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EAC I MIIM I Opportunities in the Medical Equipment Market India I April 2017/ 1

Make in India Business Support Programme for German Mittelstand

and Family Owned Enterprises

Berlin, April 7th, 2017

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“Opportunities in the Medical Equipment Market India”

Presented by:

Ms. Daniela Bartscher Herold, Partner - EAC International Consulting PartG

Mr. Vikram Vardahn, Deputy Head of MIIM Programme, Second Secretary, EoI Berlin

BVMed - Bundesverband Medizintechnologie e.V.


THE LOCAL EXPERTS

RUSSIA

INDIA

CHINA

SOUTH EAST ASIA

MIDDLE EAST

CEE

KOREA

JAPAN WESTERN EUROPE

2

A. INTRODUCTION TO MAKE IN INDIA MITTELSTAND (MIIM) PROGRAMME AND EAC

B. OVERVIEW: INDIAN MACROECONOMIC, DEMOGRAPHICS AND HEALTHCARE INDUSTRY

C. INDIAN MEDICAL DEVICES INDUSTRY

1. OVERVIEW: INDIAN MEDICAL DEVICES INDUSTRY AND GLOBAL POSITIONING

2. MARKET SEGMENTATION AND INDUSTRY STRUCTURE

D. SNAPSHOT: REGULATORY FRAMEWORK AND GOVERNMENT INITIATIVES

E. FUTURE OUTLOOK: INDIAN MEDICAL DEVICES INDUSTRY

1. MEDICAL DEVICES INDUSTRY DEVELOPMENT 2020

2. KEY GROWTH DRIVERS AND INHIBITORS

F. OPPORTUNITIES FOR GERMAN MITTELSTAND AND KEY SUCCESS FACTORS

1. SEGMENT/ TECHNOLOGY ATTRACTIVENESS ASSESSMENT

2. KEY SUCCESS FACTORS FOR MARKET ENTRY

G. CONCLUSION

INDEX


THE LOCAL EXPERTS

RUSSIA

INDIA

CHINA

SOUTH EAST ASIA

MIDDLE EAST

CEE

KOREA


3













G. CONCLUSION

INDEX

EAC I MIIM I Opportunities in the Medical Equipment Market India I April 2017/ 4 4

MIIM INTRODUCTION

Source: MIIM

MIIM is a unique integrated platform for market entry services that combines services rendered by

government, not-for-profit and private entities- An Initiative of EOI Berlin

An Initiative of Embassy of India Berlin and driven by Government of India‟s national programme,

MAKE IN INDIA


PILLARS OF MIIM SERVICES

Source: EAC

Case-by-case support is offered in four different ways: hotline, workshops common for all and

projects/individual workshops for MIIM companies

HOTLINE/

E-MAIL ACCOUNT

Hotline: +49-30- 25795514

Fax: +49-30-25795520

Email: miim@ indianembassy.de

EXCHANGE

PLATFORM

Exchange platform for all MIIM companies will be conducted half yearly (next EP in September 2017)

Discussion and experience sharing

Network event

CONDUCT

WORKSHOPS

6 bi-monthly workshops-open and free to all enrolled companies

Topics of interest to all, key notes by program experts

On request individualized workshops will be provided

DEDICATED

WORKSHOPS/ PROJECTS

For specific requirements of companies, customized workshops/ projects are offered

Will be designed and executed by respective MIIM program partners

Based on the company segregation and support requirement, customized solutions will be implemented with the support of

all MIIM program partners


OVERVIEW MIIM PROGRAMME STRUCTURE

Source: MIIM

MIIM Programme has a built-in network of Programme Partners to support the participating companies

with their services

Programme Owner:

Embassy of India, Berlin

Knowledge Partner:

Euro Asia Consulting

FACILITATION PARTNERS

Invest India

7 State Governments

of India

TAX & LEGAL PARTNERS

CHAMBER OF COMMERCE

Indo-German

Chamber of Commerce

Khaitan & Co.

India

Rödl & Partner,

Germany

TECHNOLOGY PARTNER

Global Innovation and Technology

Alliance

BANKING PARTNERS

Deutsche Bank

Sate Bank of India

KFW DEG

INCUBATION PARTNER

German Centre Delhi

Gurgaon (GCDG)

Co

mm

un

icat

ion

Coordination

Co

op

eration

EXHIBITION PARTNER

Deutsche Messe

ASSOCIATE PARTNER

TUV Rheinland


MIIM REPORT CARD – YEAR (SEPT. 2015 – MARCH 2017)

Source: MIIM team

MIIM has approached >300 companies where 71 are enrolled as official members, adding 11 since

September 2016

“Mittelstand companies approached”

to the MIIM programme

“Companies expressed interest” to join the

programme

“Enrolled as official members of MIIM

programme” “Advanced stage of investment implementation”

#307 #83

#83

#71 #41

“Personal

meetings

conducted” by

MIIM team to

evaluate “fit for

MIIM”

MIIM in 1.5

years has

enrolled 71

official

members where

41 are at

advanced stage

of investment


MIIM RESULTS – INVESTMENT PLANNED!!!

Source: EAC

MIIM is supporting declared investment of ~630 mio EUR and ~4,000 employment – an increment of ~180

mio EUR since Sept. 2016

INVESTMENT AVENUE TOTAL INVESTMENT:

being facilitated under MIIM Programme

31 New Manufacturing Plants

11 Expansion Projects (2nd manufacturing plant, expansion of current

set up etc.)

2 Pilot Projects

Approx.

634 mio EUR

(~45 bln INR)

Note: Value refers to 28 companies‟ confirmed

investment plans; other MIIM companies have

not yet disclosed investment plans as yet Employment Generation for ~4,000


EAC OFFERING – INNOVATIVE CONSULTING SOLUTIONS

EAC offers consulting solutions covering concepts and execution of growth strategies,

M&A and operational excellence with offices in Moscow, Shanghai, Munich and Mumbai

STRATEGY OPERATIONAL

EXCELLENCE M&A


INDUSTRIES – KNOW-HOW IN KEY GROWTH SECTORS

In-depth industry experiences and a track record of successful projects in major growth sectors

guarantee "best practice" sharing with our clients

MOBILITY INDUSTRIALS INFRASTRUCTURE ENVIRONMENT

CHEMICALS HEALTHCARE CONSUMER

GOODS

ADVANCED

TECHNOLOGIES


FUNCTIONS – SOLUTIONS FOR SPECIFIC DEMANDS

Our consulting services address individual client requirements and key value-drivers –

EAC covers strategy formulations as well as roll-outs and operational efficiency programs

Market Attractiveness

Product Innovation

Go-to-Market Strategy

Digitalization

Strategy Execution

Partner Screening & Selection

Due Diligence

Business Plan & Valuation

Deal Structuring, Negotiations

Post Merger Integration

Performance Improvement

Operations

Human Resources

Compliant to Perform (C2P)

Global Footprint Advisory

STRATEGY M&A OPERATIONAL EXCELLENCE


EAC – STRONG TEAMS FOR SUCCESSFUL SOLUTIONS

We work in highly professional and motivated teams who come from a range of different national cultures

and stand for the EAC values and principles

Find out more about EAC under www.eac-consulting.de

TEAM MUNICH

TEAM SHANGHAI

TEAM MUMBAI


EAC – A VALUABLE KNOWLEDGE PARTNER

Prestigious associations and chambers in Germany like the VDMA, BME or the Embassy of India

take EAC on board as an experienced knowledge partner

The VDMA (Mechanical Engineering Industry

Association) represents over 3100 mostly medium-

sized companies in the capital goods industry,

making it the largest industry association in

Europe. In touch with the latest developments, the

VDMA represents the economic, technological and

political interests of the engineering industry,

Germany‟s biggest industrial employer. It produces

key technologies for the global market. EAC has

created several surveys for the VDMA as a key

partner.

The BME (Supply Chain Management,

Procurement and Logistics Association) has

established itself as a professional association for

buyers and supply chain managers in Germany.

30 specialized experts‟ panels work on new

practical concepts, which are provided to members

and the public. Every year more than 2,000 guests

meet in Berlin for the largest buyers' congress in

Europe – the BME-Symposium. EAC has a

speaker slot during the congress in 2016.

"Make in India" is a major national program of the

Government of India launched by Prime Minister

Narendra Modi. Since Mittelstand companies are

the backbone of the German industry the

Embassy of India (EOI), Berlin, launched the

market entry support programme "Make In India

Mittelstand!" (MIIM) to facilitate investment by

German Mittelstand and family-owned companies

in India. EAC has been selected as the knowledge

partner of the EOI in this strategic programme


GLOBAL REFERENCES – CLIENTS WHO TRUST US

https://de.wikipedia.org/wiki/Datei:Bbraun.svg


GLOBAL TRACK RECORDS – HEALTHCARE

HEALTHCARE

STRATEGY M&A OPERATIONAL EXCELLENCE

https://de.wikipedia.org/wiki/Datei:Bbraun.svg


BV MED – OVERVIEW

BV Med established in 1901 is a German medical industry association with ~230 companies manufacturing

medical equipment & appliances, promoting and representing the combined interests of the industry

Source: BVMed website

BVMED – GERMAN MEDICAL TECHNOLOGY ASSOCIATION

Association Introduction

Activity:

– The German Medical Technology

Association (BVMed) is an industry

association and representative body

of the entire medical technology

industry and trade companies

Association Members

Predominantly small to medium sized

enterprises:

– Around 230 member companies in

the medical technology sector

engaged in manufacturing of various

medical equipment and appliances

Association Scope

Support and information in various

business areas:

– Organization of >50 working groups

– Legal and regulatory advice

– Market access and information

– Representation and public affairs

Medical dressings / First aid Verbandsmittel / Erste Hilfe

Medical aid Hilfsmittel

Surgery OP / Chirurgie

Other products and services Sonstige Produkte / Dienstleistungen

Plastic disposable items Kunststoff-Einmalprodukte

Implants Implantate


THE LOCAL EXPERTS

RUSSIA

INDIA

CHINA

SOUTH EAST ASIA

MIDDLE EAST

CEE

KOREA


17













G. CONCLUSION

INDEX


Source: World Bank, World Economic Forum, Country trade portals

MACROECONOMIC AND DEMOGRAPHIC OVERVIEW – INDIA

India is a 1,950 bln EUR economy estimated to grow robustly at 7.6% CAGR till 2019 driven by population

of 1,311 mio people with median age of ~29 years characterized by purchasing power parity of 5,834 EUR

