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MEDICAL DEVICES

by EOS Intelligence EOS Intelligence No Comments

India and China Make Space for Domestic Medical Devices

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Medical device industries in India and China have long been dominated by international players, especially when it comes to high-end devices. High investment requirement, long gestation period on ROI, limited support from the government, and relatively low demand and awareness about medical procedures have resulted in limited domestic investments. However, the industry has been evolving as more and more local players are realizing the scope of this high-potential market that is still in its nascent growth stage in India and China. Moreover, increased government support is further expected to boost indigenous production in the industry.

Similar market structures, a whopping difference in size

While the medical device sector in China is far ahead of that of India (with respect to sales, number of players, and investment), they both have a similar market structure, i.e. being dominated by large multinational players, who have built strong relationships with large hospitals, healthcare organizations, and influencers.

Very few local players have had any significant presence in this industry, and those that did hold some share in the market, limited their focus to the low-investment, low-price product range. However, with healthcare spending in the two countries rising significantly, more and more domestic players are entering and expanding into this space.

India’s healthcare industry is poised to reach US$280 billion by 2020 registering a CAGR of 15% during 2016-2020, while China’s healthcare spending is projected to reach US$1 trillion by 2020, growing at a CAGR of about 12% during the decade.

The rise in healthcare spending in both countries is underpinned by rising disposable income, availability and growing awareness about medical care, expansion of health insurance coverage, rising burden of lifestyle diseases and increased stress levels, as well as ageing population (especially in China).

In addition to this, the governments in both countries are providing instrumental support to companies interested and engaged in medical device manufacturing on domestic soil.

Government takes initiative to promote Indian domestic manufacturing

India’s medtech market, which was valued at close to US$4 billion (INR 260.5 billion) in 2015 is expected to reach about US$8 billion (INR 550.4 billion) by 2020, registering a CAGR of 16.1% during 2015-2020, which is significantly higher than the global industry growth of about 4-6%.

Although about 65-70% of the market value is characterized by imports, the current government’s initiatives in the sector (including the Make in India initiative) are expected to reduce the country’s dependency on imports in the medium-to-long term. Some of the initiatives undertaken by the government include allowing 100% FDI in the sector, setting up medical technology and devices parks across selected states to bring down indigenous manufacturing costs by as much as 30%, developing two testing and quality certification labs aimed at monitoring and improving quality of manufactured devices, and issuing Medical Device Rules 2017, which promote domestic manufacturing.

Before the Medical Device Rules 2017, medical devices were regulated as drugs and this resulted in several regulatory bottlenecks with regards to medtech manufacturing. The new set of rules ease the process of obtaining licenses and undertaking clinical trials, encourage self-compliance, and promote a single-window digital platform for the processing and easy tracking of applications and licenses for import, manufacture, sale/distribution, and clinical investigation of medical devices. In addition, the new medical device rules classify medical devices into four categories based on the risks these devices may pose, in line with global standards for classifying and registering medical devices.

In addition to this, the government also corrected the inverted tax structure faced by the industry in the past (i.e. import of finished goods attracted lower duty compared with import of raw materials for domestic manufacturing). Under the 2016-2017 budget, the government relaxed import duty on components and raw materials required to manufacture medical devices to 2.5% and provided full exemption from additional customs duty (SAD). Further, it increased duty on import of finished medical devices from 5% to 7.5% (in addition to imposing an additional duty of 4% on medical devices by withdrawing exemptions.)

While the move of reducing duty on raw materials has been appreciated by the industry, the rise in duty of imported medical devices has met with mixed reviews. India is highly import-dependent with regards to medical devices and a rise in duty on most categories will make medical care more expensive for the consumer.

Further, in June 2017, the union cabinet announced a US$250 million initiative as a part of the National Biopharma Mission to fund bio-tech start-ups in the field of medical devices, bio-therapeutics, etc. The government is also looking to encourage innovation in this space by setting up R&D incubation centers in association with leading research institutions in this field.

