Why this is important to Wisconsin businesses: The sector is experiencing double-digit growth that is expected to continue for at least the next five years.
India is the fourth-largest medical device market in Asia, and one of the top 20 in the world. In 2017, the market size was estimated at $5.2 billion, with a 15.8 percent compound annualized growth rate (CAGR). This double-digit growth is expected to continue for the next five years. Growth in the Indian health care sector is attributable to a growing population with rising income, increased health consciousness, and widespread access to health insurance. An increase in the number of private hospitals is also driving demand for medical devices.
Although the Make in India program and the Indian National Health Policy 2017 both seek to encourage the local production of medical devices, India’s medical device market continues to be largely import-dependent, with 70 percent of products being imported. Domestic producers are mainly in the low-price, high-volume segment. Approximately 30 percent of India-made products in this sector are exported, with the consumable and disposable segments forming the largest share of these exports.
The industry is fragmented into small and midsize enterprises, and primarily manufactures low-end products such as disposables/medical supplies. The industry comprises 750 to 800 Indian manufacturers, of which close to 65 percent have annual revenue less than $2 million. Fewer than 2 percent of Indian companies have annual revenues over $100 million. Indian companies are entering into mergers and acquisitions with domestic and foreign companies to drive growth and gain new markets.
The medical devices sector is segmented into four main categories: equipment and instruments, consumables and disposables, patient aids and implants, and other. The equipment and instruments category has a market share of 55 to 60 percent, followed by consumables and disposables at 30 percent. Refurbished medical devices also have a significant share in India. The refurbished market is dominated by demand for diagnostic imaging equipment. Developing markets, including India, offer high growth potential for organizations engaged in manufacturing and distributing refurbished medical devices.
India has always been an attractive market for global manufacturers, and 100 percent foreign direct investment (FDI) under the automatic route is allowed in the medical device sector in India, providing great opportunities for foreign players to enter the market. The sector received around $1.57 billion of FDI from 2000 to 2017. Companies such as Trivitron, Sutures India and Perfint Healthcare have received several rounds of investment from investors. Since 2010, the medical device sector saw several M&A transactions, although the average deal size has been below $10 million. Equipment and instruments and consumables are the two segments attracting the most foreign investment. The U.S., Europe and Japan are the key source countries for FDI in medical devices. The sector has witnessed tremendous foreign investment, and the growing presence of multinational corporations is a testament to the opportunities that exist in India. Examples include the Smith & Nephew acquisition of Adler Mediquip, Terumo Corp.’s acquisition of Terumo Penpol, Philips Medical Systems’ acquisition of Medtronics, and Becton Dickinson’s manufacturing plant in Haryana.