Medical Equipment Industry

Indian Journal of Public Health, Volume 57, Issue 4, October-December, 2013

Medical Equipment Industry in India: Production, Procurement and Utilization

*Indira ChakravarthiUGC Research Fellow, Centre of Social Medicine and Community Health, Jawaharlal Nehru University, New Delhi, India

Summary

This article presents information on the medical equipment industry in India-on production, procurement and utilization related activities of key players in the sector, in light of the current policies of liberalization and growth of a health-care industry in India. Policy approaches to medical equipment have been discussed elsewhere.

Keywords:Keywords: Diagnostics, Import of medical equipment, Medical equipment industry, Medical technologies, Production of medical equipment

Introduction

Medical devices and equipment receive scant attention in the Indian context, both at the health policy level and as an area of study. There has been little attempt to systematically address the issue of equipment based medical technologies and regulation of their production and use. There is paucity of primary data on the kind of medical equipment and techniques being introduced, on their need and relative usefulness, reliability, patterns of utilization, their production, procurement, distribution, costs and accessibility. This article presents quantitative and qualitative information on manufacturing and import of medical equipment, as well as involvement of the medical equipment industry in product promotion, lobbying activities, research, education and training of medical professionals. The necessary information has

*Corresponding Author: Dr. Indira Chakravarthi, UGC Research Fellow, Centre of Social Medicineand Community Health, Jawaharlal Nehru University,New Delhi - 110 067, India. E-mail: [email protected]

Special Article

Access this article onlineAccess this article online

Website:Website: www.ijph.in Quick Response Code:

DOI:DOI: 10.4103/0019-557X.123242

PMID:PMID: ***

been collected from government reports, business reports and announcements and scanning of websites of various companies.

Market Size of Medical Equipment

According to one estimate cited in a report by the Confederation of Indian Industry (CII) the medical technology market in India was valued at US$2.75 billion in 2008, estimated to reach US$5 billion by 2012 with an annual growth rate of nearly 15%.[1] According to a study by Ernst and Young, the size of the Indian medical equipment industry was $2.16 billion in 2006 (Rs. 9500 crores) and expected to reach $3.2 billion by 2009 (Rs. 14,080 crores) and $4.5 billion by 2012 (Rs. 19,800 crores).[2] Although we are aware that the above fi gures have their limitations as they are from different sources, yet they give an estimate of the signifi cant size of the market for medical equipment, indicating that the demand has registered very high growth rates since the 1990s.

Manufacture of Medical Equipment in India

Scattered data regarding production of medical equipment and instruments are compiled by the Annual Survey of Industries and Department of Electronics. Currently there is indigenous manufacturing capacity for a range of hospital furniture, medical equipments, appliances and devices in the country, from low to medium

[Downloadedfreefromhttp://www.ijph.inonFriday,December12,2014,IP:14.96.124.86]||ClickheretodownloadfreeAndroidapplicationforthisjournal

nitinsRectangle

204 Chakravarthi: Medical Equipment Industry in India


technology, developed in the early years of building self-reliance and reducing imports, with support to small and medium industry.[3] Small consumables (syringes, intra-venous sets, gloves, blood-bags, catheters, etc.) and equipment considered low technology, such as conventional electrocardiogram (ECGs), defi brillators, bedside monitors, diagnostic X-ray equipment, therapy equipment such as diathermy-ultrasound-electrotherapy, surgical diathermy, respiration monitors, ultrasound scanners, analytical equipment for pathological and biochemical analysis, incubators and pacemakers, are manufactured in the country by local producers with small capacities. Although necessary expertise and a certain amount of infrastructure exist in the country, the local industry has not grown to the required extent and the micro-processor based counterparts of many of the above equipment are all imported. Although Indias medical technology industry is primarily import dependent, according to industry reports nearly 60% of what is being manufactured is being exported.[1]

Manufacture of medical electronic equipment forms a negligible part of total electronics production, but there has been a steady increase in value of its production. In the 15 year period from 1988 to 2003, its value increased 12 fold to Rs. 421.81 crores, at about 18% per annum.[4] The increase in the manufacture of some imaging equipment, such as medical X-ray and ultrasound equipment can be attributed to the manufacture/assembly of these by multinationals such as General Electric (GE) and Siemens, for sale in India and other neighboring countries.

