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Industry Guide

Surgical and Medical Industries

Introduction 

The surgical and medical industries are involved in the manufacturing and distribution of various products and equipment used in the healthcare sector. These include surgical instruments, medical devices, implants, prosthetics, consumables, and diagnostics. The surgical and medical industries are vital for ensuring the quality and accessibility of healthcare services, as well as for advancing medical research and innovation. The surgical and medical products can be classified into four major categories, based on their function and risk level: 

  • Class A: Low-risk products, such as bandages, gloves, syringes, and needles. These products are used for basic and routine procedures, such as dressing, injection, and blood collection. They have a low impact on the patient’s health and safety, and are subject to minimal regulatory oversight. 
  • Class B: Low-moderate risk products, such as catheters, stents, and blood pressure monitors. These products are used for diagnostic and therapeutic purposes, such as monitoring, imaging, and drug delivery. They have a moderate impact on the patient’s health and safety, and are subject to moderate regulatory oversight. 
  • Class C: Moderate-high risk products, such as implants, pacemakers, and ventilators. These products are used for surgical and life-support purposes, such as replacement, stimulation, and respiration. They have a high impact on the patient’s health and safety, and are subject to high regulatory oversight. 
  • Class D: High-risk products, such as heart valves, artificial joints, and dialysis machines. These products are used for critical and complex purposes, such as regulation, restoration, and filtration. They have a very high impact on the patient’s health and safety, and are subject to very high regulatory oversight. 

The surgical and medical industries require high capital investment, skilled manpower, sophisticated technology, and strict quality standards. The industries also face challenges such as regulatory hurdles, price competition, import dependence, and intellectual property rights issues. However, the industries also offer immense opportunities for growth and innovation, given the rising demand for healthcare services, the increasing awareness and affordability of the consumers, and the supportive policies of the government. 

Market Potential 

The global market for surgical and medical products is expected to grow at a compound annual growth rate (CAGR) of 5.6% from 2020 to 2027, reaching USD 612.7 billion by 2027, according to a report by Grand View Research. The major factors driving the market growth are the increasing prevalence of chronic diseases, the aging population, the rising demand for minimally invasive surgeries, and the technological advancements in the field. The report also identifies the key segments and regions of the market, as shown in the table below. 

Segment 

Market Size (USD billion) 

CAGR (%) 

Surgical Instruments 

202.8 

6.1 

Medical Devices 

174.3 

4.9 

Implants 

105.9 

5.4 

Prosthetics 

54.7 

6.3 

Consumables 

50.6 

5.9 

Diagnostics 

24.4 

4.7 

Region 

Market Share (%) 

CAGR (%) 

North America 

39.8 

4.8 

Europe 

29.2 

5.2 

Asia Pacific 

21.4 

7.1 

Latin America 

5.3 

6.4 

Middle East and Africa 

4.3 

5.6 

 

The Indian market for surgical and medical products is one of the fastest growing in the world, owing to the large population, the growing healthcare expenditure, the rising medical tourism, and the government initiatives to promote the domestic industry. According to a report by India Brand Equity Foundation, the Indian medical devices market was valued at USD 11 billion in 2019 and is expected to reach USD 50 billion by 2025, growing at a CAGR of 15.8%. The surgical instruments segment accounted for the largest share of the market, followed by the consumables and implants segments. The report also highlights the key drivers and challenges of the market, as shown in the table below. 

Drivers 

Challenges 

Large and growing demand for healthcare services, especially in the rural and semi-urban areas. India has a population of over 1.3 billion, with a high burden of communicable and non-communicable diseases, and a low penetration of healthcare facilities and professionals. This creates a huge gap and opportunity for the surgical and medical products to cater to the unmet needs of the population. 

High dependence on imports, especially for high-end and critical products. India imports about 80% of its medical devices, mainly from the US, Germany, China, and Singapore. This makes the industry vulnerable to the fluctuations in the exchange rates, tariffs, and supply chain disruptions. It also affects the competitiveness and profitability of the domestic manufacturers. 

