhealth-related costs. Reimbursement procedures werealso cumbersome with signi cant delays in claimssettlement. With reforms in the insurance sector in2000, an attempt was made to address some of theselimitations. Private sector companies now offer health

Figure 9: National Commission of Macroeconomics in Health 2005

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In the years following independence, India adoptedan import substitution policy encouraging thedevelopment of indigenous industries under theumbrella of a strong public sector. The medicaltechnology sector however was not on the list ofgovernment priorities and there was no signi cantattempt to build domestic capabilities in R&D andmanufacturing. The seeds of import reliance were thussown in the early years following independence. Insubsequent years, the reliance on imports continueddespite high import duties and tariffs. Todayapproximately 80% of the medical technology marketbelongs to imports (Industry Analysis). Interestingly,approximately 60% of the domestic manufacture ofmedical technology is exported (Industry Analysis).

The proportion of imports is highest in the medicalequipment and medical implants segments andimports contribute approximately 85% of the market(Industry Analysis). A few indigenous manufacturersin areas such as in-vitro diagnostics, X-ray machines,ECG machines, patient monitoring, etc. have made aname for themselves and can speak of product qualityand technical support capabilities.

The medical disposables and medical furnituresegment has many domestic players with signi cantmanufacturing capacities. Apart from meetingdomestic demand, these companies also export toboth, advanced economies as well as developingcountries. Domestic companies have createdmanufacturing capabilities meeting U S Food andDrug Administration (USFDA) standards and but canalso speak of marketing alliances and distributionagreements for tapping the overseas markets.

Relying on ImportsThe current scenario of Indian medical

technology industry The last few years have seen an increase in domesticmanufacturing of medical equipment. With impetusfrom various government schemes, India is nallycoming to be recognized as a manufacturingdestination for sophisticated medical technology.International medical technology companies are alsousing India as a manufacturing base by either settingup facilities of their own or by acquiring domesticmanufacturers. Examples include 3Ms manufacturingplant in Pune, Becton Dickinson (BD)s manufacturingfacility in Haryana, Hollisters manufacturing facilityin India and Philips Medical Systems acquisitionof Meditronics and Alpha X-Ray Technologies. Toencourage domestic manufacturing of medicalequipment, the government plans to set up medicaltechnology parks.

Notwithstanding these initiatives, the proportionof imports in the market is unlikely to change in thenext ve years as newer technologies continue tobe launched overseas. With the growth in domesticcapabilities and MNC investments in the Indianmarket, the proportion of imports is likely to fall toapproximately 60% of the market by the year 2020.


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The sheer lack of affordable alternatives was thetrigger for early innovation in India in the medicalequipment segment. In-vitro diagnostics, X-ray, ECGmachines were areas where indigenous companiesdeveloped new products at accessible price points.

Indias disease pro le is also different from whatis seen in the western world. This has been theother trigger for innovation especially in the in- vitro diagnostics sub-segment. Examples includerapid diagnostics for malaria, dengue and somecommunicable diseases.

Physical structure (especially in women) and variedlifestyles of the population (for example, additional

exion needed in knee implants to permit squatting)have also been triggers of innovation especially in theorthopedic implants sub-segment.

Infrastructure constraints and environmentalconditions have also propelled the need for innovation.Parts of India lack a regular and stable power supply.Higher temperatures, humidity and dust levels posechallenges spurring the need for tropicalising medicaltechnology

India lacks a credible healthcare nancing mechanismand most expenses are out-of-pocket. The Indianconsumer therefore has always been price-conscious.This characteristic of the Indian market was not atrigger for medical technology innovation till recently.The economic crisis in advanced economies since 2008and the possible impact on healthcare costs broughtto the fore the need for innovation to address priceconsiderations. Frugal innovation, development ofnew products designed for emerging markets ratherthan stripped-down versions of products designed foradvanced economies, has become the buzzword in

medical technology innovation. International playershave set up centres to focus on medical technologyinnovation for emerging markets in general, and Indiain particular. Examples include GEs John F WelchTechnology Centre in Bangalore, Stryker CorporationsGlobal R&D Centre in Gurgaon, Philips InnovationCampus in Bangalore and Johnson & Johnsons R&DCentre for Medical Devices in Mumbai.

Ushering in ChangeInnovation unleashed

Medical technology companies in India spendbetween three and seven per cent of their revenueson innovation (Industry Analysis). Not surprisingly,the percentage is higher in MNCs. Companies seearound 10% of their revenues over the next ve years(Industry Analysis) come from these new initiativesin innovation and this proportion will grow in thecoming years.

The government is making efforts to encourageinnovation and development projects in medicaldevices and technologies.