GDP (at current prices)

1,950 bln EUR

Population

1,311 mio people

GDP Growth (2015-19)

7.6%

Share of Global Workforce

18% (Age 15-59 years)

Manufacturing Share to GDP

10% ~29 years

Ease of Doing Business Index

Rank 130 (out oi 189) 5,834 EUR

Logistics Performance Index

Rank 35 (out of 160)

Ultra-High Net-Worth Households (UHNH)

137 thsd units

Local Supplier Quality

Rank 66 (out of 140)

Combined net worth of UHNH

1.8 trln EUR

Purchasing Power Parity per capita

Median Age

India 2016

55 Global

Competitiveness Rank

(out of 140) 11

Global

Manufacturing Competitiveness Rank

(out of 40)


Source: EAC research

Cumulative investments worth 879 bln EUR is expected across infrastructure sectors over next 5 – 6

years; investments expected to have multiplier effect on Indian economy

INDIAN ECONOMY – GOVERNMENT COMMITMENTS 2021

ROADS

250 bln EUR National highways

Expressways

Highway Upgradation

INDUSTRIAL

CORRIDORS

100 bln EUR 5 Industrial corridors

Early bird projects of 1.2

bln EUR

POWER

250 bln EUR Thermal upgradation

Renewables (Solar,

Wind, Biogas)

SMART CITIES

7 bln EUR 20 Smart cities in first

phase

40 to follow

RAILWAYS

142 bln EUR High speed rail

Dedicated freight

corridor CLEAN INDIA

2.6 bln EUR Solid and liquid waste

management

PORTS

100 bln EUR1) New ports

Ports modernization

HOUSING

27 bln EUR Housing for All by 2022

Pradhan Mantri Awas

Yojna

1) Includes Sagarmala investment of 56 bln EUR which is planned for period 2017-2025

Funding Source:

Roads: Ministry of Road Transport and Highways

Power: Ministry of Power and private players

Railways: Ministry of Railways, World Bank, Japan Intl. Cooperation Agency

Ports: Ministry of Shipping and private players

Industrial Corridors: Government of India, Japanese government and

other international agencies

Smart Cities: Japan International Cooperation Agency (JICA)

Clean India: Central and state governments

Housing: Ministry of Housing


DOING BUSINESS IN INDIA – KEY BOTTLENECKS

Source: World Bank, „Doing Business 2014‟‟, twitter.com & EAC Research

Government has critically identified and acknowledged the presence of bottlenecks which are hindrance to

doing business in India which needs immediate attention to attract FDI and grow the manufacturing GDP

BOTTLENECKS - WHY THE WORLD DOESN‟T „MAKE IN INDIA‟

PM Modi acknowledges following bottlenecks:

Steps Taken

Non-conducive

Laws

Infrastructure Bureaucracy IPR Laws Integrated Medical

Device Parks

Judicial Delays


TAX STRUCTURE – CURRENT AND GST

Source: EAC research and analysis

News from April 2017: GST will come into place from July 2017 which releases many tax complexity and

also optimizes logistic burdens and costs

CURENT INDIRECT TAX STRUCTURE OF INDIA

Present Tax

Structure

Excise

duty

GST TAXATION STRUCTURE

CGST

Service

tax

Sales tax/

VAT/ CST

Customs

duty

Entry tax/

entertain-

ment tax

Taxable

event is

manufac-

turing

Taxable

event is

provision

of service

Taxable

event is

sale

Taxable

event is

import &

export

Taxable

event is

entertain-

ment of

goods

Called Central GST

To be levied by Centre

Applicable on Intra-state supply of goods &

services

Central taxes to be subsumed here

SGST

Called state GST

To be levied by state

Applicable on Intra-state supply of goods &

services

State taxes to be subsumed

IGST

Called integrated GST

To be levied by Centre

Applicable on Inter-state supply of goods &

Services and imports

Expected to be aggregate of CGST+SGST

CST to be subsumed here


Source: EAC

OVERVIEW – HEALTHCARE INDUSTRY IN INDIA

Indian healthcare seems like a “mirror” of the status quo - market shows gaps in infrastructure but offers

great potential backed by government policies and emerging “customer and patient” structure

The 76.5 bln EUR Indian

healthcare market is

expected to grow by ~18%

CAGR till 2020

Hospital remains largest

segment with 64% share

in overall healthcare

market

Characterized by high

under penetration with

only 7 beds and 7

physicians against global

avg. of 27 and 14 resp.

Private sector accounts

for 26% of the hospitals

Rising healthcare

awareness coupled with

growing per capita

income has resulted in

demand for better quality

of healthcare services

Lifestyle diseases,

growing elderly

population is resulting in

increased demand for

healthcare

Presence of globally

certified hospitals is

driving medical tourism

demand

Expansion by major

hospital networks in tier

II/ III cities, Public private

partnerships, emergence of

telemedicine to extend

reach of healthcare

services in untapped

areas

Single specialty

hospitals and day care

hospitals concept to

reduce quantum of

investment and fasten

pay back period

HEALTHCARE

INDUSTRY IN INDIA

KEY INDUSTRY

TRENDS

GROWTH

DRIVERS

To improve status of

healthcare government

targets to increase

healthcare spends from

1.15% to 2.5% of GDP by

2017

Government offers tax

breaks for investment in

hospital infrastructure

(>100 beds) in rural areas

Allows 100% FDI in

healthcare through

greenfield as well as

brownfield investments

GOVERNMENT

POLICY


Source: World Bank, WHO

OVERVIEW – GLOBAL POSITIONING OF HEALTHCARE INDUSTRY

Indian healthcare market is largely underpenetrated on key parameters in comparison to developed world

and other emerging economics

Germany

BEDS1) PHYSICIANS1) PER CAPITA HEALTH

EXPENDITURE (EUR)

TOTAL HEALTHCARE

EXPENDITURE2)

OUT OF POCKET

EXPENDITURE (%)

US

Japan

Brazil

Russia

China

India

Global

GOVERNMENT

EXPENDITURE (%)

1) Per 10,000 population 2) % of GDP

27

7

38

61

23

29

82

137

14

7

15

43

19

23

25

38

9.1%

5.5%

7.1%

8.3%

10.2%

17.1%

11.3%

4.7%

58.8%

55.8%

52.2%

46.0%

83.6%

48.3%

77.0%

30.0% 68

916

382

813

862

3,370

8,557

4,951

49.7%

32.0%

45.8%

25.5%

13.9%

11.0%

13.2%

62.4%


Increasing disease burden backed by growing need

towards well-being

Demand for basic/ primary healthcare infrastructure

Rising medical tourism

Telemedicine services bridging the rural-urban divide

24 Source: NATHEALTH - Healthcare Federation of India, WHO reports, DIPP

OVERVIEW – INDIAN HEALTHCARE INDUSTRY

INDUSTRY SIZE AND SEGMENTS, 2015 (EXCL. PHARMA) MARKET CHARACTERISTICS

Indian Healthcare is the 4th largest sector, estimated at 76.5 bln EUR in 2015 with Hospital and medical

devices accounts for 91% of total market; 100% FDI allowed through automatic route

Industry size: 76.5 bln EUR

Hospital and

Diagnostics

6%

85%

Healthcare IT

1%

Medical Insurance

4%

Medical Tourism

4% Medical Device

Relevant segment:

Medical Devices: 4.6 bln EUR

4th largest healthcare market in Asia

Indian healthcare industry is growing at a high pace

(~17% CAGR) during 2008-15 owing to:

– Strengthening coverage and services

– Increasing expenditure by public & private players

– Tremendous changes in regulations, import duties

price control expected in Medical Device Policy‟ 17

100% FDI allowed via automatic route in hospital

and medical devices sector

Industry Characteristics

FDI Permissions

Growth Drivers


HOSPITAL STRUCTURE IN INDIA

Source: Ministry of Health, EAC research

Number of hospitals expected to grow by CAGR 13% by 2020; growth fueled by growth in private

hospitals and Northern zone of India with highest number of hospitals

DEVELOPMENT OF HOSPITAL IN INDIA (IN THSDS) REGIONAL SPREAD OF HOSPITALS (IN THSDS)

2010 2015 2020 P

Government

Private

54

87

CAGR: 10%

68%

32% 74%

26%

CAGR

2010-15

4%

12%

162

CAGR: 13%

Types of government hospitals

– Central government operated

– State government operated

– Municipal corporation operated

Types of private hospitals

– Private hospital chains

– Corporate group operated

– Charitable trust operated

– Individual doctor operated

West Zone North Zone

South Zone Central & East Zone

471 167 5.6

Hospital Beds Hospital Beds

69

214 3.9 166 7.7

Hospital Beds Hospital Beds

Urban Rural

26%

74%

18%

82%

27%

73% 71%

29%

26%

74% 76%

24%

13%

87% 68%

32%

Delhi (NCR)

Ahmedabad

Vadodara Bhopal

Kolkata

Mumbai Pune

Goa

Chennai

Kochi

Bangalore

Hyderabad

Jaipur


HEALTHCARE M&A AND PE DEALS IN INDIA


Indian market characterized by active focus by global private equity players and leading healthcare

providers to enter through mergers and acquisitions and grow sustainably in the Indian territory

