Techno-Med
A Special Feature on Medical Equipment Technology

‘India should not be a dumping ground for medical equipment of other countries’

J V Vaidya, Vice-Chairman, Confederation of Indian Industry, Medical Equipment Division, and past Chairman of Indian Electrical and Electronic Manufacturers’ Association (IEEMA), is an authority in the medical equipment industry and has been associated with it for the last 15 years. An electrical engineer from VJTI and post-graduate in Power Systems, IIT, Mumbai, Vaidya, as the Joint General Manager and Head, Strategic Business Unit, has been the steering force behind L&T’s Medical Equipment and Systems. In an interview with Rita Dutta, he discusses issues related to medical equipment market

Do think there should be accreditation for medical equipment in India?

Yes, accreditation and standardization are extremely necessary to monitor the quality of the mushrooming of small time equipment manufacturers in India. Today, anybody can start manufacturing equipment, like any other small business, without any permission or license. By the same norm, the quality of equipment sold by the MNCs needs to be filtered also. India should not become a dumping ground for other countries. In the US and China, one needs to have FDA and SDA approvals respectively, to sell medical equipment. Similarly, no medical equipment can be installed in the European Union countries, unless it carries the CE mark.

What is the scope of the growth of the medical equipment market?

As of today, the 1000-crore diagnostic and imaging equipment industry, to a large extent dominated by MNCs, like GE, Philips Medical Systems, Siemens, etc. is growing at a rapid pace of 20 percent annually. The 500-crore therapeutic equipment market, supported by the indigenous companies, is growing at a modest pace of 8 to 12 per cent annually.

Can you trace the growth of the medical equipment industry?

The growth in the high end equipment market has been quite substantial, if one compares with the scenario in early 80s when to buy imported equipment it was necessary to have Actual Users Import Licence (AUIL), to be obtained from the Ministry of Commerce. One had to rely on a dealer for that license. The turning point was in mid 80s, when the late Prime Minister, Rajiv Gandhi, encouraged liberalisation by abolishing AUIL, which meant that imported equipment can now be purchased directly, without applying for a licence. In comparison, the growth of the indigenous industry has been quite slow.

Liberalisation gave a fillip to MNCs. Did it not stunt the growth of the indigenous industry?

No. While the indigenous industry is in manufacturing middle and low-end equipment, though not necessarily low-tech, the MNCs focus on high-end equipment.

Are the domestic manufacturers losing out to the MNCs? Is there a clash of clientele?

No, there is no clash. The MNCs target the corporate hospitals and super-speciality hospitals, mainly institutes, where price is less of a concern for buying equipment. Only 0.5 per cent of the population, i.e, the high income group, can afford the treatment offered by the corporate and super-specialty hospitals. The indigenous industry has customers mainly in nursing homes, clinics as well as private and government hospitals.

Did the opening up of health insurance have an impact on the medical equipment industry?

It is too early to say, since health care insurance products have just been launched by a few players in Oct. 2002. The impact is not as much as it was expected. Insurance players are more cautious about health care industry, with the increase in the life-span of common man. They want to take calculated risk. The impact would only be felt when health insurance would be offered at a reasonably attractive terms to customers.

What factors can be attributed to the growth of indigenous industry ?

The fact that the middle-class has become aware of various diagnostic techniques as never before. The increase of normal life span of a man is also another factor.

The upper age group spends more on his health for the last five years of his life than he did before. The strengthening of referral system and the spate of nursing homes have also spurred the growth.

What hurdle do the indigenous companies face in making high-end equipment ?

Some Indian manufacturers often find it difficult to bridge technology gap and need to catch up with the MNCs in research and development. The MNCs have been there for many years, whereas the Indian companies have to find innovative ways to acquire technology and nurture it at a rapidly accelerated pace.

Can we expect the indigenous manufacturers to make high-end equipment in the near future?

The possibility cannot be ruled out. May be within less than a decade, the indigenous companies would start manufacturing high- end equipment. By the time domestic companies make it, however, the MNCs would have already improved on their technology, thus maintaining a technology gap, which could, in due course of time, be narrowed.

Do the indigenous manufacturers need to cultivate an “export mind set” for sustaining in this economy?

It is absolutely necessary to look outwards, adopting a global approach i.e. an export mindset. Since India represents almost two per cent of the world market in medical equipment, if we make our equipment qualitywise and costwise suitable for the export market, the industry can grow by leaps and bounds.

Medical equipment is inherently low volume, highly intellectual and manual effort requirement business. This is because of stress on design, embedded software capabilities, testing, simulation and clinical trials.

What is needed, however, is to get satisfied with nothing less than the global benchmarking in quality and performance. Once this is done, international quality certifications, both for the manufacturing and service support systems, would go a long way in building export business. The most difficult part, however, may be to build marketing capabilities outside India.

These are expensive and there is no clear roadmap available or a simple magic formula applicable to all countries.

This is where innovativeness will score, which Indians are good at. Given the required time and resources, India would gear up for export opportunities in the global market. This is evident from the fact that in the forthcoming Medica 2002 exhibition in Dusseldorf, Germany, more than 50 Indian companies are likely to take up stalls and display their capabilities.