Unlocking India’s potential: Why medical device companies cannot afford to ignore the India market
By: Sarah Ye, Jung Hyun Kim & Ashley John
Why India?
The Indian economy is poised to be the world’s third-largest economy by 2027, surpassing Japan and Germany[1]. With demographic shifts, higher affordability from a burgeoning middle class and rapid urbanization leading to an increased demand for healthcare, India presents unparalleled opportunities for medical device companies looking to increase their growth in the region.
The ongoing geopolitical tensions between China and the United States have created a climate of uncertainty, dampening the prospects for growth in the Chinese market which was previously the key market in the Asia Pacific region. The implementation of volume-based procurement (VBP) policies in China has further pressured the top-line growth of foreign medical device companies.
Against this backdrop, India emerges as an alternative source of growth, but it also comes with its own unique economic, demographic and healthcare dynamics that require careful navigation of the market.
Key drivers of growth in the India market
1. Increasing life expectancy and burden of chronic diseases
India’s population is witnessing a significant demographic shift, with an increasing life expectancy and a growing burden of chronic diseases. According to the World Health Organization, life expectancy in India now averages around 70.8 years[2], an increase of almost 10 years from two decades ago[3]. Coupled with the increase in affluence leading to lifestyle modifications that are mirroring the West, the burden of chronic diseases, such as diabetes and cardiovascular disease, has risen significantly[4]. Managing these conditions often requires continuous monitoring, long-term care and regular medical interventions, leading to a sustained demand for healthcare services and medical devices.
To underscore this increased demand, India’s medical device market in terms of consumption is estimated to be approximately $12 billion in 2022 and is expected to grow strongly at a compound annual growth rate (CAGR) of 21% to reach approximately $50 billion by 2030, higher than the global CAGR of 5%[5][6]
2. Increasing size of the middle-class
Another factor contributing to the demand for quality healthcare services and medical devices is the increasing size of the middle class. According to the India Brand Equity Foundation, the size of India’s middle class will nearly double to 61% of the total population by 2046, up from 31% in 2020–21[7]. Out-of-pocket (OOP) spending remains a significant component of healthcare financing in India, and as disposable incomes rise, there’s a growing expectation for high-quality healthcare services, driving a surge in healthcare spending.
1Middle-income is defined as those with an annual household income of approximately $6,000 to $36,000.
3. Untapped potential in Tier 2+ cities
While metropolitan Tier 1 cities like Mumbai and Delhi have traditionally been the focal points for healthcare investment by foreign pharmaceutical and medical device firms, Tier 2+ cities present a vast untapped market. Monthly incomes per capita in Tier 2+ cities have recorded an approximately 19% year-on-year (YoY) increase in 2024, as compared to approximately 6% in Tier 1 cities[8], with nine Tier 2+ cities in the list of top 10 cities in growth of middle-income households[9]. Due to a growing awareness of the importance of healthcare from education and exposure, patients are increasingly seeking specialized medical services outside of metropolitan areas without the need for extensive travel.
There’s already a substantial demand for surgical interventions in Tier 2+ cities, with 64% of total surgeries conducted in India currently being conducted in Tier 2+ cities [10]. This demand has led to several corporate hospital chains expanding and investing in healthcare facilities in Tier 2+ cities[10], showing that there are significant growth opportunities that are yet to be unlocked.
What medical device manufacturers can do to navigate the Indian healthcare market
To effectively navigate the Indian healthcare market, there are a few considerations for medical device companies:
1. Deep focus on Tier 1 and Tier 2 Cities
Medical device companies should strategically focus on Tier 1 and Tier 2 cities. Tier 1 cities, such as Delhi, Mumbai and Bengaluru, are already well-established traditional healthcare hubs with advanced medical facilities and a growing patient base seeking high-quality healthcare solutions. By building a strong commercial presence in these cities, companies can tap into a concentrated market with sophisticated healthcare needs.