YEAR TARGET NAME ACQUIRER STAKE DEAL SIZE

(MIO EUR) PRESENCE

NUMBER OF

BEDS

2013 Apollo Hospitals Kohlberg Kravis Roberts

(KKR) 4.5% 81

24 cities in India and 2

international >10,000

2013 Fortis Healthcare Standard Chartered

Private Equity 2.7% 5

6 cities in India; New Delhi,

Noida, Gurgaon, Mohali ~ 5,000

2013 Sterling Sterling Addlife India Ltd

(acquiring from Actis) 82% NA

4 cities in Gujarat; Ahmedabad,

Vadodara 862

2015 Care Hospital Thomson Medical 72% 272 6 cities in India; Mumbai,

Hyderabad etc. 2,400

2015 Narayana Hrudalaya CDC Group / UK 10-15% 40 13 cities in India and 1

international ~3,000

2015 Manipal Hospitals TPG Capital 25% 121 15 hospitals in India with

international presence 4,900

2015 Medanta Temasek / SING 17.74% 88 Gurgaon 1,600

2015 Global Hospital IHH Healthcare Berhad 73.4% 173 5 hospitals in 4 cities; Mumbai,

Hyderabad, Chennai, Bengaluru 2,000

2016 Saket City Max Healthcare 51% 47 Present in Delhi and Max Health > 2,600 in max

Healthcare

M&A


GROWTH DRIVERS‟ OVERVIEW – INDIAN HEALTHCARE INDUSTRY


6 key healthcare industry growth levers include under penetration, demographic, lifestyle changes, rising

income medical tourism and insurance penetration

India has only 7 beds and 7 physicians

per 10,000 population compared to global

average of 27 and 14 respectively, which

exhibits significant growth in developing

healthcare infrastructure

UNDER PENETRATION

Lifestyle changes and preferences to

result in growth in working class population

from 34% in 2011 to 40% in 2026, while

elderly population to double by 2026

DEMOGRAPHIC SHIFT

Changing lifestyle has led to increased

instances of lifestyle diseases; growing

health awareness and precautionary

diagnostic check-ups leading to increasing

hospitalization

CHANGING DISEASE PROFILE

Rising per capita income (1,721 EUR in

2015 to 2,246 EUR by 2020) to result in

increase in per capita healthcare

expenditure and thereby higher medical

insurance penetration

GROWING AFFLUENCE

Medical tourism industry expects growth

of high growth of 22% to reach 7.3 bln

EUR by 2020; world class, medical facilities

and skilled professionals to drive future

industry growth

MEDICAL TOURISM

Medical insurance penetration to grow

from 18.7% in 2015 to 22% in 2020; higher

insurance coverage will result in access to

better quality of healthcare services

MEDICAL INSURANCE

GROWTH DRIVERS

3

5

2

4

1

6


KEY TRENDS IN INDIAN HEALTHCARE INDUSTRY (1/2)


In hospital sector, 5 major trends including tier II/ III focus, single specialty hospitals, day care concept,

PPP model and technology orientation …

1) Medtronic acquired Covidien in Jan 2015

2) Chirurgisches Verfahren an einem nicht-hospitalisierten Patienten

GROWING

TIER II/ III

CITY FOCUS

EMERGENCE

OF SINGLE

SPECIALTY

HOSPITALS

DAY CARE

SURGERY2)

CONCEPT

96% of Indian population lives in non-metro regions

70% of population lives in rural areas

Regional and national hospital chains are expanding in under penetrated tier II/ III cities across India

like Durgapur, Guwahati, Trichy, Nasik, Bhubaneswar, Madurai, etc.

– Medical equipment companies (GE, Covidien1)) expanding distribution network in rural areas

Emergence of specialty hospitals catering to ophthalmology, renal care, cardiology, orthopedic e.g.

Vasan Eye Care, Narayan Hrudyalaya, RG-Stone

Requires low investment resulting into shorter break even periods compared to multispecialty

hospitals

Offers better scalability due to lower land requirement

Day care surgery accounts for 40% of total surgery volume

Non-hospitalization not only results in freezing up of capacity but also increases patient affordability

Requires only 30% of cost for set up full fledged hospital resulting in lower capex and shorter break

even periods

Major hospital chains like Apollo, Fortis, Vasan Eye Care have also ventured into day care hospitals

Ext

end

ed R

each

E

con

om

ics

Eco

no

mic

s

1

2

3


KEY TRENDS IN INDIAN HEALTHCARE INDUSTRY (2/2)


… has helped Indian healthcare industry to address challenges like affordability and access to quality

healthcare

PUBLIC

PRIVATE

PARTNERSHIP

(PPP)

MODELS

TECHNOLOGY

ORIENTATION

Key trigger points

– Government – Lack of funds and resources , lack of operational expertise

– Private entities – Incentives from government, infrastructure availability, mass access

Examples

– Arogya Raksha Scheme was announced in Jan 2017 by government of Andhra Pradesh with support of private entities like New India assurance and private clinics

Objective: Insurance scheme for bottom of pyramid with an insurance coverage up to 2,800 mio EUR, covering 1044 diseases and 432 hospitals have been empaneled

Telemedicine

– Government of Karnataka and Private entities have opened up Narayan Hrudayalaya

Objective: Government‟s access to remote unserved areas

Rajiv Gandhi super specialty hospital:- Objective is to achieve operational expertise

80% of Indian population does not have direct physical access to specialist healthcare

Concentration of healthcare facility (80%) in urban areas whereas 70% of Indian population resides

in rural areas

Telemedicine, tele-radiology gaining pace to bridge to infrastructure and skilled manpower

availability gap

– Key players – Narayana Hrudayalaya, Apollo Hospital, Asia heart foundation

Eco

no

mic

s an

d e

xten

ded

rea

ch

Ext

end

ed r

each

4

5


THE LOCAL EXPERTS

RUSSIA

INDIA

CHINA

SOUTH EAST ASIA

MIDDLE EAST

CEE

KOREA


30













G. CONCLUSION

INDEX


OVERVIEW – GLOBAL MEDICAL DEVICE INDUSTRY

Economies of Americas, Western Europe and APAC together account ~90% of the global medical device

industry where India is valued at ~5 bln EUR estimated to grow significantly by 11% CAGR until 2020

Source: International Trade Administration, EAC research

GLOBAL MEDICAL INDUSTRY SNAPSHOT

AMERICAS 167

CENTRAL/ EASTERN EUROPE

15

WESTERN EUROPE 80

ASIA/ PACIFIC 69

MIDDLE EAST/ AFRICA 10

RUSSIA 6

INDIA VS BRIC COMPARATIVE

INDIA CHINA RUSSIA BRAZIL

444 6%

19 EUR 38 EUR 3 EUR 6 EUR

47 EUR

209

19

106

5.8%

6.9%

7.5%

XX Per capita spend on medical devices Industry size 2015, bln EUR Industry size 2020, bln EUR XX CAGR % (2015-20) XX

13

89

8

6.6%

7.2%

5%

5 3% 4.3 7.8 11% 4.6 71.4 11% 43.1 7.9 5% 6.2

346


OVERVIEW – INDIAN MEDICAL DEVICES INDUSTRY

Indian medical devices industry valued at 4.6 bln EUR is the 4th largest market in Asia, with ~800 devices

manufacturers and ~75% import dependency; planned medical devices parks to device future growth

Source: AIMED, EAC research

Indian medical devices industry valued at 4.6 bln EUR, is expected to reach 8.6 bln EUR in 2020 growing at 11% CAGR

Domestic companies are largely involved in manufacturing of low-end products for local as well as international consumption

Import dependent medical devices sector, is expected to get a boost for domestic manufacturing through the planned 3 medical

devices parks – Andhra Pradesh, Maharashtra and Gujarat

25%

10%

65% > 7 mio EUR

< 1.4 mio EUR

1.4-7 mio EUR

INDUSTRY SIZE

Industry size, 2015: 4.6 bln EUR

Share of Instrument & appliances

and diagnostic imaging: ~66%

GLOBAL COMPETITIVENESS

Among top 20 markets globally

4th largest in Asia after Japan,

China and South Korea

INDUSTRY STRUCTURE

Highly fragmented with ~750

medical devices manufacturers

FDI INFLOWS

FDI inflows, 2016: 151.4 mio

EUR

IMPORT DEPENDENCE

Share of imports: 70% - 75%

Source of imports:

EXPORT COMPETENCE

38% of domestically

manufactured devices exported

INDIAN

MEDICAL

DEVICES

INDUSTRY


Low local manufacturing capability- accounting for

<0.5% of manufacturing sector

Local manufacturers focused on medical

disposables, low end technological products

High-end medical equipment market dominated by

foreign MNC„s – imports accounting for ~77% market

33

INDIAN MEDICAL DEVICES INDUSTRY DEVELOPMENT

MEDICAL DEVICE INDUSTRY DEVELOPMENT (BLN EUR)

KEY HIGHLIGHTS

Medical device industry- valued at 4.6 bln EUR is characterised by highly fragmented (~65%) manufacturing

landscape; local companies focus on low end products while high-end equipment is imported dependent

10% 19%

38%

+11%

2015

4.6

33%

30%

20%

17%

2008

2.1

33%

+22%

+12%

+8%

+12%

Source: NATHEALTH - Healthcare Federation of India

Patient aids and others Hilfsmittel und Sonstiges

Consumables and implants Verbrauchsmaterialien & Implantate

Diagnostic imaging Diagnostische Bildgebung

Instruments and appliances Instrumente und Geräte

Indian medical device industry has grown robustly with

~11% CAGR during 2008-15 reaching 4.6 bln EUR

Patient aids and consumables & implants have been

the key segments driving growth

Highly fragmented local manufacturing landscape

with small to mid-sized segment comprising of ~65%

of market

Industry Development

Industry Structure

Local Manufacturing Capability


THE LOCAL EXPERTS

RUSSIA

INDIA

CHINA

SOUTH EAST ASIA

MIDDLE EAST

CEE

KOREA


34













G. CONCLUSION

INDEX


MARKET SEGMENTATION – INDIAN MEDICAL DEVICE INDUSTRY

INDUSTRY SEGMENTS INDUSTRY CHARACTERISTICS

Indian medical devices industry- 4.6 bln EUR, is comprised of 4 major segments- of which „instrument and

appliances‟ and „diagnostic imaging‟ together account for 66%; major import dependency across segments

High-end imaging devices mostly imported

Great potential in low and mid-end range

systems purchased by small hospitals and

facilities

Import driven segment- ~75% of the

requirement currently met through imports

Source countries: Ireland, US, Australia,

Singapore, China and South Korea

Ophthalmic instruments (Augenheilkunde), Sterilizers

(Sterilisatoren), Dental products (Dentalprodukte), Therapeutic

appliances (Therapeutische Geräte)