Increasing awareness and affordability of the consumers, especially in the middle and upper income segments. India has a growing middle class, with a rising disposable income and spending on healthcare. The consumers are also becoming more aware of the quality and benefits of the surgical and medical products, and are willing to pay for them. This creates a favorable market for the premium and branded products. 

Lack of adequate infrastructure, testing facilities, and skilled manpower. India has a poor infrastructure for the manufacturing and distribution of the surgical and medical products, such as power, water, roads, and ports. The country also lacks the testing and certification facilities for the quality and safety of the products, and relies on the foreign agencies for the same. The industry also faces a shortage of skilled and trained manpower, such as engineers, technicians, and managers. 

Rising medical tourism, attracting patients from across the world for quality and affordable treatment. India is one of the leading destinations for medical tourism, with a large number of patients coming from the neighboring countries, the Middle East, Africa, and Europe. The country offers a range of medical services, such as cardiac, orthopedic, dental, and cosmetic, at a fraction of the cost of the developed countries. This creates a demand for the surgical and medical products, especially in the private and specialty hospitals. 

Complex and stringent regulatory framework, leading to delays and uncertainties. India has a complex and evolving regulatory framework for the surgical and medical products, involving multiple agencies, such as the Central Drugs Standard Control Organization, the Drug Controller General of India, and the National Pharmaceutical Pricing Authority. The regulations are often unclear, inconsistent, and unpredictable, leading to delays and uncertainties for the manufacturers and importers. The regulations also impose price controls and caps on some of the products, affecting their viability and sustainability. 

Supportive policies and incentives of the government, such as the PLI scheme, the medical device park scheme, and the Make in India initiative. The government has launched several schemes and initiatives to support the development and growth of the surgical and medical industries in the country, such as the Production Linked Incentive (PLI) scheme, the Medical Device Park scheme, and the Make in India initiative. These schemes and initiatives aim to provide financial and technical assistance, infrastructure and common facilities, tax and duty exemptions, and ease of doing business to the industry. 

Intense price competition, especially from the low-cost and sub-standard products. The industry faces intense price competition, especially from the low-cost and sub-standard products, mainly from China and other Asian countries. These products often undercut the prices of the domestic manufacturers, and capture a large share of the market, especially in the rural and semi-urban areas. These products also compromise the quality and safety of the products, and erode the trust and confidence of the consumers. 

Innovation and research activities, leading to the development of new and improved products. The industry is witnessing a surge in the innovation and research activities, leading to the development of new and improved products, such as smart and wearable devices, biodegradable and bioresorbable implants, and point-of-care diagnostics. These products offer better performance, convenience, and outcomes to the users, and create a differentiation and value proposition in the market. 

Intellectual property rights issues, leading to the infringement and imitation of the patented products. The industry faces intellectual property rights issues, such as the infringement and imitation of the patented products, mainly by the competitors from China and other countries. These issues affect the innovation and research activities of the industry, and reduce the returns and incentives for the same. They also affect the reputation and credibility of the industry, and expose it to legal disputes and challenges. 

 

The states of Andhra Pradesh and Telangana are emerging as the hubs for the surgical and medical industries in India, due to their favorable policies, infrastructure, skilled workforce, and proximity to major markets. According to a report by the Federation of Indian Chambers of Commerce and Industry, Andhra Pradesh and Telangana together accounted for 18% of the total medical devices production in India in 2018-19, and have the potential to increase their share to 25% by 2025. The key products manufactured in these states include surgical instruments, orthopedic implants, catheters, stents, syringes, needles, and diagnostic kits. The report also provides the SWOT analysis of the states, as shown in the table below. 

Strengths 

Weaknesses 

Availability of land, water, power, and other resources at competitive rates. The states have abundant and cheap land, water, power, and other resources for the industry, and offer them at subsidized and concessional rates. The states also have a stable and reliable power supply, with minimal outages and interruptions. 

Lack of adequate cold chain and storage facilities for the temperature-sensitive products. The states lack the adequate cold chain and storage facilities for the temperature-sensitive products, such as vaccines, insulin, and blood products. These products require a controlled and monitored temperature and humidity, and are prone to spoilage and wastage. 

