Medical and Healthcare Technology (“MedTech”) is a sunrise sector in the Indian economy, with startups and MNCs growing at rapid pace with an estimated growth from US$ 11 billion to US$ 50 billion by 2030 at 16.4% CAGR.[1]Although there has been substantial growth in the sector in the last decade, from consumables to machine learning equipment, but there is still a considerable gap in the accessibility of such technology for the masses in India. This gap is being bridged by the Indian government by facilitating public and private investments in this sector for new and innovative startups and by encouraging large manufacturers to set up their factories in India.
Mr. Kuldeep Mirani, founder of Beyond Seed Venture Solutions, remarks that “Embracing innovation is vital to ensuring that contemporary healthcare becomes accessible and cost-effective not only for India but also for the global population. This entails the development of efficient solutions that harness the power of technology. Through the utilization of artificial intelligence (“AI”), virtual tools, robotics, machine learning, telemedicine, data science, and predictive analysis, technology has the capacity to revolutionize healthcare delivery. This transformation offers a value proposition that grants widespread and affordable access to healthcare systems, promising a brighter future for healthcare accessibility.”
Innovation in the Healthcare Industry
Artificial Intelligence is integrated by various startups in the healthcare industry, in their products and platforms for enhancing diagnostics, precision medicine, chatbots, electronic health record, surgeries, virtual assistants etc., to automate routine tasks, save time, increase efficiency, and preserve resources. It is being used in wearable and smart devices for individuals to keep track of their movements, heart rate, calorie intake, steps, and sleep patterns etc.
Remote/ Continuous Monitoring provides easy access to health parameters of individuals daily. These devices detect and alert health issues including notify healthcare providers of any unusual or abnormal parameters, which could prevent an adverse event or any complications.
Telemedicine has revolutionised the healthcare industry and was gained popularity during the Covid-19 pandemic. It allowed the healthcare providers to reach patients virtually, breaking the barriers created by distance and increasing access to facilities to every part of the country. Telemedicine is regulated under the Telemedicine Practice Guidelines issued by the Ministry of Health and Family Welfare, in India.
Online Healthcare Utility Platforms, allow individuals to discover healthcare services around them, and compare prices on the deals offered, creating a transparent network for patients.
Mr. Chander Verma, founder of Plunes Technologies Private Limited states that, “It is the need of the hour for India with such a high population and vast geographical complexities to streamline the varied pricing and accessibility of healthcare services. There is a resultant need to create healthcare utility networks that provide revolutionary technology platforms for hospitals; digitise the medical and health records for patients and offer new and innovative software solutions to patients”.
E-pharmacies have helped patients by facilitating the delivery of medical supplies and pharmaceuticals with ease, by breaking geographical barriers.
Mr. Jigar Parekh, Head of Corporate Development & Investor Relations for Medikabazaar, remarks that “Advent of E-commerce & Aggregation in Healthcare, both on the B2B and B2C side has resulted in wider reach across geographies and reduced pricing of key products viz. medicines & consumables. This is in turn has led to increased accessibility and affordability of healthcare even to the rural & remote markets with multiple brands vying for attention from them.”
Other trends include virtual care for chronic diseases, online platforms for mental health problems, thermal sensing devices that help the early detection of diseases, platforms for pregnancy related issues and technology that enhances in-vitro diagnostic tests. These trends have redefined the way traditional healthcare systems were operating and have brought about a much need change in patient care by making the most necessary needs of individuals accessible and affordable.
Investment Climate and GoI Incentives
The MedTech sector is growing at an unprecedented rate, including large multinational companies and small and medium enterprises. This is fuelled by substantial Foreign Direct Investment (“FDI”) influxes, which enhances global players’ confidence in Indian markets, as proven by USD 2.3 billion FDI inflows in Medical and Surgical Appliances from April 2000 to March 2023.[2] With 250+ firms[3] working on solutions to critical health challenges, India’s medical device startup ecosystem is diversified and brilliant.
Most recently, the National Medical Devices Policy, 2023 (“Policy”) was adopted. It aims to aid startups and innovation in the sector. It targets to facilitate research and development (“R&D”) and innovation through innovation hubs for startups to create a health technology ecosystem. Further, it tries to attract investment in the sector, by encouraging private investments, venture capital (“VC“) funding, and public-private partnerships. According to the Policy, this can be accomplished through active outreach initiatives such as encouraging VCs to screen startups for incubation and supporting contemporary financing models such as blended finance, which combines public and private funding.
The new proposed Drugs, Medical Devices and Cosmetics Bill, 2022, which aims to replace the Drugs and Cosmetics Act, 1940, also brings about a huge change by developing a distinct regulatory framework for medical devices. Additionally, it proposes to set up a medical device technical advisory board, setting up of medical device testing facilities and expanding the regulations governing the quality of medical devices. These additions provide testament to the expanding importance of this sector in India.