Electro-diagnostic apparatus

(Elektrodiagnoseapparate), Radiation

apparatus (Strahlungsapparate),

Imaging parts (Bilddiagnose)

Syringes (Spritzen), Needles

(Nadeln) and Implants (Implantate)

Orthopedics (Orthopädie) and

Portable aids (Mobile Hilfsmittel)

Instruments and

Appliances Instrumente und Geräte

Diagnostic

Imaging Diagnostische Bildgebung

Consumables and

Implants Verbrauchsmaterialien / Implantate

Patient Aids and

Others Hilfsmittel und Sonstiges

Most of the requirements are met through

domestic manufacturing

Only trade surplus sector in the Indian

medical devices industry

Dominated by high imports, primarily from

US

Domestic players are experimenting with

proprietary technologies and tie ups

KEY PRODUCTS

X% Share of total medical devices‟ industry, 2015: 4.6 bln EUR


34%

32%

18%

16%


INDIAN MED TECH SEGMENTS – KEY TRENDS IN INDIA

INDUSTRY SEGMENTS

Various medical technology products have been witnessing increasing demand in India (Avg. CAGR of

~11%), owing to rising health issues and thereby demand for high tech products in local/ export markets



KEY TRENDS

Rising health issues - cataract/ retinal disease (grauer Star /

Netzhauterkrankungen) and thereby need for complex surgeries to

drive demand for ophthalmic, therapeutic, sterilizing

equipment (Ophthalmologische, therapeutische und sterilisierende Geräte)

MARKET SIZE (BLN EUR)

Diagnostics demand to be grossly fragmented between 3

major proponents:

– Corporate hospitals; Research institutions;

Private imaging clinics

Local consumption coupled with strong exports demand to

drive demand:

– Low cost products have been designed (par in quality

terms) for local and export demand

Rising health issues- OOO to drive demand (majorly for

orthopedics and prosthetics):

– Osteoporosis; Osteoarthritis; Obesity (OOO) (Fettleibigkeit)

+12%

1.5

2015 2020

2.6

2.11.4

2020

+8%

2015

3.1 1.7

2020 2015

+13%

Instruments and


Diagnostic


Consumables and


Patient Aids and


34%

32%

18%

16%


IMPORT AND EXPORT – INDIAN MEDICAL DEVICE INDUSTRY

INDUSTRY SEGMENTS

Instrument and appliances and Diagnostic imaging are high technology segments where India is

characterised with high imports (total share of ~88%), while the same segments export low tech products

IMPORTS (MIO EUR)


Source: AIMED, EAC research

EXPORTS (MIO EUR)

2015 2014

1,666 1,577

+6%

53%

X% Share of total imports X% Share of total exports

1,047

+7%

1,117

2014 2015

35%

254245

2014

+4%

2015

8%

129116

+11%

2015 2014

4%

274312

-12%

2014 2015

26%

541442

+22%

2015 2014

52%

198171

2014

+16%

2015

19%

3027

+11%

2014 2015

3%

DETAILS

Syringes (Spritzen), Needles

(Nadeln) and Implants (Implantate)

Ophthalmic instruments (Augenheilkunde), Sterilizers

(Sterilisatoren), Dental products (Dentalprodukte), Therapeutic

appliances (Therapeutische Geräte)

Electro-diagnostic apparatus

(Elektrodiagnoseapparate), Radiation

apparatus (Strahlungsapparate),

Imaging parts (Bilddiagnose)

Orthopedics (Orhopädie) and

Portable aids (Mobile Hilfsmittel)

Instruments and


Diagnostic


Consumables and


Patient Aids and


34%

32%

18%

16%


INDUSTRY STRUCTURE – MEDICAL DEVICES (1/4)

Indian medical device industry is comprised of ~750 manufacturers with ~650-700 firms generating sales

≤ 20 mio EUR, characterized by mix of local players & MNC catering local demand with moderate exports

Source: Association of Indian Medical Device Industry- AIMED

MEDICAL DEVICES MANUFACTURING INDUSTRY STRUCTURE

750 MEDICAL DEVICE MANUFACTURING FIRMS

65%

Sales < 2 mio EUR

25%

Sales 2-10 mio EUR

5%

Sales <10-20 mio EUR

3%

Sales 20-100 mio EUR

2%

Sales > 100 mio EUR

Mostly domestic players operating in the

consumables segment catering to local

consumption with limited exports

Mix of domestic and MNC players in the

low to medium tech product categories of

various sub-segments catering to local

consumption with moderate levels of

exports

Major domestic and MNC players with

significant presence in the domestic and

exports markets

“The size of indigenous

manufacturing is small

and fragmented although

characterized by the

presence of both

domestic players as well

as MNCs”

“Local innovation by

MNCs as well as domestic

players is expected to

drive indigenous

manufacturing and in-

parallel lead to rapid

growth in exports“

- Rajiv Nath, Forum

Coordinator AIMED

450-490

FIRMS

200-220

Firms

30-40

Firms




MEDICAL DEVICES‟ CLUSTERS IN INDIA

Medical devices manufacturing is majorly spread across 3 clusters of North, West and South zones, where

northern part focusses on low-end consumables, while south region concentrates on high-end technology

Province: Haryana

Province: Gujarat

Province: Karnataka

Province: Tamil Nadu

Cluster Focus: Low-end consumables and dental

equipment

Cluster Focus: Stent manufacturing

Cluster Focus: Insulin pens, medical IT, cardiac stents and implants, PCR

machines

Cluster Focus: Diagnostics, critical life support systems and ophthalmology

Northern part of India is largely concentrated with low-end consumable manufacturers due to of low-cost labour and policy

incentives, whereas most companies in the southern zone manufacture high-end devices using developed technology

North Zone

West Zone

South Zone

Delhi (NCR)

Ahmedabad Kolkata

Mumbai

Chennai Bangalore

Hyderabad



INDUSTRY SEGMENTS

Indian medical device industry is largely dependent on imports (~70%) where instruments and diagnostic

imaging segments accounting for 66% of the overall market, are characterized by high level of imports

Instruments and

Appliances

Diagnostic

Imaging

Consumables and

Implants

Patient Aids and

Others

Source: NATHEALTH - Healthcare Federation of India, Central Drugs Standard Control Organization

80%

66%

50%

75%

20%

25%

50%

34%

1.6

1.5

0.8

0.7

INDUSTRY CHARACTERISTICS/ KEY PLAYERS


34%

32%

18%

16%

Domestic players

Local manufacturers are primarily focusing their R&D

efforts on developing affordable medical devices for

lower and middle income segments of the Indian market

Indigenous manufacturing is limited to products in the

lower end of technology value chain, and driven by the

consumables and implants segment

Complex medical devices are manufactured in a

limited manner by MNCs present in India or imported

Local manufacturing Imports Market size of segment, bln EUR



MEDICAL EQUIPMENT – SUCCESS FACTORS

Indian healthcare delivery centers have increasingly installed/ preferred medical equipment from global

Med-Tech gaints such as GE, Philips and Siemens to ensure effective healthcare delivery solutions

MEDICAL EQUIPMENT INSTALLATION AT KEY HEALTHCARE DELIVERY CHAINS

1) MRI: Magnetic Resonance Imaging, OT: Operation Theatre, ICU: Intensive Care Unit, MDCT CT: Multiple detector computed tomography

GLOBAL HOSPITALS GROUP

GE Healthcare- SIGNA PIONEER MRI1)

system

APOLLO BSR HOSPITALS

Philips Healthcare- Cardiology Digital

CATH Lab

MEDANTA HOSPITAL

Siemens Healthcare- 5 advanced cath

labs at Medanta

FORTIS

HEALTHCARE

Johnson & Johnson- OT1), ICU1) solution

WOCKHARDT

HOSPITAL

Philips Healthcare- MRI1) system

JAWAHARLAL NEHRU CANCER HOSPITAL

AND RESEARCH CENTRE

Siemens Healthcare- MDCT CT1) Scan

EAC I MIIM I Opportunities in the Medical Equipment Market India I April 2017/ 42 42 Source: EAC research

LOCALIZATION – FOREIGN MNC INNOVATIONS IN INDIA

Medical device manufacturing giants such as Johnson & Johnson, GE, Philips etc. have successfully

designed and developed 'Made in India' Med-Tech products best suited for local Indian market needs

COMPANY NAME COUNTRY OF

ORIGIN

TECHNOLOGY

SEGMENT1) INDIA PRESENCE PRODUCT INNOVATIONS/ ADAPTATION IN

INDIA PRODUCT VIEW

Smith and

Nephew

UK PA Acquisition of

Sushrut-Alder in

2013

Developed external fixators (externe

Fixateure) for Indian market

customized to patient needs

Johnson &

Johnson

USA CI 3 manufacturing

plants with integrated

R&D centers

Developed knee implants at different

price points specially suited for Indian

market needs

GE

Healthcare

USA IA, DI, CI 3 manufacturing

plants with integrated

R&D centers

Introduced an electrocardiogram (EKG) system that is priced 80%

lower than a similar imported

product available in India Cardiac ultrasound machine (Herz-

Ultraschallgerät) that is ~50% cheaper

than imported one

Philips

Healthcare

Netherlands IA, DI Manufacturing and

R&D at Pune and

Bangalore

Introduced X- ray system (Röntgensystem)- Mobile Diagnost Opta

and cath-lab equipment (Katheterlaborgeräte) designed,

developed and manufactured at India's

Healthcare Innovation Center suited

for local markets as well as exports 1) IA: Instruments and Appliances; DI: Diagnostic Imaging; CI: Consumable and Implants ; PA: Patient Aids


THE LOCAL EXPERTS

RUSSIA

INDIA

CHINA

SOUTH EAST ASIA

MIDDLE EAST

CEE

KOREA


43













G. CONCLUSION

INDEX


GOVERNMENT INITIATIVES – MEDICAL DEVICE INDUSTRY

Source: EAC research, SKP analysis, Ministry for Health and Welfare

Government‟s „Make in India‟ initiative will be supported by new, robust medical device rules, expected to

be in force in Jan 2018 to streamline imports, manufacture, registration, grant of license to operate in India