Presence of well-developed industrial parks, clusters, and zones, with common facilities and incentives. The states have well-developed industrial parks, clusters, and zones, dedicated to the surgical and medical industries, such as the MedTech Valley in Andhra Pradesh and the Medical Devices Park in Telangana. These parks, clusters, and zones provide common facilities, such as testing, sterilization, warehousing, and logistics, and incentives, such as tax and duty exemptions, subsidies, and reimbursements, to the industry. 

Lack of strong linkages and collaborations among the industry, academia, and research institutions. The states lack the strong linkages and collaborations among the industry, academia, and research institutions, which are essential for the innovation and development of the surgical and medical products. The states have a limited number of educational and research institutions, such as the Indian Institute of Technology, the Indian Institute of Science, and the Council of Scientific and Industrial Research, which are engaged in the surgical and medical fields. 

Availability of skilled and semi-skilled manpower, with expertise in engineering, biotechnology, and pharmacy. The states have a large pool of skilled and semi-skilled manpower, with expertise in engineering, biotechnology, and pharmacy, which are relevant for the surgical and medical industries. The states also have a number of vocational and technical institutes, such as the Industrial Training Institutes, the Polytechnics, and the Engineering Colleges, which provide training and education to the manpower. 

Lack of awareness and adoption of the quality standards and best practices in the industry. The states lack the awareness and adoption of the quality standards and best practices in the industry, such as the ISO, CE, and FDA certifications, which are required for the domestic and export markets. The industry also faces a lack of awareness and compliance with the regulatory and environmental norms, such as the Medical Device Rules, the Biomedical Waste Management Rules, and the Hazardous Waste Management Rules, which are essential for the quality and safety of the products. 

Proximity and connectivity to the major domestic and international markets, such as Hyderabad, Chennai, Bengaluru, and Mumbai. The states have a strategic location and connectivity to the major domestic and international markets, such as Hyderabad, Chennai, Bengaluru, and Mumbai, which are the hubs for the healthcare and pharmaceutical sectors. The states also have a good road, rail, air, and sea connectivity, which facilitates the transportation and distribution of the products. 

Lack of diversification and innovation in the product portfolio, with a focus on the low and medium-end products. The states lack the diversification and innovation in the product portfolio, with a focus on the low and medium-end products, such as surgical instruments, syringes, and needles. The states have a limited presence in the high-end and niche products, such as implants, prosthetics, and diagnostics, which have a higher value and demand in the market. The states also have a low level of research and development expenditure and output, compared to the other states and countries. 

Opportunities 

Threats 

Increasing demand for the surgical and medical products, both in the domestic and export markets. The states have an opportunity to tap into the increasing demand for the surgical and medical products, both in the domestic and export markets, driven by the factors such as the growing population, the rising healthcare expenditure, the increasing medical tourism, and the supportive government policies. The states can also leverage their strengths, such as the low cost of production, the availability of resources and manpower, and the proximity and connectivity to the markets, to enhance their market share and penetration. 

Increasing competition from the other states and countries, especially in the high-end and niche segments. The states face increasing competition from the other states and countries, especially in the high-end and niche segments, such as implants, prosthetics, and diagnostics, which have a higher value and demand in the market. The competitors, such as Gujarat, Maharashtra, Tamil Nadu, Kerala, Karnataka, China, Taiwan, South Korea, and Singapore, have an edge over the states in terms of the technology, quality, innovation, and branding of the products. 

Increasing scope for the public-private partnerships, especially in the areas of infrastructure, testing, and research. The states have an opportunity to increase the scope for the public-private partnerships, especially in the areas of infrastructure, testing, and research, which are essential for the development and growth of the surgical and medical industries. The states can collaborate with the private sector, such as the industry associations, the chambers of commerce, the corporates, and the NGOs, to create and improve the infrastructure, testing, and research facilities for the industry, and to share the costs and benefits of the same. 

