Anomalous tariff structure
A 4% Special Additional Duty for medical devices and instruments announced in the Union Budget 2006-07, is contributed to increase the cost of diagnostic scans and high-end tests.
As a result of this new levy, medical instruments such as CT Scanners, MRI machines, Cathlab and ventilators which was earlier under the 5% customs duty slab will now attract 9% duty while ultrasound machines, patient monitors, defibrillators and blood cell counters will be charged under the 26.8% customs duty category. All these taxes and duties caused a10-20% increase in costs for the patients in diagnostics.
The duty exemption for diagnostic kits used to detect life threatening diseases is another area of contention. The duty waiver continues to only apply to basic techniques that are increasingly replaced by newer and more precise methods like the Polymerase Chain Reaction (PCR) test. At present only tests like the ELISA and CLIA enjoy the duty waiver while the PCR kits attracts 37%. Customs duty in spite of applications in the diagnosis of diseases like TB, hepatitis or bird flu, increase the cost of tests done using the advanced technique.
These budgetary tax measures coupled with an already anomalous customs tariff structure are expected to escalate the cost of treatments and burden the patients and ultimately constraint the delivery of modern healthcare, the report noted.
As a measure to tackle the increasing duty structure and dependency on imports, Indian companies are looking forward to having alliances with foreign companies either to import and distribute their products in the Indian territory or become licensed manufacturers and distributors of the foreign companies.
The level of R&D spending in the medical device and diagnostics industry, as a percentage of its sales, has been consistently increasing from 5.4% in 1990, to 8.4% in 1995, to 12.9% post 2000.
NIPER recommends creation of more academic centers to meet the technological and regulatory demands; interdisciplinary and combinatory research projects; testing facility for devices and pre-clinical and clinical studies for medical devices as some of the measures to assist the sector.
Future of Medical Disposable Maket in India - Findings of Market Research
- In the medical disposable market, Non Woven products are the fastest & the largest growing segments. Surgical drapes & gowns would be the top gainers as the hospitals & ambulatory surgery centres have upgraded the surgical infection prevention safeguards.
- Hospitals would be the largest customers for disposable medical devices.
- The global market for pre-filled syringes is expected to grow by 8.7% CAGR 2006–2016E. In 2008, 1.5 billion syringes worldwide were sold.
- The market for medical gloves is growing at 7% annually. The major factors contributing to the growth are hospital admissions & also ageing population.
- In United States, Catheters, drug delivery & related disposables experienced the fastest growth among the other product groups at 6 % every year from 2003 – 2008. The demand for these products reached US$~ billion in 2008.
- US is the largest market in terms of gloves usage and consumption is around 30 billion pieces of gloves annually.
- The EU market is the second largest market for medical devices & disposables. It has a market share of 30% which is only second to US which has a share of 45% of the total world market.
- In Romania, during 2002 – 2006 the production of medical devices & disposables increased by 14 % because of increased standard of living & international demand.
- In Czech Republic, Syringes, needles & catheters is the most on demand hospital supplies which is slowly making a separate market and started counting in a niche category. In 2007, this category accounted for 8.25% share in the total consumption of medical devices and disposables.
- In Indian Medical disposable device segment, the domestic production is bound to increase in the coming future, but imported high end goods will constitute the majority of sales.
- India is the fourth largest market in the Asia Pacific region in regards to healthcare/pharmaceuticals, behind Japan, China and South Korea.
- China is a leading producer of medical gloves and with the modernization of China’s healthcare system the growth opportunities for disposable medical devices are growing day by day.
- Contract manufacturers specialized in medical products are the major factor behind the growth in demand for medical disposables such as syringes and intravenous devices.
- Worldwide, the medical disposable market’s demand for plastic is expected to reach more than US$~billion by 2011, with a combined annual growth rate for injection moulded products ranging from 4.0-5.5% between 2006 and 2011.
|