Apart from easing the supply side, the government’s initiatives, such as Free Diagnostics Service Initiative also play a vital role in boosting the demand for medical devices (especially in-vitro devices) in the country. Through this initiative, the government, under the National Health Mission aims at providing a minimum set of diagnostics to the underprivileged population in the country.

In addition to this, the program has worked on devising an integrated approach to combat prevalent non-communicable diseases such as hypertension, diabetes, and cancer by undertaking year-round screening and testing. This will result in large government orders for IVDs and other medical devices.

Another initiative undertaken by the government to both support the domestic industry and ensure a more widespread reach of medical devices has been price capping of coronary stents and orthopedic implants. Observing the huge distributor margins on these medical devices, the government undertook a bold step to cap the prices at which stents and knee implants can be sold in India.

Prior to the price control, the average retail price for a bare metal stent was about US$700, while that for a drug-eluting stent was about US$1,800-2,000. In February 2017, the government fixed a ceiling price of ~US$106 (INR 7,260) for bare metal stents and ~US$431 (INR 29,600) for drug-eluting stents.

In a similar move, the government capped prices for knee implants in August 2017. Knee implants, which ranged from ~US$2,308-US$13,121 (INR 158,300 – 900,000) were limited to ~US$791-1,661 (INR 54,270-113,950). In mid-2017, the government published a list of 19 medical devices (including catheters, heart valves, other orthopedic implants, etc.) that will be monitored for pricing, thus similar price capping may be expected for other devices as well.

Large players may withdraw their latest generation products from India, while Indian players will focus only on cost-effective products instead of innovations.

While the intent for the price capping is noble and will provide a boost to the domestic manufacturers who are better equipped at producing low-priced products, several leading international companies, such as Abbott Vascular and Medtronic, have criticized the decision and submitted applications to increase the ceiling price for the premium quality products or allow them to withdraw the products from the Indian market (as per the government’s rules, no manufacturer can withdraw their products from the market for a period of 12 months from the date of the price ceiling without prior approval from the government). This may be detrimental to the overall industry as large players may withdraw their latest generation products from India in the long run, while Indian players will focus only on cost-effective products instead of innovations.

Indian domestic players might go beyond high-volume low-end products

The Indian medical device market is largely import driven with a very fragmented domestic players landscape. While there are around 800 local medical device manufacturers across the country, only 10% have a turnover of more than ~US$7.3 million (INR 500 million).

The small-scale domestic players focus primarily on the consumables and disposables segment of the medical device industry, which include high-volume low-end products such as syringes, needles, and catheters.

The patient aids segment, including mostly hearing aids and pacemakers, is largely import dependent.

While the equipment and instruments segment and the implants segment are largely dominated by foreign players, they have recently seen an influx of local players that have customized their offerings to the Indian market. Karnataka-based Remidio Innovative Solutions has come up with a retinal imaging system, wherein the fundus of the eye connects to a mobile phone camera to take pictures of the retina to detect diabetic neuropathy. The device can also be used in remote areas and the images and results can be shared in real time on the treating doctor’s phone. Similarly, Karnataka-based Tricog Health Services has developed a cloud-based ECG machine for faster diagnosis. Several other players include Sattva, Cardiotrack, Forus Health, etc.

Understanding the needs and price-sensitivity of the Indian market, several leading global players have also created customized offerings for Indian consumers. For instance, GE Healthcare has come up with a compact CT scanner, which consumes less power, while Skanray Technologies has developed affordable X-ray imaging systems to meet the Indian needs.

We can expect a transition in the domestic sector, which will not only focus on high-volume low-end products but also look at entering the high-end innovative segment offering more affordable and locally customized solutions.

 Since the Indian government has fixed the inverted duty structure and provided other instrumental support to the domestic sector, we can expect a huge transition in the industry, which will not only focus on high-volume low-end products but also look at entering the high-end innovative segment offering more affordable and locally customized solutions. This may eventually result in a phase of consolidation, with foreign market leaders absorbing several innovative Indian start-ups and established players.

