Medical device market in India expected to grow on the back of reforms, infrastructure: Fitch

Fitch said diagnostic imaging and patient aids will grow at a 2020-2025 CAGR of 10.7% and 11.2% in USD terms.

The medical device market in India is expected to grow, with diagnostic imaging and patient aids as the “most dynamic” product areas supported by reforms and infrastructure development, according to Fitch Solutions.

Fitch said the diagnostic imaging industry will grow at a 2020-2025 compound annual growth rate (CAGR) of 13.5% in local currency terms and 10.7% in USD terms, whilst patient aids will rise at a 2020-2025 CAGR of 14.1% in local currency terms and 11.2% in USD terms. 

“In the short-term, diagnostic imaging will grow strongly throughout 2021 due to increased demand as a result of the Covid-19 pandemic, expanding by 40.8% in 2021 and returning to mid-single-digit growth from 2023, supported in the long-term by market advancements,” Fitch said in a report.

“Patient aids will be boosted in 2021 due to increased demand of therapeutic apparatus as a result of the Covid-19 pandemic and is expected to return to mid-single-digit growth in 2023 as demand wanes,” it added.

Consumables, dental products, orthopaedics and prosthetics, and other medical devices will also see growth.

Fitch noted that the “Make In India” initiative will be the “long-term” driver of local medical device manufacturing as it will continue to develop the production capacity of the sector with the development of healthcare infrastructure. It will also support medical device exports for India.

The initiative has also provided the needed support to the manufacturing of medical devices and the enhancement of related infrastructure, noting that 38% of social infrastructure projects in India are under the healthcare industry.

Fitch also noted that other schemes have been encouraging the growth of the market, citing the Production Linked Incentive scheme which promotes domestic manufacturing of medical devices, by providing 5% incentive on incremental sales of medical devices produced locally, attracting large investment and a “significant total outlay."

The Scheme for Promotion of Medical Device Parks is also seen to help develop necessary infrastructure by providing 90% of the project cost in north-east and hilly states, and 70% in other states. 

“The medical device market will be boosted in the long-term through the success of this initiative and its supporting policies,” it said.

Fitch also said that India’s shift to a “more unified government” through the dominance of the Bharatiya Janata Party “will bode well for medical device market growth.” 

“A stronger majority will increase the pace of structural reform momentum and bode well for India’s business environment, providing tailwinds for growth,” it said, adding that the previous  “large coalition government and fragmented administrations complicated policymaking.”