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Do you manufacture your medical devices in India? Would you?

In late December, the Indian government allowed 100 percent Foreign Direct Investment (FDI) under automatic route for medical devices to encourage investors to manufacture in the country.

For the first time, a foreign investor will not have to seek the permission of the Foreign Investment Promotion Board (FIPB) to acquire 100 percent of an existing company or set up a new manufacturing unit in the medical devices sector.

See for the full article.

Does this policy change affect your view of manufacturing in India?

Please share your thoughts and experiences with us in today’s comments.

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Meet Health Economist Beth Brooks

Beth is a 15-year health economics veteran and our newest Medical Devices Group Advisory Board member.

She provides product life cycle value analysis and economic insight to the medical technologies industry and can answer your questions on reimbursement.

At http://medgroup.biz/reimbursement you can ask her questions about:
• Health economics strategy and tactics
• Reimbursement strategy and tactics
• Pricing strategy
• Value-focused presentations to facilities and to payers

And meet Beth in person at the 10x event in San Diego this May: http://medgroup.biz/About-10x

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Make it a great week.

Joe Hage
Medical Devices Group Leader

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Jonathan Wacks
Vice President Of Quality at Flexan, LLC
I’ve been involved in the QA and Purchase of Indian PCB’s, Power Supplies, Contract Software, and other items for US assembly of electronic medical devices. Let’s be real-in terms of China, US, or EU supply chain, you still have to kiss a lot of “frogs” before you find the “princes”. In India, due to the state of infrastructure, as well as the gov’t and business culture, an even greater effort is needed to achieve success. As far as finished devices and drugs are concerned, India in my mind is still a “not quite yet”. As much as folks complain about FDA, the imposed and ENFORCED regulation made US food, drugs, and devices the envy of the world (but certainly not the cheapest). Given the disastrous audit results by FDA in India, it’s clear that the Indian Government simply cannot be trusted to regulate its home device and drug manufacturers. Without that culture of compliance imposed within these life-sustaining industries, it will be difficult to attract and to build the infrastructure required for India to become a world leader. No way.

Austin Walters
Bringing Innovation to Life in Healthcare
This comment log has been a most insightful read, thank you everyone for sharing your experiences.

I am not involved directly in the manufacture of medical devices, but I have written about several high quality indigenous medical devices that have been manufactured in India. Umashankar already mentioned the TTK Chitra Heart Valve. There’s also the Kalam-Raju stent as another good example of a Class III medical device made in India. Both of these products crashed import prices to about 30% of what they were before.

Then there are devices like GE Healthcare India’s Vscan (handheld ultrasound machine) and Discovery IQ (CT/PET scanner) that are made in India, and now being sold around the world. These products are of the highest possible quality.

From my perspective, what’s important to keep in mind is that it’s neither possible nor desirable to ‘avoid’ local partnerships when setting up R&D / manufacturing operations in India. As Tarun Khanna and Krishan Palepu write in their book on doing business in emerging markets, taking a ‘Get Rich Quick’ approach to India or China is foolish and dooms a project to failure. Success in these markets requires COMMITMENT, PRESENCE, and PATIENCE as well as a host of local partnerships, and lots of training. In other words, it requires the same thing success requires anywhere else. ‘Email management’ won’t cut it.

My articles on the above companies are located in this database, which contains nearly 50 examples of indigenous medical device innovations that may succeed around the world: [http://www.globalhealth.care/p/running-list-of.html|leo://plh/http%3A*3*3www%2Eglobalhealth%2Ecare*3p*3running-list-of%2Ehtml/uw38?_t=tracking_disc] . Message me if you know of others!

Anil Bhalani
Consultant – Regulatory Affairs/Quality Assurance
Lots of good thought here.

No investor will place a penny in India (including the Melinda and Bill Gates Foundation) without a return on investment. Currently the Modi government is having trouble with the opposition that controls the Upper House to get any meaningful reform through. He will have to wait 2 years by which time the people of India, who have become used to handouts may elect another party. If Indians do not give a crap, why would a foreign investor?

A company who is going to invest in India has to think long term versus an investor who puts money through mutual funds. The company in my opinion will only do this if it provides market penetration in the region or needs a cheaper manufacturing advantage or needs the labor and technical personnel.

As for India. I believe it has access to everything (1) the money (2) the technology (3) training facility (4) the labor, including technical labor. What it does not have is the correct work attitude and a will to do right.

Money: There is just too much, it is tucked away in mattresses. Trust me on this, I have personally seen too many of those mattresses with my very own eyes.

