Medical devices OEM collaboration gives India a central role in accessing high growth markets and is now increasing access to its domestic market, says, Sathish Babu Ramachandran, Mechanical Systems Delivery Head, Cyient
For many years, India has played a central role as a contract collaboration hub for the US and Europe-based medical device companies searching for development, engineering and manufacturing advantages that return value by providing quality and cost protection.
Products introduced or upgraded in the last three to five years are primary profit drivers for medtech original equipment manufacturers (OEMs) so they need partners that can manage quality, increase functional value, reduce time to market and decrease product development cycles. 1
India is the country of choice for offshoring R&D, as noted by the Zinnov 2016 zone report, accounting for 40 per cent of the offshoring market to emerging markets, followed by China and Brazil.2 The 2016 AT Kearney Global Services Location Index scores the country the highest among popular offshore destinations in terms of cost advantage, skill and business environment. 3
India continues to present itself as a leading outsourcing location due to its large population of well-qualified and highly educated professionals, with comparatively lower wages and proven product execution. 4 Indian outsourcing partners have evolved effective workforces, processes and procedures ideal for attracting OEMs. These strategic investment decisions by OEMs have bolstered margins through leveraging India’s comparative advantage.
The Indian workforce also provides deep experience with a wide range of cultures and customers – whether work is located here or placed within the origin countries to facilitate collaboration. Political stability combined with public and government economic support for this model have reduced the risk of global sourcing resulting in increased return on investments.
Leading segments like in-vitro diagnostics, diagnostic imaging and point-of-care devices sales continue to grow in the US and European markets, demanding better margins for reinvestment into future product generations. Clearly, India has significant potential for research, development and manufacturing growth to service established markets, and extracting profitability. Companies recognise the growth potential by building relationships with these emerging market product leaders and gleaning their insight on local markets.
The Indian medtech sector is still regarded as a burgeoning industry despite how long the industry has invested there with biotech and pharma leading over traditional medical devices. Now with the medtech industries’ leadership and recent government regulatory changes, growing in-country medical device companies are poised to address patient healthcare access and affordability needs in India where medical device imports have led for many years.
The government’s ongoing Made in India campaign will increase the country’s credibility and appetite for global investment, where it is already the largest global player in generic pharma, according to the a leading publication. 5 The Indian market is among the top 20 in the world by market size, and fourth in Asia after Japan, China and South Korea; and has a potential to be among the top five manufacturing hubs, according to the leading newspaper. 6
A recent agreement between two major advocacy groups, AiMeD and Invest India, has a goal of reaching out to major companies in leading markets such as the US, Germany, Japan, Taiwan, South Korea and Israel to increase further technology sourcing and manufacturing joint ventures for India, according to a newspaper article.7 This will contribute not only to job creation and GDP but will also improve health indicators for India.
Both native startups and global dominant companies are at the beginning stages of making this lifesaving technology more accessible in a country where high quality, affordable healthcare is generally hard for most to utilise. Consequentially, the products produced in India for Indians could be exported to other emerging markets in South America, Asia, and Eastern Europe to make India a net exporter of medical devices contributing to the overall economic development of the country.
References:
1. Opening the Doors to India: Offshoring Medical Devices, MDDI online news, published 1 March 2007
2. Zinnov 2016 zone report.
3. 2016 A.T. Kearney Global Services Location Index™ Top 20, 2016.
4. 2016 A.T. Kearney Global Services Location Index™ Top 20, 2016.
5. AiMeD, Invest India sign agreement to make India a global manufacturing hub of medical devices, Healthworld from The Economic Times, AiMeD published 16 Feb. 2017
6. Indian can be among world’s top 5 medical device markets: Himanshu Baid, Business Standard, 15 Feb. 2017
7. Healthworld from The Economic Times, AiMeD, Invest India sign agreement to make India a global manufacturing hub of medical devices, published 16 Feb. 2017
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