Further, the Department of Pharmaceuticals has organized the Indian MedTech Expo 2023, which aimed to create numerous opportunities for startups to network. The key theme of the event was ‘Future of Device, Diagnostics & Digital and showcased Evolving Technologies.’[4] This event was extremely beneficial to startups as they were provided with the opportunity to meet industry leaders, potential investors, and esteemed members from various regulatory bodies. This will not only promote Indian startups but will also bring in more investments to the sector.
5 Key Compliance Areas for Startups to Prioritize
- Price Control: The Ministry of Health and Family Welfare (“Ministry of Health“) issued a notification on February 11, 2020, (“Notification“) through which all medical devices were added to the definition of ‘drugs’ by amending the Drugs and Cosmetics Act, 1940. Hence, by the extension of the definition, this Notification allows the National Pharmaceutical Pricing Authority (“NPPA”) to control the prices of all medical devices. The NPPA implements and enforce the provisions of the Drugs (Prices Control) Order, 2013.
- Marketing and Advertising (Interaction with healthcare providers): MedTech companies are subject to various restrictions, particularly on marketing, campaigns, and advertising. There are other industry codes that govern advertising campaigns and the usage of media influencers, as well. As a result, all MedTech startups must be aware and privy to the regulatory requirements and compliances while commissioning, generating, evaluating, or approving marketing materials.
These laws and regulations govern advertisements on various platforms and forms of media, like print media, social media, comparative advertisements, brand ambassadors, celebrity advertisements and social media influencer endorsements, etc. Therefore, if a MedTech startup wishes to market or advertise their products, adequate review of the applicable compliances must be carried out, as advertising and marketing is strictly regulated and non-adherence could lead to penalties, including monetary damages to the MedTech startup.
- Packaging and Labelling: Packaging and labelling of medical devices in India are governed by, (a) The Medical Devices Rules, 2017, (b) The Legal Metrology (Packaged Commodity) Rules, 2011 and (c) Drug (Prices Control) Order, 2013. It is imperative for MedTech startups to adhere to applicable packaging and labelling requirements to ensure that they do not incur any unwanted transgressions or penalties in this regard.
- Licensing Framework: Currently, the licensing framework for medical devices is highly complex and spread across several legislations, regulations, rules, guidelines, and policies, including the Medical Devices Rules and the D&C Act. Additionally, the licensing framework is regulated by several statutory bodies, including the Central Drugs Standard Control Organisation, the NPPA, Atomic Regulatory Board, state licencing authorities and so on. This extensive and complex framework hinders the smooth functioning of the MedTech industry. To remedy this and to improve ease of doing business, as well as to balance patient safety with product innovation, the Policy has envisioned to create a ‘Single Window Clearance System’ for medical device licensing which will involve all stakeholder departments/organisations, to minimise the duplication and reduce the burden of compliances.
- The Digital Personal Data Protection Act, 2023 (“DPDP Act”): The DPDP Act imposes new obligations and provides for processing of digital personal data. If a startup collects any personal data through their devices or otherwise, they will be classified as a data fiduciary[5] under the DPDP Act. The obligations of data fiduciaries under the DPDP Act include inter alia, giving a notice to collect personal data, getting the unconditional consent to process personal data, the provision to withdraw consent and establish an effective mechanism to redress the grievances. Breach of the provisions of the DPDP Act can attract significant penalties such as being blocked to the public and monetary penalties which may extend up to INR 250 crore.
However, the DPDP Act under section 17(3) gives special exemptions to startups[6] such as:
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- section 5 which sets out the provision of notice;
- section 8(3) on the accuracy of personal data;
- section 8(7) on retention of data;
- section 10 on the additional obligations of a significant data fiduciary; and
- section 11 on the right to access information about personal data.
In conclusion, fostering a thriving startup ecosystem, particularly within the HealthTech and MedTech sectors, is not only essential for nurturing innovation but also for bolstering the overall progress of the nation. The proactive measures undertaken by the GoI to align with global advancements in fields such as AI, robotics, and quantum computing signal a promising trajectory. As these efforts continue to cultivate an environment conducive to investment and business growth, aspiring entrepreneurs are empowered to contribute meaningfully to India’s ascent as a formidable player on the global innovation stage.
Disclaimer:
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Authors:
Pradnesh Warke, Associate Partner, Dentons Link Legal
Tanay Jha, Associate, Dentons Link Legal
Khushi Shah, Trainee Associate, Dentons Link Legal
Footnotes
[1] India Brand Equity Foundation, ‘Medical Device Industry in India,’ <Medical Devices Industry in India – Market Share, Reports, Growth & Scope | IBEF> accessed <August 10, 2023>.
[2] Invest India, ‘Sector: Medical Sector,’ < https://www.investindia.gov.in/sector/medical-devices> accessed August 10, 2023.
[3] Ibid 2.
[4] India MedTech Expo 2023 < India Medtech Expo – India MedTech Expo 2023> accessed August 16, 2023.
[5] The Digital Personal Data Protection Act, 2023.
[6] “startup” means a private limited company or a partnership firm or a limited liability partnership incorporated in India, which is eligible to be and is recognised as such in accordance with the criteria and process notified by the department to which matters relating to startups are allocated in the Central Government.