Increasing regulatory and environmental compliances, especially in the areas of safety, quality, and disposal. The states face increasing regulatory and environmental compliances, especially in the areas of safety, quality, and disposal, which are essential for the quality and safety of the products, and the protection of the environment and public health. The states have to comply with the various norms and standards, such as the Medical Device Rules, the Biomedical Waste Management Rules, the Hazardous Waste Management Rules, the ISO, CE, and FDA certifications, and the price controls and caps, which may increase the cost and complexity of the production and distribution of the products. 

Increasing potential for the value addition, product differentiation, and branding, especially in the segments of implants, prosthetics, and diagnostics. The states have an opportunity to increase the potential for the value addition, product differentiation, and branding, especially in the segments of implants, prosthetics, and diagnostics, which have a higher value and demand in the market. The states can invest in the research and development, technology transfer, and innovation activities, to create and improve the products, which offer better performance, convenience, and outcomes to the users, and create a differentiation and value proposition in the market. The states can also invest in the marketing and promotion activities, to create and enhance the brand image and reputation of the products, and to attract and retain the customers. 

Increasing pressure on the margins and profitability, especially due to the price controls and taxation policies. The states face increasing pressure on the margins and profitability, especially due to the price controls and taxation policies, which affect the viability and sustainability of the products. The states have to deal with the price controls and caps imposed by the government on some of the products, such as stents, knee implants, and masks, which reduce the revenue and profit of the products. The states also have to deal with the taxation policies, such as the goods and services tax, the customs duty, and the income tax, which increase the cost and burden of the products. 

Increasing opportunities for the collaboration and integration, especially with the other related industries, such as pharmaceuticals, biotechnology, and IT. The states have an opportunity to increase the opportunities for the collaboration and integration, especially with the other related industries, such as pharmaceuticals, biotechnology, and IT, which are complementary and synergistic to the surgical and medical industries. The states can collaborate and integrate with the other industries, to create and improve the products, which offer better functionality, compatibility, and interoperability to the users, and create a competitive advantage in the market. The states can also leverage the strengths and expertise of the other industries, such as the research and development, technology, quality, and innovation, to enhance their capabilities and performance. 

Increasing risks and uncertainties, especially due to the pandemic, natural disasters, and geopolitical issues. The states face increasing risks and uncertainties, especially due to the pandemic, natural disasters, and geopolitical issues, which affect the production and distribution of the products, and the demand and supply of the market. The states have to deal with the pandemic, such as the COVID-19, which has disrupted the supply chain, affected the demand, and increased the safety and hygiene requirements of the products. The states also have to deal with the natural disasters, such as floods, cyclones, and droughts, which have damaged the infrastructure, affected the availability of resources, and increased the relief and rehabilitation needs of the products. The states also have to deal with the geopolitical issues, such as the trade wars, sanctions, and conflicts, which have affected the relations, regulations, and opportunities of the products. 

 

Government Subsidies and Incentives 

The Government of India has taken several measures to support the development and growth of the surgical and medical industries in the country. Some of the major schemes and initiatives are: 