Sept 2014 Oct 2014 Jan 2015 Dec 2014 Apr 2015 Oct 2016 Jan 2017

Make in India Announcement

Domestic manufacture of

customized indigenous medical

devices will ensure low cost of

manufacturing

Assured purchase by government

health facilities from domestic

manufacturers

Target to reduce the healthcare

delivery cost in next 5-10 years

100% FDI allowed

Under the automatic

route for Brownfield and

Greenfield set-ups

Draft Drugs & Cosmetics Act(Amendment) Bill,

2015 Released

Covers new areas and will 'regulate the import,

manufacture and distribution of devices

Medical Device Regulations

Draft amended after

consultation with industry

stakeholders

Medical Device Regulations

2015

Draft to sets out regulatory

structure for medical devices

– Harmonization of standards

in lines with USFDA1)

– Method for license approval

for import and

manufactured devices

– Post market surveillance

programs

MOHFW2)

notified Medical

Device

Regulations

Formation of Task Force

To identify issues relating

to the promotion of

domestic production

1) US Food and Drug Administration 2) Ministry of Health and Family Welfare

1st Jan 2018

(expected date

of MDP3) 2017

implementation)

2018

3) Medical Device Policy


Source: World Bank, World Economic Forum, Country trade portals

PM MODI GOVERNMENT – 360 DEGREE APPROACH (1/3)

Medical device industry is expected to witness a dedicated 360 degree focus post formation of new

government to boost sector‟s manufacturing capabilities and reduce import dependence of finished goods

Thrust by PM Modi

Government

Separate medical devices

and drug Administration

Building testing facilities,

dedicated medical devices Parks

Modifying the

Inverted Duty Structure

Promoting indigenization and

customization for local needs

Promote India as a

global manufacturing hub

Implementation of robust

medical device rules

Duty Structure

Policy

Support

Regulatory

Framework

Research &

Development

Make in India Infrastructure

INDIAN

MEDICAL

DEVICE

INDUSTRY




Enforcement and implementation of robust medical device policies will boost domestic manufacturing and

bring dedicated focus for sustainable growth and continuous development of medical device industry

FOCUS AREAS KEY INITIATIVES EXPECTED OUTCOME IMPLEMENTATION LEVEL

Make in India

Initiative

100% FDI allowed under automatic route

for greenfield and brownfield projects

Influx of more MNCs to setup a

manufacturing base in India

Low cost of delivery of healthcare services

to customers

Reduce import dependency

Policy Support Creation of independent regulatory body

and office for Medical Device Industry

Act as a single window for necessary

approvals and clearances for investors

Renaming 'Department of

Pharmaceuticals' to 'Department of

Pharmaceuticals and Medical Devices'

Dedicated focus for sustainable growth and

development, industry growth at a CAGR

of more than 11%

Preference of domestically manufactured

medical devices over imports for

government procurement

Improve contribution of industry to

manufacturing GDP

Promote cost-competitiveness and

localization

Implementation of 'National Medical Device

Policy'

Robust system, harmonized standard,

domestic manufacturing friendly




The provision of dedicated manufacturing parks and government run testing labs supported by favorable

duty structure for import of raw materials when implemented will further promote domestic manufacturing

FOCUS AREAS KEY INITIATIVES EXPECTED OUTCOME IMPLEMENTATION LEVEL

Infrastructure

Setting up of medical device parks to provide

conducive infrastructure to manufacture

Ready available dedicated infrastructure for

manufacturers to ease operations and logistics

Setting up of government owned common medical

device testing and certification centres

Implement mandatory testing and certification of

medical devices by recognized institutions by

government of India

Duty Structure Modify the inverted duty structure Promote domestic manufacturing

Minimum or zero import duty on raw materials for

manufacture of devices

Strict prohibitions on import of refurbished

diagnostic equipment to be banned

Ensure quality standards are met and the

equipment are tested and certified before sale and

use

Research and

Development

Development of incubation centres for use by

start-ups for research and innovation

Promote start-ups to develop innovative products

for domestic use in an affordable manner

Provision of seed capital and viability funding for

projects

Enhanced tax benefits for R&D activities targeted

for sustainable solutions


MEDICAL DEVICE REGULATION 2017 – KEY FOCUS AREAS

Source: MOHFW , EAC

New medical device rules was notified by MOHFW1) in Jan 2017 which is in alignment with international

practices focusing on areas that needed robustness to make the system more regulated and structured

NEW MEDICAL DEVICE RULES – FOCUS AREAS

Increased number of Notified Medical

Devices

– Definition: Notified in the official gazette

by Central Government

– Defining authority: Drug Controller

General of India (DGCI)

– Impact: Process for seeking registration

and license of device for intended use in

India based on regulated/ not regulated

product

Classification of Medical Devices

under Schedule M-III

– Definition: Segmentation of „notified‟

devices based on associated risk upon

intended use

– Defining authority: Global

Harmonization Task Force (GHTF)

– Impact: The domestic manufacturers

have to meet risk proportionate

regulatory requirements

Clinical Investigation

– Definition: systematic study of an

investigational device to assess its

safety, performance or effectiveness

– Conforming authority: CDCSO2)

– Impact: New regulations for first time

manufactured or imported products

which is proposed for license in India;

import of non-regulated products

Post Market Surveillance

– Definition: process to collect and

analyze information post launch in

market on compliance, safety,

performance and adaptability of device

– Surveillance authority: CLAA

appointed notified bodies

– Impact: Imported or manufactured

devices bearing license may be subject

to warnings and recalls

2) Central Drugs Standard Control Organization

Registration and licensing of Medical Devices

Definition: Conformity assessment to ensure compliance to safety and quality standards and grant of sale in Indian Market

1) Ministry of Health and Family Welfare

1 2 3

5 4

– Imported Medical Devices

Licensing authority : Central License

Approval Authority (CLAA)

Impact: The imported medical devices

classified under Schedule M-III and

first time imported products will have

to follow required procedural guidelines

– Manufactured Medical Devices

Licensing authority: Central or State

License authority based on classification

Conformity of quality management

practices in alignment with ISO13485

Impact: First time manufactured or

Scheduled M-III classified products



MEDICAL DEVICE REGULATION 2017 – IMPLICATIONS (1/2)

Implementation of new medical device rules will ensure large number of devices to be notified & classified;

mandatory testing and certification protocol to be followed for registering imported devices for use in India

PARAMETER PRESENT STATUS OF REGULATION PRESENT

IMPLEMENTATION LEVEL EXPECTED TURNAROUND

Notified

Medical

Devices

20 out of 5000 medical devices in Indian

market are regulated and notified under

'Drugs and Cosmetic Act' 1940

The number of notified devices is

expected to increase many folds under the

new rules for medical device

Classification

of Notified

Medical

Devices

No defined and structured classification of

notified medical devices followed Unregulated medical device are not being

classified

Under Schedule M-III of medical devices,

notified medical devices will be classified into 4

categories based on associated risk, in

harmonization with international standards by

global harmonization task force

Import of

Medical

Devices

No defined regulation on imports by

'Drug and Cosmetics' Act

A clear registration and license approval

process for import of notified devices will be

regulated for strict adherence

Testing and

Certification

Universal standards and certificates for

safety and quality issued by bodies like the

International Electro technical

Commission are not mandatory

The mandatory certification system will be

introduced and implemented as per new rules

as per adoptions from regulatory standards like

Bureau of Indian Standards (BIS) and ISO as

quality management systems

IMPLICATION OF NEW MEDICAL DEVICE REGULATIONS



MEDICAL DEVICE REGULATION 2017 – IMPLICATIONS (2/2)

The new medical device rules is expected to introduce more measurement parameters e.g. price control,

shelf-life, clinical trial procedures and licensing clause on manufacturers in India

IMPLICATION OF NEW MEDICAL DEVICE REGULATIONS

PARAMETER PRESENT STATUS OF REGULATION PRESENT

IMPLEMENTATION LEVEL EXPECTED TURNAROUND

Clinical Trials Presently the medical devices have to

follow a stringent clinical trial spanning

four phases

Clinical trials will be called clinical

investigations, the rules are relaxed, only a

pilot study to test safety and performance of

device

Shelf-life of

Medical

Device

The period during which a device remains

suitable for its intended use from the date of

its manufacturing is not defined

The new regulation is expected to implement

a shelf-life not exceeding five years from the

date of its manufacturing

Medical

Device Price

Control

No pricing rationale and control Empower National Pharmaceutical Pricing

Authority (NPPA) to develop & monitor

prices Develop a win-win pricing policy to ensure

sufficient return on investment by investors

and affordability by customers

Manufacture

of Medical

Devices

The company to intimate the manufacturing

of notified medical device is mandatory

A defined registration and license approval

procedure for manufacture of medical device is

mandated by the new regulation


AMERICAS EUROPE ASIA

USA Canada Russia Japan India

Regulation of

medical devices

The Federal Food Drug

and Cosmetic Act Therapeutic Products

Division of Health

Medical Device

Directive

Federal Service for

Control over Healthcare

& Social Development Pharmaceuticals Medical

Devices Agency

Central Drugs

Standard Control

Organization

Pre & post market

supervision

Center for Devices and

Radiological Health

Notifying Bodies-

Autonomous

private enterprises

Federal Agency for

Technical Regulation &

Metrology

Central Licenses

Approving Authority

Risk

classification

Three-tiered

system (Class I,

Class II, Class III)

Four-tier

classification

(Class I, Class II,

Class III, Class IV)

Four-class

scheme (Class

I (including Is

and Im), IIa, IIb

and III)

Four classes (Class

I, IIa, IIb and III)

General- Class I

Controlled Class II

Specially controlled-

Class III and IV

Four-tier

classification

(Class A, B, C and

D)

Approval system

Class I: General

controls

Class II: Pre-

market notification

510(k) process

Class III: Need

premarket approval

(PMA)

Class I: Only post

market monitoring

Class II: Safety,

efficacy, quality and

post market control

Class III & IV:

Premarket quality,

safety assessment

Need to

exhibit CE

marking on

products to

ensure devices

are safe and fit

for their

intended use

Need to fulfill

sanitary and

epidemiological

standards

Class I: Need a

device notification

Class II: Need a

device certificate

Class III and IV:

