Despite price control measures, multinational medical firms fare well

Despite price control measures on medical devices, multinational firms seem to have done well. They not only secured almost 80 per cent of the total 2,000 import licenses granted in the last one year but also managed to gain market share in key segments like stents. 

Sources in the Central Drug Standards Control Organisation (CDSCO) said that MNC firms have secured around 80 per cent of the device import licenses granted in the past year. These include names like Johnson and Johnson, Abbott, Medtronic, Boston Scientific and Becton Dickinson, among others. Some of these companies are importing knee implants and ancillaries required for stenting. 

MNCs have, in fact, gained market share in the last one year or so. For example, in the stents segment Abbott has seen its market share grow from 25-30 per cent to 38.4 per cent share at present, as per market sources. Dublin-headquartered Medtronic that had a share of around 10 per cent before the price cap moved to 13.5 per cent of the market. Coronary stents were brought under price cap in February 2017. They were slashed by nearly 80 per cent. 

MNC pharma lobbies have claimed that price control is not in their favour. Medical Technology Association of India (MTAI) says, “There was a spate of registrations awarded by CDSCO in December 2017 to smoothly bring in the new medical device rules from January 1, 2018. Almost every application in the pipeline was cleared and this was a Herculean and commendable effort from the GOI. It would, however, be premature and even erroneous to read this atypical increase as the global medical device industry becoming more upbeat about India.” The applications for marketing theiar devices in India has not come down. 

In fact, apart from Abbott withdrawing its fully absorbable stent -- Absorb Bioresorbable Vascular Scaffold (BVS) -- there has been no withdrawal of medical technology from the country due to price control. A senior official from the central drug regulator says that applications for import of medical devices by multinational firms remain the same.  

Also, data suggests that price cap has actually increased the industry volumes, and thus most companies have seen a rise in the share of the market. A total of 5,11,389 stents were used in 2017, a rise from 2016. In 2015, stent usage was 4,33, 650 units. While the stent market itself has not grown at the same pace as in previous years, players have benefitted with their market shares increasing.  

Multinational makers are not just the ones who have benefited by the price cap.

Surat-based Shajahanand Medical Technologies (SMT)  and Delhi-based Translumina has seen a sharp rise in their market shares. Both the companies have seen their shares rise from 10 per cent (before the price cap) to around 16 per cent now. Another domestic stent maker, Meril Lifesciences, had a market share of less than 10 per cent about a year back. Now, it has a 12 per cent market share.

Indian companies importing their devices from abroad still remains only around 20 per cent of the total imports. The remaining is imported by multinationals.

Medical Technology Association of India (MTAI), which represents multinational device makers, said, “There was a spate of registrations awarded by the CDSCO in December 2017 to smoothly bring in the new medical device rules. Almost every application in the pipeline was cleared. It would be premature and erroneous to read the increase as the medical device makers becoming more upbeat about India.”

Nearly 85 per cent of the total medical devices used in the country are imported, and MNCs have the bulk share.

The domestic device makers’ lobby Association of Indian Medical Devices Industry (AIMED) states that the MNCs cannot ignore the Indian market. Rajiv Nath, Forum Coordinator of AIMED, says, “The hue and cry against price controls on the few devices that have come under price regulation and threat to walk away are contradictory to on-ground continued market approvals being sought from CDSCO for additional brands and products by importers.”

Multinational device makers have been continuously lobbying for no price control if India wished to bring in technology. When stent prices were capped, multinational stent makers had said that they would withdraw from the Indian market. When the restriction on withdrawal expired, multinationals withdrew some of their stents.

The Centre’s plan to cap prices and rationalise trade margins of medical devices has made multinationals feel the pressure in the Indian market. Ever since the government went on to curb the prices of coronary stents and subsequently orthopaedic knee implants, multinational device makers have been lobbying to ensure more devices do not come under price control. Recently, the government notified eight more devices as drugs which give the National Pharmaceutical Pricing Authority (NPPA) the power to cap prices of these apart from the 20-odd devices that already are drugs.

The price of drug-eluting coronary stents was capped at around Rs 30,000. After coronary stents, orthopaedic knee implants were also brought under price control. Further, the government is working to rationalise trade margins of medical devices of other devices as well.