  • The National Biopharma Mission, launched in 2017, aims to provide financial and technical assistance to the biopharmaceutical and medical devices sector, with a focus on innovation, entrepreneurship, and affordable healthcare. The mission has a budget of Rs. 1500 crore for a period of five years, and covers the areas of product development, clinical trials, manufacturing, and regulatory approvals. The mission is implemented by the Biotechnology Industry Research Assistance Council, under the Department of Biotechnology, in collaboration with the World Bank. The mission supports the projects and programs, such as the Grand Challenges India, the Biotechnology Ignition Grant, the Biotechnology Industry Partnership Programme, and the Biotechnology Translational Research Programme, which aim to foster the innovation and development of the surgical and medical products. 
  • The Production Linked Incentive (PLI) Scheme, announced in 2020, offers incentives to the manufacturers of 13 medical devices, including surgical instruments, implants, and diagnostics, based on their incremental sales for a period of five years. The scheme has a budget of Rs. 3420 crore, and provides incentives ranging from 4% to 6% of the incremental sales. The scheme is implemented by the Department of Pharmaceuticals, under the Ministry of Chemicals and Fertilizers, in collaboration with the National Pharmaceutical Pricing Authority. The scheme aims to boost the domestic production and export of the surgical and medical products, and to reduce the import dependence and trade deficit of the country. 
  • The Medical Device Park Scheme, launched in 2020, provides financial support to the states for setting up dedicated parks for the medical devices industry, with common facilities such as testing, sterilization, warehousing, and logistics. The scheme has a budget of Rs. 400 crore, and provides a grant of up to Rs. 100 crore per park. The scheme is implemented by the Department of Pharmaceuticals, under the Ministry of Chemicals and Fertilizers, in collaboration with the State Industrial Development Corporations. The scheme aims to create and improve the infrastructure and common facilities for the surgical and medical industries, and to attract and retain the domestic and foreign investments in the sector. 
  • The Medical Device Rules, implemented in 2018, aim to regulate the quality and safety of the medical devices in the country, and to facilitate the ease of doing business for the manufacturers and importers. The rules classify the medical devices into four classes, based on their risk level, and prescribe the norms and procedures for their registration, licensing, import, and export. The rules are implemented by the Central Drugs Standard Control Organization, under the Ministry of Health and Family Welfare, in collaboration with the State Drugs Control Authorities. The rules aim to ensure the quality and safety of the surgical and medical products, and to protect the interests and rights of the consumers and patients. 

The Government of Andhra Pradesh and the Government of Telangana

The Government of Andhra Pradesh and the Government of Telangana have also introduced various policies and incentives to attract and retain the surgical and medical industries in their states. Some of the key benefits offered by these states are: 

  • Reimbursement of stamp duty, transfer duty, and registration fee for the land and buildings acquired by the industry. The states reimburse the stamp duty, transfer duty, and registration fee paid by the industry for the purchase or lease of the land and buildings, subject to a maximum of 100% of the amount paid. The states also provide the land and buildings at concessional rates, through the State Industrial Development Corporations, the Industrial Area Local Authorities, and the Special Economic Zones. 
  • Reimbursement of state goods and services tax (SGST) paid by the industry for a period of five to seven years, subject to a maximum of 100% of the fixed capital investment. The states reimburse the state goods and services tax (SGST) paid by the industry on the purchase of the raw materials, components, and finished goods, for a period of five to seven years, subject to a maximum of 100% of the fixed capital investment made by the industry. The fixed capital investment includes the cost of land, building, plant and machinery, and other assets. 
  • Subsidy on the cost of power, water, and quality certification for the industry. The states provide a subsidy on the cost of power, water, and quality certification for the industry, subject to a maximum of Rs. 1 crore per unit. The subsidy on the cost of power is Rs. 1.5 per unit of electricity consumed by the industry, for a period of five years. The subsidy on the cost of water is 25% of the water charges paid by the industry, for a period of five years. The subsidy on the cost of quality certification is 50% of the fees paid by the industry, for obtaining the ISO, CE, and FDA certifications, or any other equivalent certifications. 
  • Interest subsidy on the term loans taken by the industry for the purchase of plant and machinery. The states provide an interest subsidy on the term loans taken by the industry for the purchase of plant and machinery, subject to a maximum of Rs. 1 crore per unit. The interest subsidy is 3% of the interest rate charged by the banks or financial institutions, for a period of five years. The term loans should be taken from the scheduled commercial banks or the state financial corporations, and should have a minimum repayment period of seven years. 
  • Assistance for the development of infrastructure, such as roads, power, water, and drainage, for the industry clusters and parks. The states provide assistance for the development of infrastructure, such as roads, power, water, and drainage, for the industry clusters and parks, subject to a maximum of Rs. 10 crore per cluster or park. The assistance is provided in the form of a grant, or a viability gap funding, or a public-private partnership, depending on the nature and size of the project. The assistance is provided to the State Industrial Development Corporations, the Industrial Area Local Authorities, the Special Economic Zones, or the private developers, who are responsible for the development and maintenance of the infrastructure. 
  • Special incentives for the women, SC/ST, and backward area entrepreneurs in the industry. The states provide special incentives for the women, SC/ST, and backward area entrepreneurs in the industry, in addition to the general incentives mentioned above. The special incentives include an additional 10% subsidy on the cost of power, water, and quality certification, an additional 10% interest subsidy on the term loans, and an additional 10% grant for the development of infrastructure. The special incentives are applicable to the units set up by the women, SC/ST, and backward area entrepreneurs, who have at least 51% ownership and management in the unit. 