Medical Devices – India and China Make Space for Domestic Players

Chinese government also focuses on aiding local producers

China’s medical device market is the third largest globally, after the USA and Japan, and is expected to surpass Japan to become the second largest by 2020. In 2017, the industry was valued at US$58.6 billion, maintaining a double-digit growth over the previous three years.

Similar to the Indian market, the Chinese medical device sector continues to be dominated by foreign players through imports or their locally manufactured products. However, the market is also characterized by the presence of several local players (though smaller in size), especially in the drug-eluting stents, IVDs, and orthopedics segments.

While the foreign players hold the major chunk of innovative medical devices, the government has been taking several and significant steps to promote local companies. The government requires international players to have local legal entities in China for registration and licensing, thus China cannot serve only as an export market.

Another such major step is the regulatory proceedings under Order 650, which mandate clinical trials in China for all class II and III medical devices, with few exceptions. This prolongs the period for obtaining a license to 3-5 years and adds close to US$1-1.5 million (CNY 7-10 million) in costs. However, it has introduced a shorter channel, called the Green Channel, which provides a fast track review option. While the government introduced this to foster domestic innovation, foreign players can use it too. To be eligible for the Green Channel, the device must have a Chinese patent and it must be an innovative product with design progress and records. Products qualifying for the Green Channel are given priority in the registration review and are exempt from the US$90,000 registration fee.

In 2016, the government introduced a second priority review system for certain breakthrough products. Under this fast track channel, the need for a lengthy pre-qualification application process was further eliminated.

The government’s guidelines in its new healthcare reform called The Healthcare Reform 2020 also aim at reducing the share of imported medical devices and promoting locally produced counterparts. Several state-based medical tenders differentiate between local and imported products, giving preference to the former. Moreover, in some tenders a further distinction is made between domestic and foreign-owned local manufacturers. Thereby foreign companies that buy-out local companies to get an easier access into China are also considered as foreign players.

Under its Made in China 2025 plan, the government has also focused on domestic development and manufacturing of high-end and innovative medical devices. These devices include imaging equipment, medical robots, fully degradable vascular stents, and other high-caliber medical devices. The government aims to boost local production of such innovative and high-value devices by supporting the R&D infrastructure and manufacturing capabilities of local players. The government also provides extension of tax benefits for a period of three years if the investment made is used towards the development of medical devices.

Moreover, under the initiative, the government has aimed at increasing the use of locally produced devices by hospitals to 50% by 2020 and 70% by 2025. To pursue this goal, in September 2017, the Sichuan province mandated the use of locally-made devices in hospitals across 15 categories including respirators, PET, and CT scanners.

Just like India, China is also focusing on combating high distribution costs of medical devices, which in turn will make their prices more affordable for the general population. However, instead of capping prices, the government has introduced a Two Invoice System. The system limits the number of invoices between a supplier and the hospital to only two – the first invoice would be from the manufacturer/trading company to a government-appointed supplier/distributor (GAS) and the second invoice will be from the supplier to the hospital. This will eliminate most links in the non-transparent and fragmented distribution network in the Chinese medical device sector, which encompassed several distributors, sub-distributors, agents, etc. (the sub-distributors were engaged due to their personal and long-standing relationships with a set of hospitals). This new system is expected to reduce the corruption level by reducing the number of intermediaries and in turn improving efficiency and reducing prices for the patients.

Chinese players dominate several narrow industry segments

China’s medical device industry is dominated primarily by international players, especially with regards to high-end and innovative devices. Having said that, there are a lot of upcoming local players, although, most of them are still limited to the high-volume low-technology segments.

However, local Chinese players have managed to dominate several narrow industry segments, such as drug eluting stents, which is dominated by three domestic companies, namely Biosensors International, Lepu Medical, and MicroPort. Similarly, local players have managed to capture a significant share of the digital x-ray market, which was dominated by foreign players a few years back.

The orthopedic sector is also characterized by the presence of several large and small local players while a few dominating local players (Trauson, Kanghui, and Montage) have also been acquired by leading international players (Stryker, Medtronic, and Zimmer, respectively). Mindray and Microport, two of the largest Chinese medtech players (who have also successfully internationalized), have strong hold on the country’s patient monitoring equipment and orthopedic segment, respectively.

