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Perspectives on building technology businesses and AcceleratorIndia from Cartezia

Overview of the Indian Medical Devices Market

Friday, June 27, 2014

The Indian medical devices industry constitutes around 8% of the Indian healthcare sector and was worth about US$6.3 bn in 2013. It has grown at a CAGR of 17.2% for the period 2008–13 and is expected to grow to US$10.2 bn by 2016.

The industry is highly fragmented with 65% of manufacturing attributable to SMEs. The higher-end of the market is dominated by foreign manufacturers, many of whom have established subsidiaries in India. The industry is currently highly dependent on imports with 77% of demand being delivered through imports. Low or no customs duties have also encouraged imports rather than manufacture.

The principal components of this market are:

  • Diagnostic imaging sector, consisting of electro-diagnostic apparatus, radiation apparatus and imaging parts & accessories which form the largest sub segment with 33% market share
  • Consumables sector, forming 18% of the overall sector, is growing at a healthy rate of 17%. This is the only segment with a positive balance of trade
  • In-Vitro diagnostics segments, including instruments and reagents, form about 10% of the overall market, having grown at a CAGR of 21% over the last five years
  • ‘Patient aids’ is the fastest growing segment, having grown at a CAGR of 36% over the last 5 years. The market consists of portable aids and therapeutic appliances
  • Orthopaedics and prosthetics market, currently 8% of the overall market, is the second fastest growing segment
  • Dental products primarily include, capital equipment (for example dental drills and dental chairs) and instruments & supplies (for example dental cement, teeth & other fittings)
  • Other medical devices segment includes wheel chairs, ophthalmic instruments, hospital furniture, medical & surgical sterilizers, for example ultra violet equipment

Hospitals in Tiers 2 and 3 locations are driving the accelerating demand for medical devices. In addition to new hospitals being set up, existing hospitals, which earlier did not have adequate equipment, are sourcing new or refurbished equipment.  Domestic players, which supply products at lower cost as compared to MNCs, will benefit from this. 

Companies such as Mysore-based Skanray Technologies, have taken advantage of gaps in the market and introduced cheap but effective new products.  For instance, Skanray's USB-based ECG product can convert laptops, or personal computers, into a 12-channel electrocardiogram system. As a result, rural diagnostic centres can now offer ECGs for as low as 20% of the cost they earlier used to charge. Skanray is also planning to launch a highly cost effective ultrasound machine, which would offer similar cost benefits to diagnostic chains and customers.

This also creates new opportunities for European technology companies to partner with Indian companies serving the needs of Tier 2 and 3 hospitals for affordable medical devices.

The Indian medical devices industry is also witnessing consolidation as Indian players try to gain access to foreign markets and consolidate their positions at home and at the same time, foreign companies enter India through acquisitions. Recent instances of domestic and in-bound M&A include:

  • India based Skanray acquired Pricol Engineering and L&T Medical & Systems
  • Purple Medical Solutions acquired MIV Therapeutics
  • Smith & Nephew acquired Adler Mediequip
  • Essilor International acquired Optics India

Recent outbound acquisitions include:

  • Transasia Bio Medical acquired Maxmat, Drew Scientific and JAS Diagnostics
  • Trivitron acquired Labsystems Diagnostics