Need to encourage the medical devices sector

October brought with it the encouraging news that the Modi government is planning a major overhaul of the country's drug policy. The overhaul, if we go by media reports, will include some very positive steps like reducing the number of drugs under price control, doing away with the practice of periodic renewal of manufacturing licenses, and encouraging medical and drug research in the country. This initiative is being backed by the Prime Minister's Office (PMO), with two intents: help India emerge as a major hub both for manufacturing pharmaceuticals as well as innovation in medical research, and thereby stop further loss of pharma business to other countries, including China. Of course, this will also help address the twin healthcare challenges of affordability and access.

This is good news. In fact, Niti Aayog's view that the price control regime needs to be reviewed, as it is impacting investments negatively in the sector, is very encouraging. Their idea of evaluating negotiated price as a solution is definitely more sensible than fixed capping. That Niti Aayog is taking up this position, and the fact that it is receiving support from the PMO holds promise of interesting times ahead for the drugs industry.

What it should mean for the medical device sector

The medical device sector needs similar help and initiatives too, and soon. My experience tells me that the medical technology industry in India is standing at a crucial juncture and needs positive action quickly.  

 Innovation and manufacturing in India have both been adversely impacted due to the lack of predictable and fair policies from the government. With such policies, coupled with low market demand, any talk of capping prices for devices such as stents only adds fuel to fire. In this context, the recent initiative by Niti Aayog to overhaul the policy framework shows promise.

There is a need to therefore examine and come up with reasonable and forward-looking solutions. The government is also giving indications that it is keen to implement policies that enable more timely licensing of safe and effective products, and to review the medical product research approval process to make it more transparent and viable. These steps will definitely encourage investment.

All this offers hope to the pharma and med tech industry, which had begun despairing lately. A good beginning seems to have been made and now let us all build on that across both sectors.

Long coming

It is heartening to see that the government of India has identified the medical devices industry as a sunshine sector for the "Make in India" initiative and in doing so, has triggered a national discussion on what it takes to drive innovation and attract investment in this industry. But more needs to be done. Med tech sector can make huge contributions in terms of economic growth, job creation and enhanced innovation in a more conducive environment. In fact, my long stint in the sector has taught me that the medical device sector can deliver significant answers to the growing healthcare needs of India. India is one of the top twenty markets for medical devices in the world and growing at a fast pace. According to a white paper published by Deloitte in March 2016, the medical device industry in India grew at a rate of 10 per cent from 2008 to 2014, and is expected to reach $8.6 billion by 2020 at an organic growth rate of 15 per cent per annum. The Deloitte report further states that with an enabling policy framework and ecosystem support, industry estimates indicate a potential to grow at ~28 per cent p.a. to $50 billion by 2025. This makes it all the more imperative for us to open up the policies and rules to pave the way for India to become a global destination for life sciences in coming years.

Let innovation lead the way

The role of new and innovative medical devices in advancing patient care and treatment has been long established. Unfortunately, lack of a stable, predictable and globally harmonized regulatory system, inclination towards protectionism, arbitrary price controls that do not value innovation, and a lack of positive incentives for manufacturers including a dearth of tax incentives for manufacturing, are all dragging down innovation and manufacturing in our country.

I strongly believe that innovation is a key to this industry's growth and success. Globally, governments regularly champion innovation in medical technology and it's time we too moved towards that. We need to embrace innovation and support it by fair regulation. More than anything, we need the right kind of regulations that are appropriate for medical devices, reasonable and not overly burdensome. In my opinion, government must work with industry and other stakeholders in the healthcare delivery system (hospitals, distributors), to come up with the price regulation regime that takes the value of a product into consideration.

After all, our two main aims should be to increase affordability and improve accessibility of good quality healthcare for all. For this, the government needs evaluate its policies carefully and to encourage the medical devices sector, rather than alienate it. This is the only way the end user, the patient, will benefit.

The author is former Managing Director and VP, Medtronic India