A successful example is that of the Ortho-CAD Network Centre for Endo-Prosthetic Skeletal Reconstruction Systems which is a consortiumof three organisations. IIT, Mumbai The Non-Ferrous Materials Technology

Development Centre (NFTDC), Hyderabad The Tata Memorial Hospital (TMH),

Mumbai

These institutes came together to do the following: Develop a high-quality low-cost total knee

prosthesis system Create a pool of trained manpower Disseminate the technologies and

methodologies involved to other groups inthe country.

The achievements of this initiative have

been many: The fabrication of version 2.1 of the TotalKnee Prosthesis (TKP), in functional

Materials (i.e. largely titanium andcobalt-chrome) has been done.

Version 1.0 of the Knee Simulator andTesting (KST) machine has been designed,developed and fabricated.

Version 2.0, an improvement over version1.0, has been designed.


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Technopreneur Promotion Programme of theDepartment of Scienti c and Industrial Research alsoprovides funding for R&D and innovation in medicaldevices. Examples of innovation supported includeretractable auto disposable syringes, digital camera forfundus photography, cardiac analysers, etc.

Many more such projects have to be launched andcompleted in India.

Innovation initiatives have resulted in newer productsfor both domestic and overseas markets. TransasiaBiomedicals has developed in-vitro diagnosticequipment through its R&D base in Mumbai. Sushrut Adler Group has developed an external xator throughits facility in Pune. Johnson & Johnson has developed aknee implant suitable for the Indian market as well as areusable stapler for use in surgeries, both at amenableprice points for the Indian market. Roche Diagnosticshas developed a screening device for cardio-vasculardisease suitable for use in rural settings too. GEHealthcare has developed a low-cost ECG machine anda low-cost ultrasound machine for the Indian market.Philips Healthcare is using its recent acquisitions inIndia to develop and launch a low-cost cath lab forthe Indian market. Other Indian companies as wellas MNCs are developing a host of medical technologysolutions from India.

Pictures and a short descriptions of some of theseproducts can be found in Appendix 1.


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PwC analysis has identi ed ve pillars which form thebasis of the medical technology innovation ecosystem.

1. Powerful nancial incentives

2. Creating capacity for quality research

3. Supportive regulatory system

4. Demand and supply of health services

5. Supportive investment community

Success in medical technology innovation is dependent onhow strong the ve pillars are and how they interact witheach other.

1. Powerful Financial Incentives

India spends approximately ve per cent of its GDP onhealthcare. This includes around one per cent of publichealth expenditure funded by the government, individualstates and local bodies with remaining expenditure fromprivate sources. Public spending in healthcare is very lowas compared to many developing countries. Given thatIndia is home to the youngest population of people under21 years of age, public investment in healthcare is crucialto creating a healthy workforce to lead economic progressin the 21st century. Public investment in healthcare thusneeds to be signi cantly ramped up to at least three percent of GDP if India is to capitalise on the demographicdividend.

Indias total expenditure on healthcare as a percentageof its GDP is comparable to that of other emergingeconomies like Brazil, China and Russia. However, percapita expenditure on healthcare is low. Also, in theabsence of adequate healthcare nancing mechanisms,out-of-pocket expenditure at approximately 80% is high.

India needs to usher in further reform in the insurancesector to increase penetration of health insurance whilesimultaneously providing a safety net for economically weaker sections of society.

The government has permitted 100% FDI in thehealthcare sector. It has also reduced and rationalised thecustoms duty on medical technology imports in the UnionBudget 2010. The government is also trying to removetrade barriers and encourage more international trade inmedical technology. It is also providing tax incentives forin-house research and development.

Building SuccessThe Five Pillars

Increasing public investments in healthcare to three percent of GDP and ushering in further reform in insuranceto increase penetration of health insurance are crucial forstimulating medical device innovation.

2. Creating Capacity for Quality Research

The quality of science and maths educations in India isgood. India has a signi cant number of college graduates with a competent knowledge of the English language.The quality of scienti c institutions in India is also good.The penetration of mobile phones in India is increasingevery year with over 600 million mobile connectionstoday. Internet penetration though low, is now increasingthrough a mixture of private investments and governmentinitiatives like state wide area networks. New technologiessuch as 3G and broadband wireless access are also likelyto increase the bandwidth for communications andinternet access.

The number of scienti c researchers in India howevercontinues to be low. The scienti c output in the formof patents is also low. Research in India is also notsystematised and lacks clearly de ned objectives. Theimpact factor of scienti c publications in terms of quality

of journals where the papers are published as well as thenumber of times they are referred to by other researchersis also low.

The government needs to make scienti c research a moreattractive career option for Indias bright young minds.Medical technology innovation is inter-disciplinaryin nature with inputs needed from medical doctors,electrical, electronics, mechanical engineers, materialsscience, physics, chemistry and biology. Collaborationbetween medical centres and universities has been thehallmark of medical technology innovation in developedcountries. In India, such collaborations are just beginning

to take shape. Stanford India Bio-Design Programme hasDBT and AIIMS and IIT Delhi collaborate with StanfordUniversity. Indian companies are increasingly embracingR&D with recent examples including Trivitron, IIT MadrasCentre for Medical Technology Innovation and successfulproduct development and commercialisation effortsby Sree Chitra Tirunal Institute for Medical Sciences &Technology (SCTIMST), Thiruvananthapuram withindustry partners for cardio-vascular devices.