Overall, while manufacturing may seem to be picking up in the country, it is more in the form of subsidiaries, as joint ventures and as part of contract manufacturing. Increasingly, multinationals and other medical device companies from US are outsourcing several of their activities to India, as a way of reducing costs in manufacturing, R and D, clinical trials and other medical services. India is considered to have several advantages lower labor costs, a large English-speaking and skilled labor force, the government providing conducive conditions by setting up special economic zones (SEZs) as in China and an increasing middle-class population seeking better health-care. The activities being shifted comprise: making India the base for business operations in the South Asian region; contract manufacturing of components by Indian companies for global markets; developing software for the advanced imaging equipment manufactured by them; undertaking R and D, clinical research and trials for their products.

The creation of conditions favorable to foreign manufacturers, both, in terms of favoring imports to meet domestic requirements and in setting up SEZs to manufacture for international markets, not necessarily to meet indigenous requirements, has to be placed in light of developments in the international economy and the importance attached to economic growth at all costs. Medical equipment industry of the US and other countries, looking at developing countries to increase their profi ts through expanding markets and reducing their costs as well, receive much support in this from their governments and international trade arrangements such as World Trade Organization (WTO) and General Agreement on Trade and Services (GATS).

The net effect is that there is manufacturing of products that are of use at the secondary and tertiary levels of health-care and/or for export: such as cardiac stents, catheters, ultrasound scanners, etc. Indian industry now wants to produce specialized medical equipment and devices for international markets. Indian manufacturers therefore are now lobbying for support to local manufacturing through concessions and setting up of SEZs, as in China. The Association of Medical Devices and Suppliers of India (AMDSI) wanted the government to set up medical technology parks in the country and give income tax and other benefi ts. A Medipark has been set up in suburban Chennai, for manufacture of medical devices and equipment of international standards.[5]

Import of Medical Equipment

Since the 1990s the manufacturing base has been adversely affected by liberalized imports of medical technology, ranging from low to high technology equipment and devices. In the 1990s there was a steep increase in the variety and quantum of import of medical equipment into the country.[6] According to industry estimates currently almost 90% of devices and disposables are being imported at international prices.[1,7] For instance, the market for Indian syringes and needles was growing in the 1990s due to certain government incentives for brand promotion abroad, but these incentives were taken back in 2001, leading to adverse impact on local manufacture. The Indian syringes and needles manufacturing industry has since been facing competition from cheap Chinese and Korean imports; as a result most of the manufacturers have started trading in cheap imported needles and syringes, repackaging and selling them under any name.[8] The import of syringes


205Chakravarthi: Medical Equipment Industry in India


(with needles) increased by 122.7% between 2004 and 2005 and by 69% between 2006 and 2007.[6]

In the 15 year period from 1988 to 2003 there has been an increase in imports by 25 times. The items imported range from: Small consumables such as surgical gloves, syringes,

needles, cannulae and catheters; A wide range of implantable and other cardiac,

orthopedic, dental and auditory devices; stethoscopes, thermometers and blood transfusion apparatus; assisted respiration apparatus;

Dental chairs and drills, eye and ear, nose and throat precision instruments and lasers, etc., imaging equipment; auto-analyzers, anesthetic equipment, ECGs and electroencephalograms, linear accelerators used in cancer therapy, hemodialysis machines, endoscopes, laparoscopes, baby incubators and other equipment.[6]

There is also import and sale of used, refurbished equipment, especially of computed tomography (CT)-scanners and magnetic resonance imaging (MRI) equipment, even by the manufacturers themselves. However, there are no estimates as to what proportion of the imported equipment is re-conditioned and who the buyers are. Use of such equipment carries concerns of obsolescence, non-availability of spares, accessories and upgrades, after-sales support and warranty problems, all of which have implications for safety, proper calibration and reliability.[9]