Technology: It built nuclear products – both civil and military (it lacked the raw material resources) , Tata’s built the first indigenous car in 1986 (which Congress did not allow to be manufactured for another 10 plus years) – Look no farther than North Korea’s beautiful cities, built with all the opposition from the world. If they can build 3, India can build 30.

Training Facilities: My experience is that the high school, the engineering school and the first company training I received (International General Electric), were far better than what I have experienced in the USA. We just have too few of them.

Labor: Look around the USA, Indian technical labor has been successful and the Indian labor has been even more successful financially.

Attitude/Work Ethic: It will be another generation or two to beat the US work ethic and its attitude to the future of mankind. This is the single thing that will keep USA as the World Leader while Indians looking at PM Modi to give them everything while the local governments and state governments sleep.

Bottom Line: Invest in the USA unless you will loose out on business elsewhere, forcing you to work there. I have personally brought back manufacturing from Mexico to Orange County, California (probably one of the highest cost of living area in USA) resulting in savings and dramatic improvement in quality.

Suresh Navandar
Designated Partner at Navandes LLP
In my opinion, Present technology used to manufacture medical equipment’s are far behind to machine tool Industries. I have develop some products with these modification, products are better accepted in market.
Since manufacturing is volume game, we have to design with standard parts design.
I wanted to add, Indian population is so high, any manufacturer can sell 5-6 times more than present volume equipment’s in India alone, if price it wisely.

Chris Carriere
Managing Director, Hesira Med Inc. (HMI)
One of the above responses mentioned India’s generic drug industry. I wish to add some points related to India’s $15-Billion generic-pharmaceutical industry:

– Labour costs are roughly one-tenth of those in Canada.
– India is the 2nd largest exporter to Canada for finished prescription products.
– 1 in 20 of Canada’s finished drugs are made in India, roughly 20 million prescriptions a year.
– Heath Canada launched a new ‘Inspection Tracker’ website this month listing concerns about standards at pharmaceutical factories, 11 of the 15 plants on the list are in India, 7 of them are now subject to import restrictions.
– In 2015 Health Canada has recalled 10 drugs on the market because of quality defects. 4 of them were made in Indian factories.
– Health Canada has halted imports from Dr. Reddy’s & IPCA plants in India.
– American authorities have prosecuted Ranbaxy Laboratories, an Indian company for falsifying its records and banned many of its products.

My professional experience is within the Med Device industry, the above info I shared is from doing very little amount of research. In regards to Med Device manufacturing in India, it will be interesting to see how it evolves. I suspect it will be similar to the $15-Billion generic industry.

In regards to the pharma sector, I do hope that India improves on their drug-regulation laws which date back to the 1940’s when it was still a British colony.

Sandeep Kumar Goyal
Born in the Holy city Hardwar at River Ganga, working on pharma packaging and self injecting devices
its a country with unit in diversity, we have great opportunities in India but it has its own challenges and we should be prepared to take them positively and not to crib about them everyday. Its like once I went to a time management course and I was late. My company was furious on me but I said look I participated in this to better learn time management so please shout a me after the course and not before, fortunately things have been much better afterwards. So the point I want to drive home, let us prepare to face the challenges and then you will definitely see the light at the end of tunnel

Vishesh Sharma
Territory Sales Manager at Aesculap
Aaryak – nice to read your views, great insight.👌

Aaryak Joshi
Medical Device Consulting
Christine Zomorodian you mentioned the key word, “advocacy”…strengthening the Identity and Representation of the Medtech industry by thought leaders and think tanks is the first requirement right now. I guess Joe can think further and provide his thoughts.

With reference to the medtech FDI initiatives, to explain its application I will use an analogy, recently the same government initiated a Clean India initiative, lot of media attention but if we see closely you wont find a single bin for miles in public places, and India depends on people and to a large extent the private sector to take actions on most of the case..they did the same way for Polio, for women education, for hygienic sanitation..and they did achieve success…regardless of ruling parties. This initiative helps people to think that government has an open ear on this aspect, and will encourage to look into that direction, with more responses start coming in from local and intl firms and individuals and with support from existing but distributed sprites of brilliance, India can very soon see a thriving Medtech ecosystem, given that the promotion does not stop, and that is where Advocacy will play an important role.. same happened for example with Biodiesel and such, there was good promotion happening earlier, and DST and DBT had (still have) some amazing offers and frameworks for firms and individuals who want to research further, but the promotion reduced and comparatively investment reduced, …India is largely Media Driven country..

Overall: for any intl investor thinking of India should consider:
1) its not one country…there are different worlds and worlds within worlds
2) market entry should have a long term goal and plan, at least when Manufacturing is being targeting
3) regulatory framework and structure has drastically changed with the current government, so very good transparency and time frame can be expected.