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The government also needs to remove infrastructurebottle necks which retard our scienti c research. There isalso a need to make our scienti c research more orientedtowards clearly de ned outcomes. Medical educationcurriculum also needs to be revamped to include medicaltechnology education with assistance from organisationslike NIPER.

3. Supportive Regulatory System

Regulatory approval time in India for medical technologycompares favourably with the rest of the world. Cost ofregulatory approval is also lower than in other countries.The regulatory approval process is perceived to berelatively easy though there is considerable variance,indicating an inconsistent understanding of the process.Transparency of government policy-making is also good.Today, the government has taken up the regulation ofcertain noti ed medical devices under the Drugs andCosmetics Act. Efforts are being made to treat themdifferently from drugs, through the issue of variousguidance documents. However, India lacks trained anddedicated regulators for medical technology.

India needs a separate regulatory pathway for medical

technology with clearly articulated, unambiguousprocesses. Steps need to be taken to amend the existingDrugs and Cosmetics Act to make separate provision formedical devices, and also pass the CDA Bill for creating ofan independent central authority. Both, the Ministry ofHealth as well as the Ministry of Science and Technologyare working to streamline regulations for medical devicesfor enhanced patient safety.

The industry requires adequate time to comply with newregulations. Further, comprehensive training needs to beprovided to the regulators at the Central and State Levelsas well as regulatory affairs departments of medical

technology companiesThe FICCI Medical Device Forum has been working veryclosely with the industry and the government as well as with regulators from other developed nations. Based ondiscussions on the need for harmonisation of regulationsand its impact on access and industry, there has been acollaborative effort to adopt harmonised standards. Thishas been done within the ambit of current legislation. A forward-looking schedule-M III has been drafted as acomprehensive regulatory system for medical devices that

can be implemented on suitably amending the existingDrugs & Cosmetics Act. The industrys training needsare being addressed by workshops being organised withthe USFDA, the European Commission as well as Indianregulators.

4. Demand and Supply of Healthcare Services

The burden of disease in India is high. Low per capitahealthcare expenditure has resulted in poor healthindicators with life expectancy at birth around 64 years(WHO 2008), a high infant mortality rate of 53 (SRS2008) and amongst the highest maternal mortality rates at254 (SRS 2004-2006). India also has the highest numberof people with diabetes and heart disease. Burden of othernon-communicable conditions such as chronic kidneydisease, cancer and stroke is also high.

Indias health infrastructure has however not kept pace with growing healthcare demands. India has only 0.9 beds(WHO) per 1000 population against a world average of3.96 beds (Technopak). The number of doctors per 1000population at 0.6 doctors per 1000 population (WHO)and the number of nurses and midwives at 1.27 per 1000population is also very low (WHO).

India needs to signi cantly increase its investmentsin medical infrastructure, both in terms of physicalinfrastructure as well as the number of medicalprofessionals and paramedical staff available. Qualityand consistency of training for medical staff also needsto be improved.

5. Supportive Investment Community

Early stage entrepreneurial activity in India is good.Foreign direct investment is also allowed in themedical technology sector. Risk capital in the form ofprivate equity funding is also becoming available forIndian entrepreneurs. The medical technology marketopportunity in India is the highest among the countriessurveyed for the Innovation Scorecard, indicatinga pressing need for innovation to meet local marketdemands.

However, availability of early stage venture funding is verylow. The government therefore needs to take a lead role inthe direct funding of medical technology research througha venture investment fund.


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Increase training for regulatory staff especially at the statelevel to ensure consistent interpretation of regulatoryapproval processes. Consider partnerships with industryassociations as a practice instead of sporadically.

Make research a rewarding career option. Encouragegreater collaboration between medical centres andtechnology universities. Enhance the quality andconsistency of training received by medical and paramedicalstaff thereby providing creative resources for leadingmedical innovation efforts. Increase the supply of medicalmanpower especially doctors through reform of the medicaleducation system. Include medical technology education within the medical curriculum with assistance fromagencies like NIPER.

Evolve clusters with common facilities for calibration,testing, quality control, waste management, etc. for thebene t of small entrepreneurs who want to set up medicaltechnology companies.

Assist existing Indian companies to upgrade their qualitysystems to adhere to international standards.


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ConclusionThere is a crying need for medical technology innovation in India

to meet healthcare demands. Innovation in medical technologyrequires a vibrant and participative ecosystem comprisingpatients, medical centres, universities, the industry, healthinsurance companies and the government.

