Rising Star in MedTech

Introduction

In the heart of the bustling American medical device industry, I found myself nestled within a leading Emergency medical device manufacturer in the throes of 2020. Our gears turned, our machines hummed, and our products, vital lifelines for many, were a symphony of precision and innovation.

Yet, our symphony relied on a chorus of vendors, most perched across the seas in China. They were our stalwart partners, the backbone of our supply chain. But then, the world stood still as the relentless wave of Covid-19 crashed upon us. The very hands that meticulously crafted our components lay idle due to the stringent pandemic restrictions.

As the factories in these distant Chinese locales fell silent, a crescendo of chaos and uncertainty swept through our corridors. The vital links in our chain had snapped, causing ripples of delay that rippled across oceans. Our shelves, once brimming with life-saving devices, began to wear thin. The timely delivery of essential medical products, our promise to those in need, hung precariously in the balance.

This incident brought to light a significant risk for North American manufacturers—an over-reliance on a single country as their primary supplier. It prompts a reevaluation, encouraging American manufacturers to contemplate outsourcing components to alternative destinations like India.

India has been a popular destination for outsourcing manufacturing for many years. However, the country is now looking to become an alternative manufacturing partner for American companies in medical device development. There could not have been a better time to make medical devices manufacturing allies in India right now. In this blog, I will try to explain my position with a few key facts.

Opportunity

India's prowess in manufacturing has drawn prominent American companies like Cummins, Eli Lilly, and Bosch, showcasing the vast potential for leveraging India's industrial strength. The country's robust workforce of skilled engineers and cost-effective labor sets the stage for an enticing manufacturing environment. Furthermore, substantial investments in physical and digital infrastructure have transformed India into a hub for streamlined production and technological integration, beckoning global manufacturers seeking reliability and efficiency.

In response to the pandemic, India has designated the medical devices sector as a flagship industry under the 'Make in India' initiative. Despite comprising multinational giants and smaller enterprises, India's share in the global medical devices market remains modest at 1.65%. To stimulate growth, the government has introduced two pivotal initiatives: the Production Linked Incentive Scheme (PLI) and the Promotion of Medical Devices Parks Scheme.

The PLI scheme aims to bolster domestic manufacturing by offering financial incentives, particularly in segments such as cancer care devices, radiology and imaging devices, anesthetics devices, and surgical implants. Complementing this, the Promotion of Medical Device Parks scheme seeks to fortify infrastructure and foster a robust manufacturing ecosystem. It envisions common facilities like testing centers, manufacturing units, sterilization facilities, and technology incubators within these parks. The proposed tenure of the scheme will be from 2020 to 2024.

Regulations for medical devices marketed and sold in India are overseen by the Central Drugs Standard Control Organization (CDSCO). Recently, the Union Cabinet approved the National Medical Devices Policy in 2023, aiming to reduce import dependency and augment domestic production. With the Indian medical devices market estimated at Rs. 90,000 crore (US$ 11 billion) in 2022 and projected to soar to US$ 50 billion by 2030, growth opportunities are palpable.

Additionally, India's initiatives to facilitate Foreign Direct Investment (FDI) in the medical devices industry have gained traction since the relaxation of FDI norms in 2015. The National Medical Devices Policy (2023) recently approved by the Union Cabinet, set to align with the PLI Scheme, further amplifies India's commitment to fostering indigenous production and innovation in the medical devices sector. These measures, coupled with India's abundant resources and evolving manufacturing clusters, position the nation as an emerging global hub, shaping the trajectory of the medical market and underscoring its dedication to high-demand sectors.

Challenges

However, Its not all that rosy and straight forward. Establishing medical device production in India poses several challenges for foreign manufacturers. Land acquisition often proves intricate due to regulatory complexities and local dynamics, hindering the swift acquisition and development of suitable manufacturing sites. Bureaucracy within the administrative processes might lead to delays and hurdles in obtaining necessary permits and approvals, further elongating the setup timeline.

India's federal structure presents a challenge as different states have varied regulations and incentives, making it arduous for foreign companies to navigate and choose the most favorable location. Moreover, India is a 'High-context' culture (google 'High-context' culture to learn more). HR policies, culturally driven nuances, and differences in work practices can be hurdles in creating a cohesive workforce. Bridging these cultural gaps and aligning HR strategies with local norms pose significant challenges. Ford's exit from India is a textbook example of what can go wrong when you fail to integrate in the local work culture.

Integrating with society and addressing societal expectations while establishing manufacturing units can be a challenge, necessitating a delicate balance between business objectives and societal impact. Overcoming these challenges demands a strategic approach that accounts for the intricacies of India's regulatory, social, and cultural landscape.

Takeaway

In conclusion, India’s potential as an alternative manufacturing partner for American companies in medical device development is immense. The country’s growing healthcare industry and the government’s ‘Make in India’ initiative provide a platform for the sector to revisit the operating model, identify key imperatives for growth, and explore possibilities for creating a step change in the medical devices sector. It’s time for American companies to take notice of India’s potential and explore the possibilities of partnering with the country for medical device development. India has never been more motivated to invite investors and brands before.

About author

Arpit Bhugul is a seasoned professional with extensive experience in the medical devices industry. With a Master's degree in Biomedical Engineering and a certification as a Project Management Professional (PMP) from the Project Management Institute, Arpit brings a wealth of expertise to the field. His career is marked by a commitment to driving innovation, managing complex projects, and navigating the intricacies of manufacturing and supply chain management in healthcare technology.