Please excuse me as my opinion is limited to my experience, and request you to add / correct this opinion where you feel it may be obsolete or wrong. Hope it helps…

Suresh Tiwari
HR professional with business expertise
Very well summarized Christine. I would only add that to do business in India, one has to look for the pockets of excellence. Due to it’s massive size and rapidly evolving market dynamics, one runs the risk of falling in an unseen pothole. If one does solid due diligence and doesn’t mind paying extra for good and proven talent, then the chances of failing are as low as in any developed market. But if we give in to the temptation of buying cheap resources and half baked market information, then we run a great risk of failing.

Vishesh Sharma
Territory Sales Manager at Aesculap
@ Christine – I slightly disagree when you say in India we have old aged device registration and surveillance regulations, No domestic manufacturing regulatory scheme, No reliable supply chain etc. Instead of “No” you can say “Less” however you will agree that ” Journey of thousand miles begin with a single step” believe me when India has determined to overcome all hurdles to improve our infrastructure, we will do it. India Inc is working on ” make in India” theme, things will start happening in the direction. Gone those days when political hurdles, corruption, rules, taxes were major problem….now New Govt making it simpler to set up manufacturing unit. Best part is low cost labor, Skilled and educated work force, support from Govt.And soon young working country will change the scenario of India . you will soon see New India Inc in Developed country…. And our products would best in quality and less in price… Journey has just started..wait n watch…

Christine Zomorodian
Principal Consultant at Gish Consulting
Reading the posts here, there is a distinct tone of optimism for the future. That is good sign for India’s future as a regional center of precision manufacturing. However, the discussion prompt implies the here and now: “Does this policy change affect your view of manufacturing in India?”

In answer to that question, I would have to say; no, not yet. Although there are ten-year-old device registration and surveillance regulations, there is not any type of domestic manufacturing regulatory scheme. Conformity assessment is outsourced to notified bodies. As mentioned by others, a reliable supply chain simply does not yet exist. The country has made great educational and economic strides but, as of now, infrastructure and workforce development are still lagging far behind. As with many rapidly-developing nations, India has not yet overcome a deep and ineffective bureaucracy that contributes to a culture of nepotism and corruption.

This state of affairs does not foster nor support a culture of compliance, something essential for critical/precision product manufacturing. These issues have been proven, across the globe, to be the greatest sources of risk for device manufacturing. All the financial incentives and cost savings in the world do not make up for these deficiencies. Just ask Boeing, Medtronic, Stryker, GE or any other corporation that has faced massive recall costs and damaged marketplace reputation due to quality failures from their offshore suppliers or contract manufacturers.

Surely, there are many in India trying hard to overcome these challenges, perhaps even some folks posting here. And of course, it is important to forge ahead with both advocacy for a full regulatory scheme and opportunities for lower-risk projects to build up these capacities.
For basic summaries of the current regulatory landscape, I suggest browsing the Emergo and Pacific Bridge websites.

Sandeep Kumar Goyal
Born in the Holy city Hardwar at River Ganga, working on pharma packaging and self injecting devices
Things do not change overnight but the winds of change have started blowing in India and that too for good, this is what I feel. India has its own challenges as far as the infrastructure is concerned and many a times support from local offices is difficult. What India offers is the warm relationship and willingness to do anything honestly. If you have the confidence then you can do it and that too, with much higher profits and less equivalent headcounts but critical thing: anyone who comes to India must appreciate the local culture and follow through, then results are amazing , so I would say manufacturing in India is not only good but excellent, just go ahead.

Vishesh Sharma
Territory Sales Manager at Aesculap
@Anil ji- sir you have started well and I agree with your views too….however at the end you have changed the direction of discussion….by asking down payment and all…..discussion diluted.

Dr.C.S.B. Nair
Consultant, Blood bags and Medical Devices at TERUMO PENPOL LTD, Sasthamangalam, Trivandrum, Kerala State
The development of any State in India hinges on the purposefulness and technical outlook of the council of Ministers. Each Minister should have a clear vision of what he is going to achieve during his tenure.. Unfortunately this is not the case in general.

Now we have a Great Leader with Long Range Vision and Purposefulness at the centre.
This is India’s Chance to go “Fast Forward” and make a success of the ‘ Make in India ‘
Vision. We have the outlook , dynamism and capability . Our friends around the world are welcome to join us in this great endeavour.