Need a device

approval

Class A: Self-

conformity

assessment

Class B, C, D:

Assessment by

notifying bodies

51 Source: EAC research

GLOBAL REGULATORY COMPARATIVE – INDIA AND WORLD

India‟s upcoming medical devices regulations are expected to find synergies with those of global

economies across Americas, Europe and Asia

REGION/

COUNTRY PARAMETER

India‟s Global Harmonization Task Force (GHTF) is set to form a dedicated medical device regulatory body as per the upcoming regulations, which will

exhibit synergies with international regulatory framework/ standards

India regulatory synergy with global


MEDICAL DEVICE 2017 – REGULATORY FRAMEWORK

Source: Central Drugs Standard Control Organization (CDSCO), EAC research

Central Drugs Standards Control Organization(CDCSO) is the regulatory body which defines the

framework and guidelines for imports, manufacture and registration of medical device in India

Ministry of Health and

Family Welfare

License

Approval

Authority

MEDICAL DEVICE REGULATION ENFORCEMENT RESPONSIBILITY GOVT. THRUST FOR REGISTRATION

Central License

Approval Authority

(CLAA)

Regulatory

Body

Central Drug Standards

Control Organisation

(CDSCO)

In 2006, strict compliance of medical

device regulation was initiated on imports

Regulation of medical devices under

„Drugs and Cosmetics Act 1940‟

Setting „Medical Device Regulations‟ for

import, manufacture, distribution and sale

„Registration‟ of „newly‟ manufactured in

India or imported medical devices

Ensures records of listed

vendor both Indian, foreign

MNC and importing agent

Lay emphasis on after sales

obligations of the companies

Post market surveillance

Enforce orders to defaulters

and issue warnings for

recalls and replacements

Renewal system in place for

registration with updated

information and changes

Classification of medical devices under

Schedule M-III

Enforce safety standards on devices

Conduct post-market surveillance

Issue warnings and recalls


MEDICAL DEVICE 2017 – CLASSIFICATION

Status-quo: The sector is largely unregulated with only 20 products notified and regulated as medical device with

upcoming medical device classification expected to bring in comprehensive regulatory framework

UPCOMING MEDICAL DEVICES CLASSIFICATION

Source: Central Drugs Standard Control Organization (CDSCO)

The new medical device rules will classify notified medical devices into four categories – Class A, B, C and

D based on associated risk of intended use thus formulating a comprehensive regulatory framework

Key Segments under Regulation Schedule M III- Notified Medical Device Classification

Disposables:

Disposable Hypodermic Syringes,

Hypodermic Needles, Perfusion Sets

Implants:

Cardiac Stents, Drug Eluting Stents,

Intra Ocular Lenses, Bone Cements,

Heart Valves, Orthopaedic Implants,

Internal Prosthetic Replacements

Classification Device Definition

A

B

C

Low risk devices

Self conformity assessment, registration

Low to moderate risk devices

CLAA1) to perform the assessment

Moderate to high risk devices

CLAA1) performs conformity assessment

D Potential unreasonable risk of illness

In addition to CLAA1) requires clinical

trials and investigations

1) Central Licensing Approval Authority

Consumables

and Implants

Industry

Segments

Patient Aids

Instruments

and Appliances

Diagnostic

Imaging

Instruments and appliances:

In Vitro Diagnostic Devices for HIV,

HBsAg and HCV

Catheters, I.V. Cannulae, Scalp Vein

Set


REGULATORY VALUE CHAIN – IMPORT V/S MANUFACTURE

Source: Central Drugs Standard Control Organization (CDSCO)

Import or manufacturing of medical device in India requires importer/ manufacturer to undergo strict

regulatory processes involving registration, permissions, licensing of the medical device

Imp

ort

er

Man

ufa

ctu

rer

DEVICE NOTIFICATION

AND CLASSIFICATION

Determining whether

the product requires

registration

REGISTRATION

Submission of regulatory

dossier for Registration

Certificate (RC)

LICENSING

Obtaining license to

import/ manufacture

POST-MARKET SURVEILLANCE

Marketing/ sale/

distribution and Post-

Market Surveillance

Devices not specified as

NMDs are required to

undergo registration

If product not registered in

US, EU, Japan, Canada

or Australia importer to

perform clinical trails

Importer to have India

representative as contact

for inspection authorities

Comprehensive dossier

preparation as per

CDSCO to begin the

registration process

No registration need for

notified product imported

& processed for exports

License application

submitted- DCGI, CDSCO

Requisite fee: 1,000

USD/ medical device

Once RC, import license

are sought, then product

can enter Indian market

CLAA conducts post-

market surveillance to

oversee conformity (right

to license cancellation)

Devices not specified as

NMDs are required to

undergo registration

process

Classification of notified

devices as Class- A, B,

C, D (as per the degree of

risk)

Compilation of dossier

preparation to be done

by the manufacturer as

per the proforma

provided by the CDSCO

to obtain the RC

License to manufacture

medical device to be

sought

Requisite fee: 1,500 USD/

manufacturing premise

Self-compliance by

Class-A medical devices

manufacturers

Stockiest, retail and

whole sellers to also

obtain sale licenses from

state licensing authorities

CLAA conducts post-

market surveillance to

oversee conformity (right

to license cancellation)

CLINICAL TRAILS

Obtaining license to

perform clinical trials

Permission to import

new NMD for clinical trial

If product is not a

notified product,

importer is required to

perform clinical trials

prior to imports

License to manufacture

a NMD for the purpose of

test/ analysis when no

manufacturing

Note: NMD: Notified Medical Device, CLAA: Central Licensing Approval Authority


THE LOCAL EXPERTS

RUSSIA

INDIA

CHINA

SOUTH EAST ASIA

MIDDLE EAST

CEE

KOREA


55













G. CONCLUSION

INDEX


July 16: Poly Medicure to set up facility at Faridabad

with investment of 8 mio EUR

August 16: Alere Medical Pvt to set up facility in

Maharashtra

August 16: Nipro to build a new plant in India that will

double its dialysis equipment production

Recent Announcements

Chennai: HLL‟s medical park of 300 acres (PPP model)

- approved by cabinet in Oct 2016

Andhra Pradesh MedTech Zone, Vizag: 270 acres -

40 companies had given expression of interest letters to

Andhra Pradesh government – announced August 2016

Maharashtra: Planned at Nagpur in Mihan SEZ, with

an area covering 200 acres- project currently in the

conceptualization stage

56

FUTURE OUTLOOK – INDIAN MEDICAL DEVICE INDUSTRY

DEMAND FORECAST 2015-20 (BLN EUR)

PLANNED INVESTMENTS 2020

Medical device industry is expected to grow at 11% CAGR during the period 2015-20 to reach at ~8 mio

EUR supported with planned investments from Government for industrial parks and company investments

+11%

2020

7.8

34%

17%

20%

4.6

30%

33%

2015

21%

19%

27%

+15%

+10%

+8%

+12%

Source: NATHEALTH - Healthcare Federation of India

Patient aids and others

(Hilfsmittel und Sonstiges)

Consumables & implants (Verbrauchsmat. & Implantate)

Diagnostic Imaging (Diagnostische Bildgebung)

Instruments & Appliances (Instrumente und Geräte)

I

II

III

IV

Medical Parks Planned


INSTRUMENTS AND APPLIANCES – OUTLOOK 2020

Instruments and appliances segment- largest segment (33% share) characterized by high imports (80%)

to witness growth of ~12%- majorly driven by demand for ophthalmic, therapeutic & sterilizing equipment

Source: NATHEALTH - Healthcare Federation of India, EAC research

Ophthalmic Instruments

(Ophthalmologische Instrumente)

Dental

Products (Dentalprodukte)

Therapeutic Appliances

(Therapeutische Geräte)

Others

Sterilizers (Sterilisatoren)

INDUSTRY SEGMENTS KEY HIGHLIGHTS/ TRENDS DETAILS

Instruments and appliances

pertaining to ophthalmic use

All forms of medical and

surgical sterilizers

Dental drills, dental chairs

and dental X-Ray and other

instruments and supplies

Blood pressure monitors and

apparatus for endoscopy,

dialysis, transfusion etc.

Mechano-therapy apparatus

and therapeutic respiration

apparatus (Atmungsapparate)

2.6

+12%

2020

55%

2%

13%

11%

19%

2015

1.5

60%

3% 10%

11%

16%

+17%

+16%

+1%

+10%

+12%

Largest segment in the medical

devices industry: 33% share

Characterized by high imports

(80%)- depicts great potential for

low/ mid-end systems purchased by

small hospitals and rural facilities

Key segments driving growth for

instruments and appliances:

Ophthalmic instruments

Therapeutic appliances

Rising health issues- cataract/

retinal disease and thereby need

for complex surgeries to drive

future demand majorly for

ophthalmic, therapeutic and

sterilizing equipment


DIAGNOSTIC IMAGING – OUTLOOK 2020

Diagnostics imaging- the 2nd largest segment (30% share) in the Indian medical device sector to witness

robust growth owing to low market penetration thereby providing affordable cost imaging solutions


Imaging Parts

and

Accessories (Diagnostische

Bildgebung)

Electro-

Diagnostic

Apparatus (Elektrodiagnose

apparate)

Radiation

Apparatus (Strahlungsappa-

rate)

KEY HIGHLIGHTS/ TRENDS DETAILS

Contrast media

(Kontrastmittel), medical X-ray

films (flat and rolled)

(Röntgen), X-ray tubes

(Röntgenröhren) and other

imaging parts/ accessories

Electro-cardiographs (EKG), Ultrasound, MRI

(Kernspintomographie), scintigraphic (Szintigrafen) and

other electro-diagnostics

CT scanners

(Computertomographie), X-ray

(Röntgengeräte) and other

A, B, C ray apparatus

+8%

2020

2.1

26%

30%

43%

2015

1.4

27%

36%

36%

+12%

+5%

+7%

2nd largest segment in medical

devices industry: 30% share

Low market penetration & rising

medical procedures to lead to

technological shift to digital and

affordable cost imaging solutions


consumable and implants:

Imaging parts & accessories

Radiation apparatus

Diagnostics demand to be

grossly fragmented between

three major proponents:

Corporate hospitals

Research institutions

Private imaging clinics

INDUSTRY SEGMENTS


CONSUMABLES AND IMPLANTS – OUTLOOK 2020

Consumables and implants segment- only trade surplus segment, accounting for ~20% of the overall

medical device market exhibits high growth potential owing to strong manufacturing competitiveness


Syringes-Spritzen,

Needles-Nadeln,

Catheters- Katheter

Bandages

(Bandagen) and

Dressings (Verbandsmittel)

Suturing

Materials (Nahtmaterialien)

Other

Consumables (sonstige

Verbrauchs-

materialien)


Syringes, tubular metal

needles, needles for sutures,

other needles, catheters,

cannulae etc.