Tier 2 cities, such as Coimbatore, Jaipur and Lucknow present a unique opportunity as they’re experiencing rapid urbanization and increasing healthcare investments. These cities often have underdeveloped healthcare infrastructure compared to Tier 1 cities, which creates an untapped potential for growth. Medical device companies can capitalize on this by implementing a step-wise approach to building their presence, starting with targeted marketing efforts in Tier 1 cities and gradually expanding their distribution networks into the peripheral Tier 2 cities. This approach allows companies to establish a foothold in these markets while adapting to the unique needs and challenges of each city tier.
2. Build strategic partnerships with Corporate and Private hospitals
Strategic partnerships with key healthcare institutions can provide medical device companies with a significant competitive advantage in the Indian market. Collaborating with top corporate hospital chains, such as Fortis, Apollo and Manipal, can help companies gain access to a wide patient base consisting of high- and middle-income patients to ensure the adoption of their products in premium healthcare settings.
In addition to corporate hospitals, companies should also consider partnering with private standalone hospitals that serve a substantial portion of the Indian population. Private hospitals often seek to differentiate themselves by offering cutting-edge treatments and high-quality care, creating an opportunity for medical device companies to showcase their products. However, while engaging with public healthcare institutions, companies should selectively target top-tier government hospitals like the All India Institutes of Medical Sciences (AIIMS), which are recognized for their excellence in medical research and patient care.
3. Target the “Medium — High” income patient segment
Medical device companies should strategically target medium- to high-income patients, as this segment often has private insurance or is capable of self-paying for healthcare services. This demographic is more likely to seek advanced medical treatments and is open to investing in high-quality healthcare solutions. By focusing on this patient group, companies can ensure higher adoption rates and a stronger return on investment.
Furthermore, engaging with these patients through digital channels is crucial for medical device companies in today’s digital age as this segment also aware of the best treatment options available in other markets. With the increasing penetration of smartphones and the internet, digital platforms offer a powerful tool for connecting with patients and building brand awareness. Companies can leverage social media, mobile apps and online forums to educate patients on disease information and available treatment options, leveling the information gap between healthcare providers and patients.
4. Understand the stakeholders in your patient journey
Lastly, medical device companies must understand the complex ecosystem of stakeholders involved in the patient journey. While physicians are typically seen as the primary influencers in healthcare decisions, there are many non-obvious stakeholders who play crucial roles throughout the patient journey. Nurses, technicians and financial coordinators often have a disproportionate influence on healthcare decisions and can significantly impact brand choices. Nurses and technicians are directly involved in patient care and device usage, providing valuable insights into the practical benefits and limitations of medical devices. Financial coordinators, on the other hand, help patients understand the costs and insurance options associated with treatments, making them key decision-makers in the adoption of healthcare products.
Recognizing and engaging with these stakeholders can provide medical device companies with opportunities to position their products favorably. By providing tailored training, support and education to these key players, companies can build strong relationships that encourage the adoption and advocacy of their products.
Conclusion
India’s medical device market presents a compelling opportunity for companies seeking growth beyond the traditional markets of the U.S., the European Union and China. The combination of increasing life expectancy and burden of chronic diseases, rising middle-class affordability and untapped potential in Tier 2 cities makes India an attractive option for further investment. If successfully navigated, medical device companies can unlock significant value and position themselves as leaders in contributing to the evolution of healthcare in one of the world’s most dynamic economies.
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References
1. https://www.blackrock.com/us/financial-professionals/insights/exploring-india-economy
2. https://www.who.int/publications/i/item/9789240074323
3. https://data.who.int/countries/356
4. https://www.thinkglobalhealth.org/article/indias-call-action-noncommunicable-diseases
5. https://www.ikonmarket.com/market-insights/medical-device-industry-india.html
6. https://www.niir.org/blog/indian-medical-devices-industry-future-growth-opportunities/
7. https://www.ibef.org/news/indian-middle-class-will-nearly-double-to-61-by-2046-47-price-report
This article reflects my personal views. They do not necessarily represent any official position of ZS.