Marketing and Sales 

The marketing and sales strategy for the surgical and medical industries depends on the type, size, and target market of the products. Some of the common marketing and sales channels used by the industry are: 

  • Direct sales to the hospitals, clinics, and healthcare institutions, through a network of sales representatives, distributors, and dealers. This channel is suitable for the high-end and specialized products, such as implants, prosthetics, and diagnostics, which require technical expertise, demonstration, and customization. This channel also helps in building long-term relationships and loyalty with the customers, and in providing after-sales service and support. The challenges of this channel include the high cost of sales and distribution, the dependence on the intermediaries, and the competition from the other brands and products. 
  • Online sales through e-commerce platforms, websites, and social media, especially for the low-cost and high-volume products, such as consumables, syringes, and needles. This channel is suitable for the products that do not require physical inspection, installation, or after-sales service. This channel also helps in reaching a wider and diverse customer base, and in reducing the inventory and logistics costs. The challenges of this channel include the low customer trust and satisfaction, the high return and refund rates, and the cyber security and privacy issues. 
  • Participation in trade fairs, exhibitions, and conferences, to showcase the products and network with the potential buyers and partners. This channel is suitable for the products that are new, innovative, or niche, and require awareness and exposure in the market. This channel also helps in generating leads and referrals, and in creating a brand image and reputation. The challenges of this channel include the high cost of participation and promotion, the limited time and space, and the uncertain outcomes and returns. 
  • Advertising and promotion through print, electronic, and digital media, to create awareness and generate leads for the products. This channel is suitable for the products that have a mass appeal, a competitive edge, or a unique selling proposition. This channel also helps in reaching a large and targeted audience, and in influencing their perception and behavior. The challenges of this channel include the high cost of advertising and promotion, the clutter and noise, and the legal and ethical issues. 
  • Customer relationship management, to provide after-sales service, feedback, and support to the existing and prospective customers. This channel is suitable for the products that have a long-term usage, a warranty period, or a maintenance requirement. This channel also helps in retaining and satisfying the customers, and in creating a word-of-mouth and referral effect. The challenges of this channel include the high cost of service and support, the customer expectations and complaints, and the quality and consistency issues. 

Investment Requirements 

The investment required for setting up a surgical and medical manufacturing unit depends on the product category, production capacity, technology, and location. The table below gives an indicative estimate of the investment required for different production scales, based on the data from the Ministry of Micro, Small and Medium Enterprises. The investment includes the cost of land, building, plant and machinery, and working capital. 

Production Scale (kg/hour) 

Investment (Rupees) 

500 

1.5 crore 

1000 

3 crore 

1500 

4.5 crore 

2000 

6 crore 

 

Surgical and Medical Industries List

Surgical Bandage

Liquid Handwash

Surgical Dresses

Artificial Dentures

3 Ply Mask

N-95 Mask

Cotton Swabs

Surgical Adhesive Tapes

Surgical Gloves

Blood Bags

Adjustable Hospital Beds

Disposable Plastic Syringes

Hand Sanitizer

IV Stands

Operation Theatre Table

Stretcher

Surgical Adhesive Plaster

Khadi Mask

Bouffant Cap

Oximeter

Thermal Scanner

Personal Weighing Scale

Blood Pressure Machine

BP Machine

Medicinal Tablets

Bandage making

Crepe Bandage

Folding Wheel Chair

Giloye Tablets

Blood Lancet

Walkers (Surgical)

TAMPONS

Surgical Microscope

Vitamin C Capsule Manufacturing Unit

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