All stakeholders have to act in concert for the sustained growthof the industry for the bene t of patients. How well they do willdetermine the future of the Indian medical technology industry.


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Appendix 1Case Study: GE Compact UltrasoundWhy is it so tough to get paid to innovate in the US under the new paradigm?It requires a new business model

Product

Logiq 9 (2001)Dimensions: 55 to 63 x 25 x 35Weight: ~434 lbCost: >$100,000

Logiq Book (2002)/Logiq Book XP

(2007)Dimensions: 3.07 x 13.73 x 11/3.07x 13.78 x 11Weight:~10 lb/~10.3 lbCost: As low as ~$30,000/ As low as ~$15,000

VScan (2010)Dimensions: 5.3 x 2.9 x 1.1Weight:~0.86 lb (with probe)Cost: $7,900

Key issues

De-featuring existing ultrasound machines was notan adequate solution to satisfy product demands in adramatically different market with a low-cost paradigm radical change was required

Value-based innovation was applied to build a compactultrasound from the ground up that was tailored tomeet local requirements of cost and portability

Reverse innovation at work the product foundnew applications in the domestic market, furtherexpanding it

Key considerations

What is the best strategy to operate in the emerging lowcost environment?

Which innovations from developing markets can beapplied to its domestic markets?

What products will require re-innovation under thenew paradigm?


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Case Study: How venture capital rms and innovation centres in emerging marketsimpact the investment environment

Key issues

US-based venture capital rms will have to open localcompanies overseas or seek co-investment opportuni-ties abroad

Other nations are increasing seed investment in tech-nology in order to generate jobs and growth

Many Countries such as Japan and Sweden,have developed innovation strategies to foster technol-ogy innovation

Changes in the investment arena in the last three yearshave resulted in the reduction of nancing available tostart-ups

- Average returns for venture capital funds havedeclined even as the size of the funds and the dealsthey invest in has grown

- Funding has migrated to later-stageinvestments

Innovation centers in emerging countries

GEs Healthymagination proposes to spend $6 Billion over six years on projects aimed for the Indian market

Emerging Market Innovation Center (EMIC) in Shanghai

The mission of the EMIC is to develop new and affordable products addressing the speci c consumer needs of emergingmarkets

Gerson Pinto,VP of R&D, Asia Paci c & Emerging Markets, J&J


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Quick Screening for Cardio-vascular disease

Values for- Serum Total Cholesterol- Fasting Serum Triglycerides- Fasting Blood Glucose

Case Study: Low-cost devices for in-vitro diagnosis and therapy

OneTouch Horizon - Developed by Asia Paci c healthcare professionals

For General Surgeons performing transections and anastomosesand for Thoracic Surgeons performing Wedge Resections, the Advant 55 Linear Cutter/Stapler enables them to perform theprocedures faster than with suture at an affordable price,resulting in bene ts for the patient, physician and provider

Sigma Market Appropriate Knee Replacement in India


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PwC rms provide industry-focused assurance, tax and advisoryservices to enhance value for their clients. More than 161,000people in 154 countries in rms across the PwC networkshare their thinking, experience and solutions to developfresh perspectives and practical advice. See pwc.com for moreinformation.

In India, PwC (www.pwc.com/India) offers a comprehensiveportfolio of Advisory and Tax & Regulatory services; each, inturn, presents a basket of nely de ned deliverables. Network

rms of PwC in India also provide services in Assurance as perthe relevant rules and regulations in India.

Complementing our depth of industry expertise and breadth ofskills is our sound knowledge of the local business environment

in India. We are committed to working with our clients in Indiaand beyond to deliver the solutions that help them take on thechallenges of the ever-changing business environment.

The Indian rm has of ces in Ahmedabad, Bangalore,Bhubaneshwar, Chennai, Delhi NCR, Hyderabad, Kolkata,Mumbai and Pune.

About PwC

Contact:

Sujay Shetty Director, Medical Devices Pharma Life Sciences LeaderEmail : [email protected] : +91 22 6669 1305


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This report does not constitute professional advice. The information in this report hasbeen obtained or derived from sources believed by PricewaterhouseCoopers PrivateLimited (PwCPL) to be reliable but PwCPL does not represent that this information isaccurate or complete. Any opinions or estimates contained in this report represent the

judgment of PwCPL at this time and are subject to change without notice. Readers ofthis report are advised to seek their own professional advice before taking any course ofaction or decision, for which they are entirely responsible, based on the contents of thisreport. PwCPL neither accepts or assumes any responsibility or liability to any reader ofthis report in respect of the information contained within it or for any decisions readersmay take or decide not to or fail to take.

2011 PricewaterhouseCoopers Private Limited. All rights reserved. In this document,PwC refers to PricewaterhouseCoopers Private Limited (a limited liability company in

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