Moreover, while foreign companies enter the Chinese market to cater to the grade-3 hospitals and the high-end segment, the local players focus primarily on the grade-2 hospitals’ value segment (i.e. products that may not have as many functionalities but serve the basic need). The products in the value segment are more localized in terms of both need and pricing. Several international companies, such as Siemens, Philips, and GE, have also modified their product offerings and have come up with a lower-end range of devices to capture this market (as per experts, the value segment has the potential of becoming much larger in comparison with the high-end segment over the coming years).

Leading Chinese medical device companies are investing heavily in their R&D to move up the value chain with more innovative and high-segment products. Therefore, in the coming years, one can expect intense competition in the Chinese medical device sector.

Similarly, leading Chinese medical device companies are investing heavily in their R&D to move up the value chain with more innovative and high-segment products. Therefore, in the coming years, one can expect intense competition in the Chinese medical device sector, which may also lead to some consolidation. With growing government support to local companies as well as their ease to localize, it is expected that the domestic players will provide a stiff competition to international players unless the latter take action soon.

 

EOS Perspective

While the governments in both countries are taking significant and constructive steps to increase the reach of the medtech industry as well as boost domestic manufacturing, it is too far-fetched to believe that this will uproot the leading global players from the market. However, that being said, in case global companies such as GE, Siemens, and Philips do not continue to customize and localize their offerings as per the changing needs of these markets, they will definitely lose market share to domestic players.

If global companies do not continue to customize and localize their offerings, they will definitely lose market share to domestic players.

Moreover, with the upcoming regulatory changes, support to local production, and overall surge in demand (especially from tier-2 and tier-3 cities in India and grade-2 hospitals in China), the sector is likely to undergo a phase of consolidation in both countries.

by EOS Intelligence EOS Intelligence No Comments

Modicare: Which States Matter the Most?

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Dubbed as ‘Modicare’ (named after the Indian prime minister), India’s National Health Protection Scheme (NHPS) is being considered as the world’s largest government funded healthcare scheme. The scheme is expected to benefit 500 million people by providing them with cover for secondary and tertiary care hospitalization. While the recent press around the scheme focuses largely on the implementation and funding challenges, we are looking at Modicare from the perspective of opportunities it will bring to the table for healthcare industry players.

Announced during the 2018 union budget, NHPS is a government-funded secondary and tertiary healthcare plan aimed at 100 million financially vulnerable families, referred to as Below Poverty Line (BPL) families, in India. Expected to be launched on 2nd October 2018, NHPS will replace the existing central-government-operated Rashtriya Swasthya Bima Yojana (RSBY), which provides an annual insurance cover of INR30,000 (~US$460) for a family of maximum five members, and is operational in only 15 (out of total 29) Indian states. The new scheme will offer insurance cover of INR500,000 (~US$7,700) per family.


NHPS is expected to provide secondary and tertiary healthcare access to more than 40% of the Indian population, which was earlier deprived of it due to financial constraints. This will create a new healthcare market, giving boost to the entire healthcare ecosystem in India. Companies across the entire healthcare value chain, including medical education providers, healthcare service providers, construction firms, pharmaceutical and medical devices companies, etc., are expected to witness ample growth opportunities. One can expect increased investments in the Indian healthcare sector by private companies as well as foreign investors.

Since the scheme is aimed primarily at making healthcare affordable and accessible for BPL population, opportunities will be up for grabs for companies to tap and expand their reach in areas where the BPL population resides in India. Based on the currently available scheme details, we have tried to identify top five states in India that are ripe for opportunities with the expected launch of the new scheme.

EOS Perspective

Taking into account various factors, including red tape, electricity supply, political stability, etc., as well as the current state of healthcare infrastructure and BPL population, we project the states of Uttar Pradesh (UP), Bihar, Telangana, Madhya Pradesh (MP), and West Bengal (WB) will be most attractive for healthcare industry players.