Medical dressings

(adhesive) and medical

dressings (non-adhesive) (medizinische Verbandsmittel)

All forms of suturing

materials

Stents (Gefäßstützen), blood-grouping reagents

(Blutgruppenbestimmung), first aid boxes and kits, ostomy products (Stomaversorgung)

and surgical gloves

15%

1.5

2020

+10%

6%

10%

68%

2015

0.9

14% 5%

11%

70%

+10%

+13%

+12%

+9%

Share in the overall medical

devices industry: 20%

Companies focusing on low/ mid-

tech products to gradually shift to

develop design & manufacturing

capabilities for high-tech products


consumable and implants:

Suturing materials

Other consumable equipment

Local consumption coupled with

strong exports demand to drive

demand:

Low cost products have been

designed (par in quality terms)

for local and export demand

INDUSTRY SEGMENTS


PATIENT AIDS AND OTHERS – OUTLOOK 2020

Patient aids segment accounting for ~17% of the total medical device market to be the fastest growing

segment (~15%), where rising health issues- osteoporosis, osteoarthritis & obesity to drive future demand


Orthopedics

(Orthopädie) and

Prosthetics (Prothetik)

Portable

Aids

Others


Fixation devices (Fixierungen),

artificial joints (künstliche

Gelenke) and other artificial

body parts (künstliche

Körperteile)

Hearing aids (Hörgeräte),

pacemakers

(Herzschrittmacher) and other

portable aids

Wheelchairs and hospital

furniture 12%

1.6

2020

+15%

42%

46%

2015

0.8

11%

41%

48%

+14%

+16%

+18%

Share in the overall medical

devices industry: 17%

Patient aids and others to be the

fastest growing segment (~15%)

of all the four segments in the

medical device industry


patient aid equipment:

Wheelchairs & hospital furniture

Portable aids

Rising health issues- OOO to

drive demand (majorly for

orthopedics and prosthetics):

Osteoporosis

Osteoarthritis

Obesity (Fettleibigkeit)

INDUSTRY SEGMENTS


THE LOCAL EXPERTS

RUSSIA

INDIA

CHINA

SOUTH EAST ASIA

MIDDLE EAST

CEE

KOREA


61













3. CASE STUDY: INDIAN MEDICAL DEVICES INDUSTRY

G. CONCLUSION

INDEX


GROWTH DRIVERS AND INHIBITORS – MEDICAL DEVICES


India‟s thrust to reduce import dependency and strong demand factors driving focus towards

„Indigenisation‟ of medical device industry, rightly backed by the planned „Medical Device Policy‟

GROWTH DRIVERS AND INHIBITORS

Trends and Inhibitors

– Increased investments and international collaborations: Indian manufacturers collaborating with foreign MNC„s for R&D,

marketing and manufacturing

Trivitron – Diasorin for R&D of IVD devices, Skanray acquired priced engineering and C&T medical and systems, Smith and

Nephew acquired Sushrut Adler, Cipla acquired Jay Precision Pharma

– Adapting to local requirements: Re-engineering of global product portfolio to improve affordability and utility

– Medical equipment financing: To address affordability of high value equipment GE, Siemens and Philips have been providing

cheaper equipment financing options than debt financing companies

– Inappropriate regulatory framework: Lack of comprehensive regulatory framework and policies supporting local manufacturing

Growth Drivers

– Demand factors: Rising income levels, an ageing population, increasing insurance coverage, under penetrated hospital sector

– Government thrust: Sector opened up to 100% FDI in 2015 and National Medical Device Policy is under progress

– Newer market access for exports: India developed low cost products (at par to global quality) to result in creating niche market in

many regions globally

“The National Medical Device Policy (likely to be finalized by 2017), to promote indigenous medical devices industry, provide for

suitable ecosystem for innovation and safeguard the industry against tariff barriers”- Mr. Rajiv Nath, Forum Coordinator, AIMED1)

1) Association of Indian Medical Devices Industry


THE LOCAL EXPERTS

RUSSIA

INDIA

CHINA

SOUTH EAST ASIA

MIDDLE EAST

CEE

KOREA


63













G. CONCLUSION

INDEX


SEGMENT/ TECHNOLOGY ATTRACTIVENESS – MEDICAL DEVICES

Source: AIMED, EAC research and analysis

Characterized with inadequate local manufacturing coupled with huge imports burden ~2.8 bln EUR,

makes IA and DI as highly attractive segments with significant investment attractiveness for new entrants

DI – DIAGNOSTIC IMAGING

Demand for low cost imaging solutions coupled with

high imports of ~1.1 bln EUR, DI exhibits significant

potential for locally developing imaging products

PA – PATIENT AIDS AND OTHERS

High growth segment (~15% CAGR until 2020)

characterized by marginal imports of ~128.8 mio EUR,

exhibiting adequate local manufacturing capabilities

CI – CONSUMABLES AND IMPLANTS

Adequate local manufacturing capabilities coupled

with export competitiveness to key export markets, CI

offers limited investment potential

IA – INSTRUMENTS AND APPLIANCES

Highly attractive segment considering huge imports

of ~1.7 bln EUR exhibiting significant local

manufacturing potential across product categories

Imports share1)

80%

Imports share1)

75%

Exports share2)

50%

Exports share2)

37%

Imports share1)

66%

Imports share1)

50%

Exports share2)

47%

Exports share2)

58%

1) Level of exports vs local production 2) Level of exports vs local consumption

IA

DI

CI

PA

HIGH LOW

HIGH LOW

Attractiveness

Attractiveness

HIGH LOW

HIGH

LOW

Attractiveness

Attractiveness


THE LOCAL EXPERTS

RUSSIA

INDIA

CHINA

SOUTH EAST ASIA

MIDDLE EAST

CEE

KOREA


65













G. CONCLUSION

INDEX


MARKET ENTRY OPTIONS – INDIAN MEDICAL DEVICE INDUSTRY

Indian medical device industry provides with greenfield, brownfield and strategic alliance entry options

where new entrant to highly benefit by leveraging local manufacturing expertise backed right govt. support

Source: EAC

MARKET ENTRY OPTIONS IN INDIAN MEDICAL DEVICE INDUSTRY

GREENFIELD ENTRY BROWNFIELD ENTRY STRATEGIC ALLIANCES

International medical device companies looking to explore the Indian market may initially acquire/ need a distributor to

market their products, whereas companies that intend to take advantage of low-cost manufacturing to export to other

neighboring countries/ major export markets may set up/ acquire a manufacturing plant in India

New entrants/ smaller players may initially prefer entering into alliances with domestic companies and gradually scale up

whereas mature/ larger players may opt to enter directly through brownfield or greenfield investments.

Organic growth-

Standalone basis

Alliance with a

Manufacturer- Distributor

Alliance with a Manufacturer-

Contract Manufacturing

Joint

Ventures/ Partnership

Mergers and

Acquisitions


THE LOCAL EXPERTS

RUSSIA

INDIA

CHINA

SOUTH EAST ASIA

MIDDLE EAST

CEE

KOREA


67













G. CONCLUSION

INDEX

EAC I MIIM I Opportunities in the Medical Equipment Market India I April 2017/ 68 68 Source: EAC research

INVESTMENT HIGHLIGHTS – RECENT DEALS AND TRANSACTIONS

RECENT INVESTMENTS, 2014-2016

“ France-based medical devices

manufacturer Peters Surgical SAS

(55 mio $ revenue 2015) has

acquired controlling equity stake in

Gurgaon-based Stericat Gutstrings

Pvt Ltd for ~9.4 mio EUR (multiple:

approx. 2x factor sales 2015)”

“ Venture capital firm Accel

Partners (Global VC firm / 6 bln

USD assets, seeds and early birds

investments) invested in Consure

Medical Pvt Ltd (fresh funding

round healthcare devices maker)

during May‟ 16”

“ Tricog Health, which has built

technological devices to detect a

heart attack within minutes has

raised funds from Inventus Capital

Partners and Blume Ventures (US/

India VC firm invests in start-

ups)”

“ Cipla (2.1 bln $ 2015 // API &

Biotech) picking 60% stake in

respiratory devices company Jay

Precision Pharma who is an

existing supplier of respiratory

devices and fecal incontinence

management of >12 mio EUR”

“ BPL Medical (Cardio, Mother &

Child Care, Nursing stations, etc.)

seeks for overseas entering

technology verticals; Goldman

Sachs-invested (16 mio EUR)

healthcare devices maker steps up

its expansion plans”

2014 2015

2016 2016 2016

M&A Private equity

Financial firms and MNCs are continuously investing and re-investing in the promising Medical device

sector, „Make in India‟ and implementation of stringent rules are initiatives by govt.to back the investments

Excerpt

“ Home healthcare services provider

Portea Medical (service company

providing home visits // 8 mio $

revenue 2015) has acquired home

medical equipment provider Health

Mantra India Pvt Ltd for un-

disclosed amount on cash/ stock”

2016


SUCCESS STORIES – INDIAN MEDICAL DEVICES


Growing presence of healthcare MNCs in India can be attributed to immature, fast growing medical device

industry with thrust on domestic manufacturing, favorable demographics, targeting right product segment

