Will importing refurbished medical devices stifle local medtech?

Can the two sides collaborate harmoniously? How long will it take for indigenous medtech Hondas and Toyotas to rise from this ecosystem?

The latest flare up between domestic and global medical technology companies is a recent office memo to import certain categories of high end pre-owned/refurbished non-ICU medical equipment.

In its OM dated June 19, 2023, the Ministry of Environment, Forest and Climate Change (MoEFCC) has permitted the import of specific pre-owned high value and high medical devices. The OM lists 50 such devices like MRIs, CT scans, non-ICU X-rays, ultrasounds, C arms, etc.

Explaining the rationale for allowing the import and use of pre-owned/refurbished non-ICU medical equipment, a note from FICCI, submitted by FICCI at the 72nd meeting of the ministry’s technical review committee on May 30, 2022, says that refurbished equipment costs approximately 20-25 per cent less than new equipment based on configuration, technology, and features.

The note also lays out the process to ensure that the refurbished equipment is evaluated to ensure that all quality standards are assured, with the required factory checks by CDSCO and certifications from AERB.

However, Rajiv Nath, Forum Coordinator, Association of Indian Medical Device Industry (AiMeD) says the decision is in contravention to India’s recently launched National Medical Device Policy 2023 that seeks to make our country not only Atma Nirbhar (self sufficient) in medical devices but also a global leader.

At the heart of it, this is a turf war. Domestic medtech companies see refurbished equipment as a threat, and are concerned that they will take longer to get the RoI on their investments in manufacturing sites. Global medtech companies have realised that they need to lower the price points as a market entry and expansion strategy.

Sure there are very valid environmental concerns. Suresh Vazirani, Chairman, Transasia Bio-Medicals warns that this policy will allow Western countries to ship all old equipment to India and thereby prevent their own countries from getting environmentally polluted with discarded pollutants in medical equipment.

And on the face of it, the decision seems contrary to the government’s Make in India mantra, championing local entrepreneurs. Gaurav Agarwal, Managing Director, Innovation Imaging Technologies says his company has invested Rs 35 crore to manufacture cathlabs with a capacity of 500 units. He cautions that by importing refurbished equipment, we miss the opportunity to nurture a robust ecosystem of innovation, research, and development in the medical technology sector.

The counter argument from global medtech companies, represented by the Medical Technology Association of India (MTaI), is that the import of pre-owned medical equipment can increase the affordability and accessibility of these capital-intensive equipment for the Indian patient, especially in tier 2 & 3 cities.

The MTaI note makes an important point that major countries like the US, European nations, Japan, United Kingdom, Canada, South Korea, New Zealand and Australia also allow the import and sale of pre-owned medical equipment which complies with their regulations.

Pavan Choudary, Chairman, MTaI, clarifies the difference between import substitution and import replacement. According to him, import substitution is usually government backed, sponsored through the raising of tariffs and non-tariff barriers and assisted with some subsidies/incentives. He cautions that this usually has counter effects on competitiveness and efficiency.

Choudary explains import replacement citing how bicycle repair shops in Japan first started repairing imported bicycles, graduated to making some spare parts, then started making those bicycles themselves. Eventually, this cluster of industry provided the ecosystem for giants like Honda and Toyota to rise. His point is that when import replacement happens, jobs boom in the cities and the village economies also get catalysed through demand for new raw materials.

Choudary summarises that the use of pre-owned medical equipment fulfills a patient’s need, a provider’s need, and a government need (of extending quality healthcare to tier 2 and tier 3 cities) and provides a skilling opportunity.

Far from a dissonance between past and present mantras, Choudary posits that the Prime Minister, the Health Minister, the Minister of Environment and Forest and their colleagues are trying to craft a medtech policy that harnesses both the domestic and international currents to optimally forge the path ahead. He reasons that this ambition is logical as medtech is a capital intensive and technology intensive sector.

How will this play out in India’s medtech sector? Can the two sides collaborate harmoniously? How long will it take for indigenous medtech Hondas and Toyotas to rise from this ecosystem?

While it remains to be seen if the recent memo on the import of refurbished medtech will stifle or catalyse the evolution of the industry, experts point out that the concept of refurbished medtech is not new to India or the world. What worries today’s medtech entrepreneurs is that the battle for market share and mind share, not just in India but in export markets, just got tougher. While the USP for a Made In India medtech brand was the price, refurbished equipment takes that away. Only Made In India medtech brands representing innovation and ingenuity, rather than only price, will survive and thrive.




health policiesmedical devicesmedtechpolicies
Comments (0)
Add Comment