Uttar Pradesh offers greatest opportunities on the basis of a large BPL population residing in it. The state boasts of a robust road infrastructure and a stable political climate. UP has legacy issues related to administrative challenges, however, the state has taken major steps in cutting the red tape.

Madhya Pradesh is the leading state in India in terms of ease of doing business. The state has electricity surplus, with good road infrastructure, and reasonably priced real estate (as compared with the remaining four states), making it an ideal destination to invest.

One of the largest BPL populations resides in Bihar, a fact that makes it one of the most attractive markets expected to be created after the introduction of NHPS. However, the administrative bottlenecks and lack of infrastructure (as compared with the other four states) may act as constraints for the market players in realizing the full potential.

Telangana, a newly formed state, offers excellent opportunities due to a reasonably large BPL population. The state has performed well on administrative reforms front, and it is expected to improve infrastructure (including electricity availability) in the future, to make it more attractive.

West Bengal has shown remarkable improvement in the field of administrative reforms (in cutting of the red tape), to make it one of the most attractive destinations for any industry. It has to focus more on further improvement in the infrastructure to make it a natural choice for the industry players to invest in the state.

In the end, the realization of the opportunities will depend on smooth as well as quick implementation of the scheme across India. At the outset, NHPS offers promising future for healthcare industry across the nation in general, and the five highlighted states in particular.


Ranking Methodology

  • EOS assessed attractiveness (in terms of opportunities for healthcare industry players) of all Indian states on the basis of a scorecard

  • States were ranked on selected parameters, i.e. size of the market and other factors (termed as ‘market enablers’) that are likely to influence decision-makers to prefer one state over another while planning to invest to tap the opportunities created post the launch of NHPS

  • Maximum score (awarded for first rank) for each parameter was fixed based on its relative importance (weightage); scores awarded for subsequent ranks (on each parameter) were a percentage (decreasing in accordance with the rank) of maximum score

  • The final score (and hence the overall rank) was the summation of individual scores on all parameters

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MedTech in APAC – Harmonizing Hazards and Rewards for Rapid Expansion

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Being the third largest medtech market in the world, Asia-Pacific (APAC) is becoming an investment hub for medical technology companies globally. Owing to the economic growth of the region and increasing income of the local population, healthcare affordability and quality are on the rise. These are the ground reasons that drive medtech companies to focus on APAC for growth and business expansion. But having access to many local markets in this vast and diverse region seems a hard nut to crack for the medical device businesses. Singapore, with its favorable business environment, which vigorously defends intellectual property rights, currently seems to be the geography being eyed by major medtech companies. Though Singapore is well-positioned as a gateway to region’s medtech sector, entering other markets in the region is still challenging. With differences in the regulatory frameworks bundled with lack of clear reimbursement strategies, medtech companies find it strenuous to meet the requirements of the regional markets. In order to witness growth, it is imperative for medtech companies to focus on the growing opportunities for industry-wide collaboration, intending to create strong platforms for growth in APAC.

In 2015, APAC was the third largest medtech market in the world, after the USA and EU, accounting for over 22% of the global revenue which stood at US$398 billion. The region’s medtech industry is expected to be one of the fastest growing globally and is forecast to surpass EU by 2020 to become the second largest market behind the USA.

The high potential of APAC is fueled by the highly populated south-east Asian countries (China and India, the world’s two most populous countries, have a combined population of 2.8 billion), aging population (by 2050, Asia population will constitute 25% of the world’s elderly aged 60+), strong economic growth, increased spending power of the middle class, and reduced costs by manufacturing medical devices in the region rather than importing. The medtech revenue generated in the region was US$88 billion in 2015, expected to reach US$133 billion by 2020, achieving a compound annual growth rate (CAGR) of 8.6% over the period of five years.

Companies want to seize APAC’s potential for rapid development of medical devices by investing in the right geography that would support their expansion plans. One such location that offers the right environment for medical device players to grow is Singapore. In Asia, Singapore is the innovation center for medtech players due to its business-friendly regulations.

Companies want to seize APAC’s potential for rapid development of medical devices by investing in the right geography that would support their expansion plans.