Promotional Activities by the Medical Equipment Industry Research, Education, Lobbying

The growing health-care market in India is being treated by all segments of business, including medical technology manufacturers, as a big marketing opportunity. Medical technology is aggressively promoted through frequent and regular trade exhibitions and conferences in metropolises and bigger towns across the country. The medical equipment manufacturers and traders also undertake several kinds of lobbying activities with the government. Several industry associations have been formed to promote industry interests. The CII National Committee on Healthcare and Medical Equipment Division and the Indian Health-care Federation are some examples. In this regard, we fi nd that there are two kinds of associations one representing the corporate entities

and multinationals in equipment manufacture as well as the corporate hospitals; and the other such as the AMDSI, representing the smaller manufacturers and traders, who are demanding support/concessions for local manufacture in Special Economic Zones (SEZs).

Medical equipment manufacturers are now organizing activities such as education and training to complement the manufacturing and trading. This activity, extremely well-institutionalized by the pharma industry through its vast network of medical representatives, is now spreading to the medical equipment industry. A major activity of the multinational imaging manufacturers such as GE, Philips, Siemens is that of organizing education, training and research in medical imaging and trials in academic centers. At present, continuing medical education courses, seminars, conferences, product launches at medical conferences, live operative workshops demonstrating the use of endoscopy equipment, demonstrations of ultrasound scanning on live subjects and exhibitions of medical equipment, all sponsored and funded by pharmaceutical and equipment industry, are the major means of acquiring and exchanging information about new technologies and procedures. An example is that of endoscopy and minimal invasive surgery that was introduced during the 1980s. It has been said: The surgical revolution set in train by the technological advances of the mid-1980s was largely uncontrolled, with few safeguards to protect patients from enthusiastic, but inadequately trained surgeonsPeople took it up before it was proven and before they acquired necessary skills. Some people have certainly tried in the past to do operations for which they were insuffi ciently trained. Some patients defi nitely died as a result.[10]

MNCs such as GE and Philips are also entering into partnerships with private corporate hospitals and diagnostic centers for R and D, clinical research and trials in India of equipment, software and imaging agents. Imaging centers, like the Diwan Chand Agarwal Imaging Research Centre, Delhi, also function as training and education centers for the use of specifi c procedures and technologies.

Some equipment manufacturers have entered into public-private partnership arrangements with state governments to provide diagnostic services. The Government of Madhya Pradesh, in January 2008, entered into an arrangement with GE Healthcare and Sanya Hospitals and Diagnostic Centre, Delhi, to establish an advanced, diagnostic imaging facility at the Netaji Subash Chandra


206 Chakravarthi: Medical Equipment Industry in India


which is regulated by the Atomic Energy Regulatory Board. Although there are some standards laid down by the Bureau of Indian Standards for some medical equipment and systems, according to the industry itself, in the absence of mandatory regulations they are hardly adhered to. Only recently the Drugs Controller General of India brought some implantable devices such as stents and pacemakers under regulation. Suffi cient anecdotal information exists to indicate irrational use of these technologies and techniques to recover the investment costs. While irrational use increases cost to patient, the safety aspect in the use of such technologies (especially of X-rays and ultrasound) remains ignored by the medical and public health community and the policy makers.

Lack of regulation of use of medical technology - neglecting safetyPolicy shifts in the health-care services sector have led to the creation of markets for specialized medical care relying on specialized technologies. As in the case of corporate hospitals sector, where Apollo Hospitals talks of setting standards through brands, the diagnostic companies are planning for the creation of brand names and leaders. Another development since the late 1990s onward is the setting up of independent, private imaging centers in many urban areas, which offer a range of imaging facilities. Diagnostic companies from US, such as Quest, are also beginning to set up centers in India.[12] These growing numbers of private hospitals and diagnostic laboratories across the cities and towns, are the major consumers of high-tech and other medical equipment. Use of state-of-the-art equipment is the major selling point for all these private facilities and acquisition of any new gadget or equipment is given wide publicity. In fact, they use their acquisition of advanced technology to create an aura of expertise, professionalism and quality.