Anil Bhalani
Consultant – Regulatory Affairs/Quality Assurance
And another issue to consider is land for your factory. If you have been reading about the Land Acquisition Bill that PM Modi is trying to pass. He is having a tough time passing that bill. And it appears that the opposition parties that control the Rajya Sabha (The Upper House) will reject that bill with all others necessary for India’s development. And the farmers may protest your land acquisition and drive you away like they did the very powerful TATAs in Bengal. Current law prevents even the PM of India and all the billionaires from buying farmland.

So that will stay in the way of all progress towards your factory.

Here is what I personally can offer if anyone wants to build on farmland in Gujarat: Land for your factory. If you are a serious player, contact me. I will charge you a down payment just to talk to me to avoid wasting time. Down payment to be returned if you do not get the land you want. You can buy the land outright or lease it from me (or the person I choose). And the contract can be made with me (or the person I choose) in the USA to protect you.

Only serious parties should contact me! And be prepared with a down payment. I am serious and not joking on the issue.

Anil Bhalani
Consultant – Regulatory Affairs/Quality Assurance
Investing in India is great! However why would I invest in India (100% FDI) without a partner where leaches from the local, state, central governments and unions will be all over my back. And they change every four to six years. (My father justified the leaches as people who provided you business permits before you had a business plan; illegal in US).

1) I need to expand into the Indian Market and local manufacturing is cheaper
2) I want to make the product cheaper than what I can in our US border, Costa Rica or China (hard to beat a subsidy by the Chinese Govt.)
3) Patriotism came calling
4) Need to support my brother-in-law
5) A high liability business in the USA; example a Bhopal’s Union Carbide Chemical Plant

A case for 100% FDI is best justified only when you want to protect your intellectual property (which is only as good as that one engineer who walks out with it). Or you need to support your brother-in-law. Or you are located in a Free Trade Zone and product leaves the shores like you were in the Mexican Maquiladora.

The case I have made for 3 and 4 is pretty weak. These are also better achieved with a local business house as a partner. The bigger, richer and more politically connected, the better. And of course your brother-in-law with average intelligence, is still a better partner along with a connected local business house.

The strongest business case is # 5. A Union Carbide Chemical Plant that we will not allow a 100 miles from our home in the USA.

Vishesh Sharma
Territory Sales Manager at Aesculap
Liked your view Mr. Rahul….thanks for sharing your experience with us.👍

Rahul Dev
Vice President India at Datwyler Pharma Packaging India Pvt Ltd
Hello..

My personal experience in 3 greenfield project suggest that, not only can you produce high quality Medical devices in India at competitive cost, you can also improve quality of life of Indian employees and be gentle on the environment.

What is that then makes India attractive for shifting manufacturing bases from around the globe and creating job losses in the developed world…. the Indian PEOPLE and why? Because you don’t need to pay as much for the same operation in India as you would do in your existing operations overseas.

An established global manufacturers desire to shift to ,a BCC Best cost country (don’t like LCC Low cost country)is to maximise profits and increase market share’s CSR is an after thought or compulsion.

An established global manufacturer already has proven process and should when shifting to BCC not compromise to find a cheap way or a Jugaad..,

– Build a State of the art Plant, should be better than the one that exist overseas.
– Transfer technology which is relevant and not old.
– Transfer new equipment not old
– Provide the same tools and systems
– Transfer established and relevant processes.
– Employ young and talented people and provide extensive overseas training. This gives them an exposure to the work culture which made the manufacturer successful.
– Understand the India way of life.. do not try to build a mini Europe or US within the compound walls.
– At the beginning of the project hire someone confident and not insecure to lead the plant who is more of a people manager then a technician to keep all the ingredients of your plant together.
– Let a Local person the head the local organization.
– Here you should invest in secure and talented PEOPLE, a must to avoid insecure managers

These are my personal opinions expressed from my experience in working together with international organisations and multicultural professionals.

Vishesh Sharma
Territory Sales Manager at Aesculap
Hi Andy, well first of all I must appreciate your knowledge about India and its challenges to built a great infrastructure compare to western country or may be China…..however you will agree with the fact that our new Govt. Is taking it on priority to provide a better infrastructure for FDI, rules has made investor friendly, we have best Talent and men force, we are working on New Technology to reduce time, the most important thing is Now India is thinking of “Make in India”. You must be knowing Indian Inc are providing generic drugs to the millions of people around the world and the day is not far when India will provide best Quality medical devices in less price and will cure million of people to die. Medical device are unavailable to poor people bcz of their high price and people die or sell their property to get treatment. Indian inc are not only working with the motto of serving mankind but also reaping profits out of it. Journey has started …world we see India growing ahead.