The country brags of presence of leading medtech companies such as Medtronic, Baxter International, AB Sciex, Becton Dickinson, Biotronik, Hoya Surgical Optics, and Life Technologies that set up their manufacturing plants and R&D units here due to strong patent laws and easy policies to set up and manage a business. For instance, in 2011, Medtronic, one of the world’s largest medical devices manufacturers, opened its first pacemaker and leads manufacturing facility in Singapore, which was the company’s first Asian site manufacturing cardiac devices. As the number of heart patients in APAC rapidly increases, Singapore is a perfect base to offer modern medical facilities to patients across emerging Asian markets.

Medtech in APAC

The medtech sector in Singapore is growing mainly due to government schemes that focus on investing in the sector. With initiatives such as Sector Specific Accelerator (SSA) Program that identifies and invests in high-potential medical technology start-ups (an amount of US$70 million has been committed for the formation and growth of such businesses) and EDBI, the corporate investment arm of the Singapore Economic Development Board that invests in innovative healthcare IT, services, devices, and therapeutics companies, the Singapore government supports the growth of medtech innovation in the country.

The medtech sector in Singapore is growing mainly due to government schemes that focus on investing in the sector.

Apart from setting up committed bodies, the Singapore government in 2015 announced that it would invest US$4 billion in biomedical sciences research for the period between 2015 and 2020 to strengthen the county’s position as Asia’s innovation center.

While Singapore is a favorable location for medtech manufacturing and R&D, it is still a young market that is witnessing problems similar to the ones seen in other APAC countries. Many countries in the region are also capable of contributing to the technological health innovation but face challenges in broadening their reach and lack assertiveness to develop innovative ways to reach a broader range of patients.

Medical device regulations are the key challenge faced by device manufacturers in the Asian region. Med tech industry is regulated by strict guidelines through each phase of product or service development. In several Asian markets, there are no clear guidelines for device manufacturers that classify medical devices as simple or complex, or even mention how to handle them. Irregularities in clearly laid guidelines for introducing and using such products often create problems for companies to come up with advanced solutions in new geographies of the APAC region. Each country has different regulations for quality control, product registration, and pricing, and these are frequently unclear and inconsistent. This is a considerable concern for medtech players planning to set up a shop in the APAC region.

Medical device regulations are the key challenge faced by device manufacturers in the Asian region.

Another hiccup that the manufacturers face is the lack of definitive reimbursement structure. With new innovations in the healthcare domain, expenditure on medical technology is expected to grow but lack of transparent compensation schemes is a major hindrance. Medical device firms, across APAC region, face the challenge of limited clarity on payment structure of technological products and services. For instance, for medical products such as pacemakers and heart valves that are readily available, the reimbursement cost is generally available, but for progressing techniques or products like LVAD (left ventricular assist device), no coverage guidelines have been established. With this lack of clarity on the structure and level of reimbursement on such advanced products, medtech companies find it difficult to place their products in the market at a competitive price.

With unclear regulations and reimbursement policy structure, the medtech companies face a hard time in the APAC region. Competition from local players also add concerns for these players to survive in these markets. Partnerships of local medtech companies with funding firms and other players are on the rise. Domestic companies often partner with private equity firms that invest in and support the local players to innovate and expand. For instance, Huami Corporation, a manufacturer of wearable fitness monitoring devices, attracted investment from American venture capital firm Sequoia Capital and Xiaomi, a Chinese smartphone player, to develop a device that monitors health (tracking the number of steps walked, number of sleep hours, calories consumed, etc.) selling at a sober price of US$15 as compared to the average price of more than US$150 of its competitive brands including Apple and Samsung.

With unclear regulations and reimbursement policy structure, the medtech companies face a hard time in the APAC region. Competition from local players also add concerns for these players to survive in these markets.

Challenges for entering such a diverse market will take time to overcome, but companies are on the lookout for growth platforms and seem to be willing to leave no stone unturned to capture new opportunities. One such opportunity that multinationals can use to their advantage is partnering with regional stakeholders to access the APAC market. These collaborations are not limited to medtech companies or players in the healthcare domain, but are extended to a broader range of players including regional governments, regulatory bodies, educational institutions, insurance companies, and other technology companies.

