India’s medical technology industry has reportedly posted a 50-85 per cent drop in revenue in the April-June quarter due to financial and operational challenges across the country related to the COVID-19 pandemic.
According to Medical Technology Association of India (MTaI), an association representing mostly global medical technology companies, elective procedures have been postponed since March 2020 as India started recording a surge in COVID19 infections.
Since elective surgeries drive a large part of the demand for medical devices, the postponement has severely impacted revenue streams of the medtech industry. For instance, as per MTaI, the estimated revenue downfall in the cardiology category was up to 60 per cent in the first quarter of the financial year (Q1FY21).
Likewise, orthopaedic industry devices encountered an even bigger fall in revenue to an extent of up to 85 per cent while revenue fell up to 75 per cent in the opthalmology sector. Revenues from the critical care device segment reportedly reduced to nearly half.
The MTaI release points out that COVID-19 has accentuated the problems of the sector that was already reeling with the impact of price control. The pandemic disrupted global supply chains, while the cost of freight movement increased 5-7 fold. These challenges have been further compounded by the falling Rupee value, high basic customs duty rate and the 5 per cent health cess on imported medical devices imposed since February this year.
Due to the shrinking margins of the hospitals, the channel and service dealership networks, and sub-dealers are already experiencing significant downsizing of workforce. While the global medtech fraternity has so far heeded the government’s request of protecting jobs of its workforce, even while facing significant financial blows, the MTaI release warns that if the situation does not improve, these efforts may not be sustainable.
Commenting on the situation, Pavan Choudary, Chairman and Director General of MTaI and also Managing Director, Vygon India, said, “In the absence of a vaccine or a reliable therapeutic remedy, medical devices are currently shouldering the fight against COVID-19. We hope that the government stays cognizant of the unprecedented challenges that the medtech industry is facing in India and we request its immediate intervention to help the sector recover so that it can continue fulfilling its role in ensuring critical care services in the country.”
The association has listed three main areas where they seek short term relief from the government:
1. Facilitate resumption of elective procedures in hospitals by issuing safety protocol/SOP for non-COVID procedures. The protocol may include :
i. Segregating hospitals into COVID/non-COVID
ii. Institute COVID testing protocols for non-COVID patients going for surgery
iii. Providing safety guidance to the healthcare professionals before, during and after surgery.
iv. Creating a corridor and arranging transportation to move patients for elective surgeries, stuck in containment zones to nearest town/ cities.
2. Customs duty exemption for medical devices: MTaI has requested the government to consider giving basic customs duty exemption to the medical device industry to cope with the liquidity challenges during this time.
3. Revoke health cess on medical devices: The government should revoke the additional 5 per cent health cess ad valorem on medical devices imposed from April 2020.
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