Why are MNCs reluctant to start full-fledged manufacturing of medical devices in India, despite favourable policies being crafted for the sector?
From a multinational company's point of view, the Indian market for medical devices is too small and evolving to look at it as a serious priority for manufacturing. At present, the medical devices market in the country is worth about $5 billion, of which $3.5 billion are imported; but the industry is growing at 11-12 per cent every year. China is a more mature market with a $20-billion industry. Technology is not cheap in India, though we talk about cheap labour. Of the $5-billion industry, at least $1-2 billion medical devices such as catheters and syringes are of low-end technology and are dominated by unorganised players.
We have to look at economies of scale, bureaucracy issues, taxation, state-level policies, availability of land, etc, while considering an investment decision. Johnson & Johnson has more than 275 operating companies in more than 60 countries and manufacturing is done in many of these countries. Having said that, please note that we largely supply high-end products like implants, but make 25-30 per cent of our products here itself since 1962.
How can the issue of price disparity between devices made by MNCs and local manufacturers be tackled?
Technology is not cheap and better patient care requires support of high-end technology. That comes at a cost since the manufacturer has to spend billions of dollars to develop them. More public expenditure and insurance in healthcare sector is the only option to effectively change the situation. Healthcare delivery standards in many of the big hospitals in India are on par with the standards in many developed countries, especially in infrastructure, technology, skilled doctors and paramedics.