Med tech companies are partnering with pharmaceutical players to access local market and widen their network. For instance, in India, Roche, a Swiss healthcare company dealing with diagnostic devices, got into a marketing partnership with Indian drug manufacturer Mankind Pharma, to extend the availability and market penetration of its blood glucose monitors, Accu-Check Go, in tier 2 and tier 3 towns making use of Mankind’s extensive local distribution network. Partnerships are critical for multinational players to rapidly and efficiently increase their geographic presence in the APAC region.

Another opportunity that medtech companies can seize to grow is the appointment of local staff in the regional management. Local people have a better market understanding and know how the system works. The decision making capabilities, if lie in the hand of local leaders, can work in favor of the companies as these leaders better understand the way the market functions. Balancing the availability of local talent and brand’s global assets, medtech players can be successful in developing products as per market needs. A mix of local resources and international talent in crucial to oversee operations in unstructured and fragmented markets such as APAC.

EOS Perspective

Correct assessment of the market needs is critical for any business to be successful. For medtech companies, APAC has been a challenging landscape due to fragmented market, as well as unstructured and complex regulatory environments. But with the focus being shifted to the dynamic and fast growing economies of APAC, the medtech market is positive to grow as the region offers scope of development and growth mainly due to aging population and growing income of middle class.

With challenges unique to each geography in APAC, medtech companies are focusing on partnering and collaborating with local medtech players and other stakeholders in the region. With strategic partnerships, global medtech players can reduce the intensity of competition faced from local companies. Collaborating with the right partner in different aspects of product development ensures growth, right product placement, and speedy market expansion. Association with regional entities are expected to increase, witnessing strong growth of the players in the medtech space.

The regulatory landscape in the region is highly fragmented and needs restructuring. Independent organization such as Asia Pacific Medical Technology Association (APACMed), formed in 2014, assigns itself to strike a balance between medtech companies wishing to enter the APAC market and other regional agencies aiming to improve the standard of healthcare offered to patients. Efforts such as these may bring coordination in the regulatory landscape, but it will take long to come to general consensus on similar laws of conducting business in this field.

by EOS Intelligence EOS Intelligence No Comments

Generic Medical Devices: Can They Breach the Branded Wall?

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Multinational companies such as J&J, GE, and Siemens have dominated the medical devices industry thanks to product innovation and lack of competition from cheaper alternatives from generic manufacturers. Though local competition has emerged in some of the larger markets such China, most domestic companies remain small-sized, focusing on less complex Class I and Class II type medical devices, such as orthopedic accessories, catheters, wound solutions, and inhalers.

Most emerging countries rely heavily on imported devices such as stents, pace-makers, artificial joints, biologics, etc., as there are very limited alternatives available in their domestic markets. For instance, India imports about 80% of the required medical devices. This is where generic devices come into play.

Generic medical devices are copies of those branded devices that are not patent-protected. While the quality of such medical devices is at par with branded products, the price can be up to 50% lower. So far, only a few generic products, such as asthma inhaler (1995) and Pulse-Oximeter (2003), have caught market attention. The recent addition being a range of orthopedic products, including plates, rods, and screws by Emerge, a company started by former employees of Swiss-based Synthes (now acquired by J&J).

Currently, the market for generic devices is predominantly US-driven, where regulations do not differentiate between a branded device and its ‘substantially equivalent’ design. It is expected that more generic devices may enter the market as branded devices go off-patent. Other branded devices, which are similar in function and not manufactured through proprietary process, may also face generic competition.

Generic Medical Devices

Generic devices may be the answer to various governments’ aim of minimizing healthcare cost without compromising on quality. However, the market for generic devices is still fragmented and geographically constrained vis-à-vis branded ones. Much would depend upon the ability of generic manufacturers in containing costs (to remain competitive) and in breaking the hold of established players over sales and distribution channels.

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