KEY SUCCESS FACTORS

Target consumers: mid-tier Indian

market

High quality cost-effective solutions

Selection of „Right‟ location

Lower operational cost and

competitive technology

„Target‟ had strong presence in

domestic market and extensive

export distribution network

Providing healthcare solutions in

mid-price segment product for

accessibility in affordable manner

ENTRY RATIONALE/ STRATEGY

Immature and growing

healthcare market in India

Growing trauma segment

Tapping India‟s world class, low

cost manufacturing potential to

leverage local market and exports

Expand in emerging economies

by further strengthening surgical

closure business

Immature and growing

healthcare market in India

High growth potential segment

COUNTRY OF

ORIGIN

United

Kingdom

USA

France

Netherlands

COMPANY

Greenfield Brownfield

MODE OF

ENTRY


CASE STUDY 1 – INDIAN MEDICAL DEVICE INDUSTRY

Source: EAC

Smith & Nephew- UK, with the intent to enter India through brownfield route acquired Alder Mediequip in

2013 leveraging benefits of established platform thereby targeting competitive cost effective solutions

INITIAL SITUATION

COMPANY Smith & Nephew PLC

COUNTRY OF ORIGIN

ESTABLISHED

REVENUE/ EMPLOYEES

London and Hull, UK

1856

~4.3 bln EUR/ 14 thsd employees

COMPANY

INDIA LOCATION

ESTABLISHED

ACQUISITION PRICE

INDIA ENTRY

Brownfield entry: Acquired Adler Mediequip

along with its brands & assets of Sushrut

Surgicals- a leader in mid-tier, orthopaedic

trauma products for the Indian market

MODE OF

ENTRY Well-established platform to develop/ provide

products to mid-tier Indian market and export

Entry point to India‟s growing trauma segment

Access to experienced sales force of ~170

ENTRY RATIONALE/

STRATEGY

INDIA BUSINESS OPERATIONS AND KEY SUCCESS FACTORS

SEGMENT/ PRODUCT SCOPE FUTURE TARGETS/ STRATEGY KEY SUCCESS FACTORS

Segment scope: Consumables and implants

Product scope includes:

– Trauma implants and instrumentation

– Spine and limb salvage portfolios

Sushrut-Adler‟s high-quality, cost-effective

capability, supplemented by Smith &

Nephew‟s domain knowledge & experience,

forms a cornerstone for sustainable growth in

the emerging and international markets

Sushrut-Adler‟s innovative approach of market-

driven „Design for Use‟ combined with „Design

for Manufacture‟ to largely benefit Smith &

Nephew to launch many cost-effective solutions

that could directly compete with those of MNCs

INDIA

PRESENCE

PRODUCT FOCUS Orthopaedic products PRODUCT FOCUS

Smith & Nephew Healthcare

Mumbai, Maharashtra

Acquired Adler Mediequip in 2013

~21 mio EUR

Orthopaedic trauma products



Source: EAC

Hollister Inc- US, exhibiting strong India entry willingness preferred greenfield entry route by setting world

class manufacturing facility in Haryana leveraging locational benefits to target local/ exports potential

INITIAL SITUATION

COMPANY Hollister Inc.

COUNTRY OF ORIGIN

ESTABLISHED

REVENUE/ EMPLOYEES

Libertyville- IL, US

1948

~650 mio EUR/ 2,400 employees

COMPANY Hollister Medical India Pvt. Ltd.

INDIA LOCATION

ESTABLISHED

INVESTMENT

Rewari, Haryana

Set up manufacturing plant in 2008

~35 mio EUR (~40.5 thsd sqm land)

INDIA ENTRY

Greenfield entry: Set-up world-class

manufacturing facility at Rewari, Haryana in

2008 in partnership with HSIIDC- Haryana

Industrial & Infrastructure Development Corp.

MODE OF

ENTRY Export demand: India‟s world class, highly

sophisticated manufacturing facility to cater to

medical device demand from local and

export markets

ENTRY RATIONALE/

STRATEGY


SEGMENT/ PRODUCT SCOPE FUTURE TARGETS/ STRATEGY KEY SUCCESS FACTORS

Segment scope: Consumables and implants


– Mother care, continence care

– Other critical care and wound care products

Benefitting aspects: Plant had been set up

after considering all benefitting aspects such as

labour, technology and copyright issues

Zeroing-in: Haryana was decided basis facilities

and environment (not even available in China)

Hollister plans to further tap the export

potential for mother care, continence care

and other medical products manufactured at

India manufacturing site

PRODUCT FOCUS Ostomy & continence care products PRODUCT FOCUS Mother care and continence care

INDIA

PRESENCE



Source: EAC

Peters Surgical acquisition of controlling stake in Stericat Gutstrings is the group‟s internationalization

strategy to enter into promising Indian Medical Device market which is poised to grow at 15% CAGR

INITIAL SITUATION

COMPANY Peters Surgical SAS

COUNTRY OF ORIGIN

ESTABLISHED

REVENUE/EMPLOYEES

Bobigny, France

1926

60 mio EUR

COMPANY, ESTABLISHED Peters Surgical India, 1983

INDIA LOCATION

ACQUISITION

STAKE/ DEAL

Gurgaon, Haryana

Stericat Gutstrings in 2014

77.5%/ 9.4mio EUR

INDIA ENTRY

Brownfield: Peters Surgical SAS acquired controlling equity stake in Stericat Gutstrings- engaged in manufacturing of absorbable & non- absorbable surgical sutures as per USP1) & EP1)

MODE OF

ENTRY Internationalization strategy with by entering

into emerging markets such as India

Strength the positioning as global specialist in

surgical closure

ENTRY RATIONALE/

STRATEGY


PRODUCT SEGMENT SCOPE FUTURE TARGETS/ STRATEGY KEY SUCCESS FACTORS

Segment scope: Consumables and

disposables


– Absorbable and non-absorbable surgical

sutures

Leveraging Stericat‟s strong presence in

domestic market and extensive export

distribution network complemented with

Peters Surgical brand and rank will foster

sustainable growth internationally

The medical device industry is growing at a

CAGR of 15% in India which translates as

immediate target for Peters Surgical after

having acquired controlling stake and direct

presence in market for surgical closures

PRODUCT FOCUS Disposable surgical instruments PRODUCT FOCUS Surgical sutures

1) USP- United States Patent. EP- European Patent

INDIA

PRESENCE



Source: EAC

Philips‟ growing presence in high-growth Indian healthcare market is a result of winning strategy, focusing

on emerging economies providing healthcare solutions in mid-price segment in affordable manner

INITIAL SITUATION

COMPANY Philips Healthcare

COUNTRY OF ORIGIN

ESTABLISHED

REVENUE/EMPLOYEES

Amsterdam, Netherlands

1891

10.32 bln EUR/ 13,200

COMPANY, ESTABLISHED Philips India Healthcare, 2008

INDIA LOCATION

TARGET

ACQUISITION

Pune, Maharashtra

Alpha X-Ray, Meditronics in 2008

INDIA ENTRY

MODE OF

ENTRY Investment in high-growth areas (Imaging

systems) while delivering on commitment to

supply affordable healthcare solutions in

emerging markets, India in particular

ENTRY RATIONALE/

STRATEGY


PRODUCT SEGMENT SCOPE FUTURE TARGETS/ STRATEGY KEY SUCCESS FACTORS

Segment scope: Equipment and instruments


– General and cardiovascular X- rays

– Surgery equipment (present focus for

portfolio extension in India)

Target segment (X-ray) constitutes one-fifth

of healthcare equipment business globally

Growth areas: Emerging markets especially

India where healthcare hasn't matured

Healthcare accessible in affordable manner

Innovative value-added integrated mid-price

solutions for easy affordability by consumers Portfolio extensions through organic

investments, partnerships and merger and

acquisitions in emerging markets

PRODUCT FOCUS Imaging and diagnostic systems PRODUCT FOCUS X- Ray systems

Undisclosed

INDIA

PRESENCE

Brownfield: Acquired Alpha X- Ray and

Meditronics in 2008

Greenfield: Start of imaging system product-ion

facility and Healthcare innovation Centre


Source: EAC

CONCLUSION

Indian medical devices sector characterized with robust growth of 11% CAGR by 2020 exhibits significant

manufacturing development and investment potential across IA and DI segments backed by govt. thrust

IMPORTS DRIVEN INDUSTRY –

EXHIBITING SIGNIFICANT GROWTH POTENTIAL

“Indian medical devices sector valued at

4.6 bln EUR and driven by imports, to

grow robustly at ~11% CAGR until 2020

exhibiting significant manufacturing

development and exports potential”

INSTRUMENTS/ APPLIANCES AND DIAGNOSTIC

IMAGING – KEY GROWTH SEGMENTS

“Inadequate manufacturing capacity/

capability coupled with huge imports,

makes „Instruments/ Appliances- IA‟ &

„Diagnostic Imaging- DI‟ as key segments

with significant investment potential”

GOVERNMENT THRUST – KEY GROWTH DRIVER

“Upcoming Medical Devices Policy to

streamline imports (changed import

taxation), manufacturing (increased process

control), mandatory registration to be the key

growth drivers besides healthcare related

infrastructural investments”

EQUIPMENT MARKET IN INDIA OPPORTUNITIES IN MEDICAL


EAC OFFICE SHANGHAI

EAC - Euro Asia Consulting PartG

✉ Heimeranstrasse 37

80339 München

✆ +49 89 92 29 93-0

@ [email protected]

EAC - Euro Asia Consulting

✉ Sunyoung Centre, Rm. 801 - 398 Jiangsu Road

200050 Shanghai/ China

✆ +86 21 63 50 81 50

@ [email protected]

EAC OFFICE MUMBAI

EAC - Euro Asia Consulting Pvt. Ltd.

✉ 306-310 Peninsula Plaza A/16, Veera Industrial Estate

Andheri (West), 400053 Mumbai / India

✆ +91 22 26 74 24 91

@ [email protected]

EAC - Euro Asia Consulting OOO

✉ Melnitskiy Per. 1

105120 Moscow / Russia

✆ +7 495 6401 013

@ [email protected]

EAC OFFICE MOSCOW

WHERE YOU CAN FIND US – EAC AROUND THE GLOBE

EAC HEADQUARTERS MUNICH

75


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and Family Owned Enterprises

MIIM PROJECT TEAM:

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