Existing regulations regarding setting up of X-ray facilities are abysmally ineffective. According to the Head, Directorate of Radiation Safety, Kerala, about two-thirds of the X-ray and CT-scan centers were manned by unqualifi ed people and the shortage of qualifi ed personnel was a critical issue for public health.[13] Furthermore, a large number of CT-machines were refurbished equipment (second-hand), whose safety level could be lower than desirable. The Department of Atomic Energy and the DRS, that have to monitor and regulate CT-X-ray centers, are unable to do so because of shortage of staff, equipment and other facilities. This indicates the lack of interest of the government in enforcing safety guidelines and regulations for medical technology.

Bose Medical College Hospital in Jabalpur. GE installed the CT and MRI systems, while Sanya invested Rs. 80 million on the equipment and provided trained professionals to the medical college hospital.[6] The German company B Braun is investing Rs. 35 crores in Andhra Pradesh for setting up within medical colleges and hospitals 11 hemodialysis centers equipped with 111 hemodialysis machines, to provide dialysis services under the Aarogyasri program.[1]

Given the exorbitant costs of certain medical equipment (ranging from few lakhs to crores for imaging equipment), it is not surprising that the medical equipment companies and suppliers themselves also arrange for leasing medical equipment, or fi nancing their acquisition. For instance Siemens reached an understanding with a bank for fi nancing purchasing of its medical equipment.[11]

Thus, the role of large corporations such as GE and Philips extends far beyond manufacture into fi nancing, supplying peripherals, customer advice and education and they are looking for ways to get into health care delivery as well. Given the vast resources that are being put in by the imaging industry, it is not surprising that medical imaging holds a lot of glamor among sections of the medical profession and is beginning to occupy a signifi cant place in medical practice. In several ways, the immediate source of information about medical innovations happens to be the industry itself and the specialists involved in the R and D of the innovation. Such activities have serious implications for safe and rational use of medical technologies, more so in a situation characterized by complete lack of regulations.

Status of Regulations

Lack of standards and regulation for manufacture, imports and sale of medical equipmentAlthough there has been an increase in imports and interest in manufacturing certain kinds of medical equipment, the government has not devised a system of regulations and standards for manufacture and import, and regulation of all these activities. Despite consistent recommendations by several government committees regarding standards for medical technology, we fi nd that there is no initiative by the health ministry to monitor and regulate such large-scale diffusion of medical equipment in the country and to lay down guidelines and standards for their manufacture, import and use for new or existing technologies, with the exception of X-ray equipment,


207Chakravarthi: Medical Equipment Industry in India


The scenario regarding use of ultrasonography is not very different from that of CT. According to the Indian Radiological and Imaging Association (IRIA), unrestricted access to equipment has prompted doctors with inadequate training in radiology (general practitioners, gynecologists and orthopedicians, to set up imaging centers, leading to wrong diagnosis.[14] Private medical and diagnostic centers and private practitioners offer short-term training on the use of latest equipment and several equipment-based techniques.

Substantial funds have been invested by both, central and state governments in purchasing medical equipment, including expensive and the latest advanced equipment, for the government health services at the secondary and tertiary levels. In several states, this has been done as part of the Health Systems Development Project executed with loans from the World Bank. In 2000, the 11th Finance Commission sanctioned special purpose grants to several states (Haryana, Orissa, Karnataka, Tamil Nadu, Uttar Pradesh, Assam, Madhya Pradesh, Maharashtra) to set up Regional Diagnostic Centers, at the district level, equipped with CT scanners, ultrasound scanners, pathology laboratory. However, Comptroller and Auditor General (CAG) reports over the years indicate underutilization or non-utilization of much of this capital investment in central government hospitals due to lack of skilled personnel.[15] Instead of taking steps to remedy this situation, it is being used to delegitimize the public sector health system and create markets for the medical equipment companies as well as the service providers, through PPPs for the provision of diagnostic services at the secondary level. Implementing the recommendations that have been made for devising mechanisms of planning purchase, procurement, management and utilization of medical equipment in the public sector services [15] would be a fi rst step in the right direction.

