By Gunjan Bagla and Rajnish Rohatgi, Amritt, Inc.
While global medtech companies dominate the market in India by revenue, their presence has largely been limited to higher-end devices and capital equipment, with some exceptions.
Until recently, Indian regulations covered only 15 “notified” categories, such as syringes, needles, stents, and orthopedic implants; the rest of the market has been largely unregulated. Rules released in 2017 explained that more categories would get notified over time and, indeed, the number of notified categories is being expanded to 37 by April 2021 (See Appendix at bottom of page).
Still, outside of these “notified” device categories, players with unproven designs, little or no quality control, limited defect traceability, and inconsistent reliability could operate with relative abandon in India. Because of this dynamic, even domestic Indian companies with superior standards have had to resort to overseas markets to maintain profitability while facing cost pressures from low-end competitors — local as well as East Asian.
This is about to change and — in the long run — the change will benefit smart western companies in some ways.
Starting April 1, 2020, India rolls out new regulations that cover virtually every kind of medical device sold in the country — notified or not. Published in India’s Gazette (similar to the Federal Register in the U.S.) Feb. 11, 2020, the updated regulations require all device makers to conform to ISO 13485 standards regardless of the source of manufacture.
Due to the far-reaching consequences of this new regime, the government is allowing a substantial grace period for manufacturers to comply with the new rules and get their devices registered. The most invasive devices, classified as Class C (“moderate high risk”) and Class D (“high risk”) will have 42 months from April 1, 2020 to conform with the new standards. Less invasive devices, considered Class A (“low risk”) and Class B (“moderate risk”) will have 30 months from April 1, 2020 to comply and complete their registration. While the regulator has not indicated as much, we would not be surprised if these deadlines are pushed back in the future.
Class C and Class D Devices already approved in the United States, UK, European Union, Japan, Australia, and Canada — and sold in the home market for at least two years — will be permitted registration and import without the requirement of local clinical investigation and trials in India.
The updated regulations contain a provision for companies to voluntarily register non-notified devices, starting on April 1, 2020, in advance of the extended deadlines. Many western companies plan to use this process so that they can start importing product under a “notional” import license; they will also have a mechanism to build a track record of adverse events or other concerns with the regulator. This will further enhance the credibility of western companies in the Indian ecosystem and ease the process of final registration when the deadline nears.
While many low-cost importers and local Indian manufacturers will be able to upgrade their designs, processes, and quality standards during this extended transition, we are sure some others will struggle.
This can create opportunities for serious players in several ways:
- Some companies may be forced to consider shutting down, especially those who are unable to upgrade quality, or to command the higher prices they will be forced to charge due to increases in regulation-associated costs. Western companies could increase unit share, realize better prices, or both.
- Surplus production capacities could be leveraged for acquisition or joint ventures with such Indian units, with “Make in India” products to reduce prices in India.
- Western companies could avail a key strategic learning of India’s “frugal engineering” that could benefit their business in other emerging economies. Companies such as BD, GE, 3M, and J&J — who already have set up manufacturing in India — have learned that Western products are often overdesigned for the needs of developing countries and that cost reduction or design simplification are often possible without compromising safety.
The Indian government is an active player in this game. For one, it is encouraging local and global companies to assemble, manufacture, and even design devices in-country as part of the “Make in India” initiative. Secondly, India’s federal government has imposed price controls on some categories, such as stents and knee implants. This will further drive domestic manufacturing by both local and global companies.
We can expect considerable excitement, some confusion, and many backlogs but, most of all, some great opportunities for nimble companies, whether Indian or global.
Appendix: Notified Device Categories
S. No. — Name of the Device
1. Disposable Hypodermic Syringes
2. Disposable Hypodermic Needles
3. Disposable Perfusion Sets
4. Substances used for in vitro diagnosis including Blood Grouping Sera
5. Cardiac Stents
6. Drug Eluting Stents
8. Intra Ocular Lenses
9. I.V. Cannulae
10. Bone Cements
11. Heart Valves
12. Scalp Vein Set
13. Orthopedic Implants
14. Internal Prosthetic Replacements
15. Ablation Devices
16. Ligatures, Sutures and Staplers
17. Intra Uterine Devices (Cu-T)
19. Tubal Rings
20. Surgical Dressings
21. Umbilical tapes
22. Blood/Blood Component Bags
23. Organ Preservative Solution*
24. Nebulizer (effective from Jan. 1, 2021)
25. Blood Pressure Monitoring Device (effective from Jan. 1, 2021)
8 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(i)]
26. Glucometer (effective from Jan. 1, 2021)
27. Digital Thermometer (effective from Jan. 1, 2021)
28. All implantable medical devices Equipment (effective from April 1, 2021)
29. CT Scan Equipment (effective from April 1, 2021)
30. MRI Equipment (effective from April 1, 2021)
31. Defibrillators (effective from April 1, 2021)
32. PET Equipment (effective from April 1, 2021)
33. X-Ray Machine (effective from April 1, 2021)
34. Dialysis Machine (effective from April 1, 2021)
35. Bone marrow cell separator (effective from April 1, 2021)
36. Disinfectants and insecticide specified in Medical Devices Rules, 2017
37. Ultrasound equipment (effective from Nov. 1, 2020)
About The Authors
Based in Los Angeles, Gunjan Bagla is managing director of Amritt, Inc., a consulting firm focused on helping American companies succeed in India. His clients include Covidien (now Medtronic), Roche Diagnostics, BD, Lifenet Health, Johnson & Johnson, Gojo, and more. For his India expertise, he has appeared in The New York Times, the Los Angeles Times, and the Washington Post, as well as on Bloomberg TV, BBC Television, and Fox Business News. He also writes about India for the Harvard Business Review. Gunjan has an MBA from Southern Illinois University and a mechanical engineering degree from the Indian Institute of Technology (IIT) Kanpur in India.
Based in New Delhi, India, Rajnish Rohatgi is a senior advisor for Amritt’s Medical Technology Practice. He spent over seven years building BD’s medical surgical business in South Asia. Rajnish has over 25 years of marketing, sales, and leadership experience in India and Africa in the healthcare, medical device, and consumer sectors. This includes a stint as VP of marketing for Max Healthcare, a leading hospital chain in North India. Rajnish has an MBA from the Indian Institute of Management Calcutta (which was established by MIT’s Sloan School) and a bachelor’s degree in metallurgical engineering from IIT Kanpur.