The medtech industry has borne the brunt of the COVID-19, and though strained for revenues, it has shown resilience and commitment by working unrelentingly to ensure availability of products (for both COVID and non-COVID emergencies) across the country. The medtech industry is in dire need of stimuli says Pavan Choudary, Chairman & Director General, Medical Technology Association of India and reiterates the policy changes required to reinvigorate the sector and ease some of the burden placed on this nascent industry, Chairman & Director General, Medical Technology Association of India narrates how the sector has also ensured that regular servicing and maintenance of capital equipment at the hospitals continues despite the financial blows it has taken.
The medtech industry is now in dire need of stimuli says Choudary and reiterates the policy changes required to reinvigorate the sector and ease some of the burden placed on this nascent industry
The unprecedented situation created by COVID-19 has resulted in alarm bells ringing across industries. After multiple lockdowns to curb the spread of infection, we are now in the phase of unlock 3.0 where businesses are cautiously starting to resume operations.
The corridor of uncertainty in the last six months has battered India’s economy which is projected to contract by 4.5 per cent this fiscal according to the International Monetary Fund (IMF). The collateral effect of the lockdowns has been sorely felt as several sectors including automobile, aviation, textiles, tourism, hospitality, real estate and electronics had almost completely come to a standstill. During this time, and in the absence of a vaccine or a reliable therapeutic remedy, the country relied on its healthcare and medical technology industry to spearhead the fight against COVID-19; and they have delivered, with uncanny grit and commitment.
The medtech sector has shown great determination in the face of adversity to ensure continued supply of critical medical devices and services, despite being bogged down by several operational issues like scarcity of contractual manpower for loading and un-loading, restrictive movement of service personnel and goods in several areas, stalling of customs clearance of imports, etc. The industry is also reeling under taxing financial challenges like escalation in costs due to the hike in freight charges, at the same time it has been hit by significant fall in revenue due to postponement and cancellation of elective procedures which drive a large part of the demand for medical devices.
It is estimated that medical technology industry has suffered a 50-85 per cent drop in revenue across categories in April-June due to the situation. Slicing the data category wise shows us that the cardiology category experienced a downfall in revenue up to 60 per cent in the first quarter of the financial year. The orthopaedic industry encountered an even bigger fall in revenue to an extent of up to 85 per cent. The opthalmology sector also recorded a similar impact as its revenue fell up to 75 per cent during April-June, 2020. Even the critical care device segment fell to nearly half. These challenges have been further compounded by the falling INR value, high basic customs duty rate and the newly imposed health cess on imported medical devices.
The medical device industry has borne the brunt of these issues, and has been strained for revenues, it is bleeding, yet has shown resilience and commitment by working unrelentingly to ensure availability of products (for both COVID and non-COVID emergencies) across the country. It has also ensured that regular servicing and maintenance of capital equipment at the hospitals continues despite the financial blows it has taken.
Several global medtech companies have even gone further by bringing COVID specific product designs and specifications (ventilators, face shields, medical beds) from the US into India to work with local manufacturers to manufacture in India and plug any potential holes in the supply.
Another significant impact of COVID-19 situation has been on the employment across sectors in India. According to data from the Center for Monitoring Indian Economy (CMIE), India’s overall unemployment rate as on August 13, 2020 stood at 7.9 per cent and is expected to settle at a higher level than seen before the COVID-19 induced lockdown. In the medical device sector, the effects of shrinking margins of hospitals can be seen at the channel and service dealership networks, and sub-dealers are already experiencing significant workforce downsizing. So far the global medtech fraternity have heeded to the government’s request of protecting the jobs of its workforce, even while facing significant financial blows. However if the situation does not improve, these efforts may not be sustainable.
The medtech industry is in dire need of stimuli; to reinvigorate the sector the government must look towards easing some of the burden it has placed on this nascent industry. For the next steps, the government should consider removing the high customs duty on imported medical devices – this would also increase healthcare affordability for patients at a time they need it the most, if this is not possible then at the minimum the government must roll back the additional burden of health cess imposed on imported medical devices, it must also look at ways to facilitate the resumption of elective procedures by issuing safety SOPs/ guidelines, this will go a long way in restoring the revenue streams of the medtech industry. The sector which is championing the fight against the pandemic cannot be allowed to crumble, for India will not be able to sustain its fall.