Acknowledgment

The author would like to thank Dr. Ritu Priya and an anonymous reviewer for valuable suggestions.

References

1. Confederation of Indian Industry and Deloitte. Medical Technology Industry in India: Riding the Growth Curve. Deloitte Touche Tohmatsu India Private Limited, July 2010. Available on: https://www.deloitte.com/assets/

Dcom-India/Local%20Assets/Documents/Lifesciences/Medical_technology_Industry_in_India.pdf. [last accessed on 2013 Sep 27].

2. Balakrishna P. In the pink of health. Business standard. New Delhi, [2007 Jul 12]. Available from: http://www.business-standard.com/india/news/inpinkhealth/290789/. [Last accessed on 2013 Sep 23].

3. Chakravarthi I. Medical technology Tracing policy approaches. Indian J Public Health 2013;57,4:197-202. (This issue).

4. Rastogi, A.K. Indian Electronics and IT Industry Production Profile. Electronics Information and Planning, March-April 2003, 30 (6-7).

5. BS Reporter. Trivitron Medical Park to attract Rs. 250 crore. Chennai, January 26 2010. Available from: http://www.business-standard.com/india/news/trivitron-medical-park-to-attract-rs-250-cr/383638/. [Last accessed on 2013 Sep 23].

6. Chakravarthi I. Shifts in processes of diffusion of medical technology in India and implications for public health. Unpublished Ph.D Thesis Submitted to Center of Social Medicine & Community Health. Delhi: Jawaharlal Nehru University; 2009.

7. Verma MD. Diagnostics industry seeks special economic zones. The Hindu. Online ed.[2006 Sep 03]. http://www.hindu.com/2006/09/03/stories/2006090316350300.htm, [last accessed on 2013 sep 23].

8. Syringe industry threatened by Chinese needles. The Economic Times. [2002 Jun 12]. Available from: http://www.economictimes.indiatimes.com/syringe-industry-threatened-by-chinese-needles/articleshow/12743637.cms. [Last accessed on 2013 Sep 23].

9. Government of India. Technology Evaluation in Medical Electronics Equipment/Systems Industry A Report prepared under Programme aimed at Technological Self Reliance. Delhi: Department of Scientific and Industrial Research, Ministry of Science and Technology; 1992.

10. Cusheri A, Jones J. Where are we going? Minimal access surgery. Br Med J 2000;319:1304.

11. Business Line. SBI signs pact with Siemens for equipment finance [2004 Mar 4]. http://www.thehindubusinessline.in/2004/03/04/stories/2004030400991000.htm [last accessed on 2013 Oct. 23].

12. Chakravarthi I. Corporate presence in healthcare sector in India. Soc Med 2010;5:192-204.

13. Special Correspondent Shortage of Trained Hands at X-ray Units. The Hindu. Online ed. [2007 Nov 8 Thursday]. http://www.thehindu.com/todays-paper/tp-national/tp-kerala/shortage-of-trained-hands-at-xray-units/article1945114.ece[last accessed on 2013 Oct 23].

14. Doda SS. Presidential address. Indian J Radiol Imaging 2006;16:15-6.

15. Government of India. Report of the Comptroller Auditor General of India for the Year Ended 31st March 2007. Union Government (Civil), Report No. 20 of 2007. 2007.

Cite this article as: Chakravarthi I. Medical equipment industry in India: Production, procurement and utilization. Indian J Public Health 2013;57:203-7.

Source of Support: Nil. Confl ict of Interest: No.
