For delivering and maintaining quality healthcare services, the need for quality medical equipment and devices at an affordable price is essential. From thermometer to pacemaker, all the products that are intended to be used for diagnosis or treatment purposes, are known as medical equipment. The global medical equipment industry stands at USD 425.5 billion and is estimated to reach USD 612.7 billion in 2025, with a CAGR of 5.4%.[1] Propelled by innovation and technological development, the global medical equipment industry is reforming the healthcare system worldwide.

With its accelerated shift towards innovation in technology, globally this industry is highly influencing and developing different aspects of diagnosis and treatment. However, a densely populated country like Bangladesh showcasing a high demand for healthcare services, still lacks the inclusion of advanced technology. Low income of the majority population, resistance to change and lack of proper training in the healthcare sector cease the adoption of modern treatment. This predicates a latent opportunity to improve the medical equipment industry and help it revolutionize the healthcare services in the country.

Segregation of the Medical Equipment Sector

In 2018, the medical device market in Bangladesh was projected to worth USD 243.6 million.[2] The demand for healthcare service is expected to rise with an increasing GDP growth rate of 7.3% as healthcare spending will also rise with it. According to the World Bank, total health expenditure per capita in Bangladesh expedited from USD 20 in 2010 to USD 34 in 2016.[3]

FIGURE: Bangladesh Health Expenditure Per Capita / Source: World Bank

As population increases, the healthcare sector keeps showcasing a consistent demand for different medical equipment such as surgical instruments, orthopedic equipment, orthodontic and dental implants, electromedical equipment etc. The medical equipment sector can be divided into five major sections.

FIGURE: Medical Equipment Segregation

Overview of the Medical Equipment Industry

Domestic Market Projection

The medical equipment industry in Bangladesh is highly import-oriented. At present, the industry comprises a few local medical equipment manufacturers covering only 15% of the total market demand while the rest 85% of the products remain import-dependent.[4] The bulk of the medical supplies are imported from the USA, China, South Korea and the European countries.

FIGURE: Medical Equipment Market Status Quo / Source: USAID

Even though Bangladesh has been unable to capitalize on the medical equipment sector, the size has gradually grown and projected an increase from USD 131 million in FY 2011-12 to USD 350 million in FY 2017-18 at a CAGR of 12%.[4] Catering to local consumption with limited exports, about 90% of the local manufacturers produce medical consumables and diagnosis kits.

FIGURE: Medical Equipment Market Size / Source: USAID

Since 1995, with the inception of Opsonin Pharma Limited, the local production of medical equipment started in Bangladesh. The industry was later followed by the entrance of several companies including JMI Syringes and Medical Devices Ltd., Get Well Ltd., Opso Saline Ltd., Techno Drugs Ltd., and Incepta Pharmaceuticals.

To meet the local unmet demand of high quality medical consumables and diagnostic machines, medical supplies are imported from the leading foreign manufacturers such as Abbott Laboratories, General Electric Healthcare, Johnson and Johnson, Smith and Nephew, Stryker Corp., and Boston Scientific.

Export Market Projection

Export figures tend to be very low due to the absence of any significant medical equipment industry in the country. Exports were valued at USD 3.7 million in 2013. According to the Export Promotion Bureau (EPB) statistics, the annual export earnings amounted to USD 5.6 million in 2014, reflecting an increase of 51.6% year-on-year.[5]

JMI Syringes and Medical Devices Ltd is the export market leader in this sector with a footmark in exporting medical consumables and diagnostic kits to Singapore, Thailand, Myanmar, Spain and Portugal etc. The company’s export earnings increased by 52% from USD 0.29 million in FY 2016-17 to USD 0.44 million in FY 2017-18.[4] A local company led by a young pool of tech-enthusiasts, Bi-BEAT Ltd, has recently exported some of its products to Sri Lanka and Pakistan and received positive feedback showcasing future export potential.[4]

Government Regulations and Initiatives

Emphasizing on the opportunities provided by medical technology to ameliorate the national healthcare system, the Directorate General of Drug Administration (DGDA) framed ‘The Registration Guidelines for Medical Device, Bangladesh 2015’ to regulate the medical supplies under the Ministry of Health and Family Welfare (MoHFW). Based on the level of risk, medical equipment is categorized in the newly outlined guideline from low risk to high risk equipment.

The aim of the guidelines is to properly execute the regulatory controls for manufacturing methods to safeguard the health and safety of patients, users and other concerns. It also suggests the following of specified procedures during design, production, and marketing by the private sector manufacturers and establish regulative controls that are proportional according to the level of risk associated with a particular medical device.

Even though the Government has exempted VAT on a range of necessary medical products, manufacturers are not provided with cash or duty benefits. Import duty policies are not in favor for this sector as duty fee on imported raw materials leads to the high cost of production, causing the price of the imported goods to be lower than the locally manufactured products.

Upgrading the Medical Equipment Industry

Around 12.5 million people or 7.5% of Bangladesh’s total population represents the elderly generation while the number is estimated to reach over 40 million by 2050.[6] On top of that, the number of kidney transplants, comprehensive cancer treatment and other high-tech surgeries are increasing in the country with rising threat of non-communicable diseases such as diabetes, stroke, lung cancer, heart diseases etc.[7] In a country with a large aging population, increasing health risks, and rising health expenditure per capita, there is a huge scope to support the domestic medical equipment industry to come up with import substitutes.

Investments should be made in R&D to nurture the biomedical engineers within the country. A strong backward linkage industry should be established to decrease import-dependency that will lead to forming a strong local manufacturing industry. Meanwhile, import duties on the raw material should be reduced to encourage the local manufacturers to produce at competitive prices.

As the global medical devices market is expected to expand exponentially, therefore, cash incentives should be provided to the existing exporters and investors for exploring the export potential of medical equipment items. As the scalability of industry will be increased, it will play a crucial role in employment inclusion.

With greater investments in R&D, advanced technology, industry-academia collaboration and joint venture partnerships with foreign technical partners will enable the medical equipment industry to upsurge from this budding stage.

Ishrat Jahan Holy, Trainee Consultant at LightCastle Partners, has prepared the write-up. For further clarifications, contact here: [email protected]

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