india’s giant appetite for medical

imaging equipment

23 December 2008

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India’s giant appetite for medical imaging
equipment Ivy Teh

Technology and innovation drives growth

India’s medical imaging sector is poised for a new accelerated phase of growth fuelled by
the availability of advanced technology and digital information. This market continues to be
one of the more progressive markets in Asia in terms of technology adoption. The
enhancements in technology have seen the growing adoption of new imaging technology
that combine high levels of accuracy with rapid, user friendly product formats. Along with
pressures to improve the quality of healthcare while keeping the medical treatments
affordable, new “greenfield” opportunities are emerging for suppliers to provide innovative
cost effective equipment.

Rising demand for quality healthcare

India, with its huge population of over a billion people, offers itself as a country with huge
market potential even with a significant portion of the locals living below the international
poverty line. Currently, the public health sector is overburdened in the cities while those
living in the rural areas have minimal access to quality healthcare. Inefficiency has given
way to a booming private healthcare industry which now takes care of three quarters of the
nation’s needs. At the same time, rising income and health consciousness amongst the
urban Indian population are driving people to seek specialised care. The urban consuming
class is expected to grow from 78 million in 2001 to 250 million in 20101. India’s increasing
affluent middle class is demanding access to better healthcare; many Indians are now
choosing to purchase health insurance with either full or partial coverage, so more can
now afford to receive high quality treatment.

Another driver of demand for quality care comes from India’s lucrative medical tourism
business. Medical tourism in India is projected to grow by six times from US $350 million
now to a US $2 billion-industry in 20122. People from all over the world make their way to
India to seek world class medical treatment at a cost comparatively lower than at home.
Open-heart surgery that costs up to US$70,000 in Britain and US$150,000 in the US; only
costs between US$3,000 and US$10,000 in India’s top hospitals. Knee surgery costs
US$7,700 in India will cost US$16,950 in Britain. Dental, eye and cosmetic surgeries are
three to four times cheaper. These patients usually get an attractive deal that includes
flight, hotel accommodation, treatment and, often, a post-treatment vacation3.

Although, the urban Indians and medical tourist make up the minority in population terms,
they currently pay for about 75% of India’s medical treatment.

1
The Medical Device Market in India, Express Healthcare Management, 2006
2
Medical Tourism Corporation
3
Medical Tourism in India Indian Journal of Medical Ethics

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Opportunities in India’s public healthcare sector

Despite the unfavourable situation in the public health sector, the Indian government has
stated in its National Health Policy that it hopes to increase the number of healthcare
centres in remote areas and improve supply of essential healthcare services by boosting
the public healthcare expenditure to 2.0% of the gross domestic product (GDP) by 20104
providing a substantial potential market for the public sector as well as the likely resultant
greater collaborations between private sector and government. At present, this could
translate into opportunities for any suppliers that are innovative in providing low cost and
easy to use medical equipment for this untapped market segment.

Medical Imaging poised for strong growth

The equipment poised for the greatest growth in India are those connected to its changing
disease profile. As more Indians lead sedentary lifestyles, smoke, and eat better, lifestyle
diseases such as cardiovascular disease and cancer are on the rise. Diagnostic devices
such as imaging, and surgical devices to treat these diseases are well-situated. Medical
imaging equipment constitutes approximately 30% of the total medical equipment market
in Indiai. Imaging technology include ultrasound scanners, magnetic resonance imaging
(MRIs), CT scanners (CTs), C-arms, colour dopplers, X-rays, and more recently 3D
imaging.

CT scanners: Dominated by low-end segment in unit installations but high-end

accounts for over 50% of market value

Overall, CT scanners have an estimated market value of

approximately US$60 million5. There are various types of
modern CT acquisitions like Scout/Pilot/Topogram; Axial;
Cine; Helical/Spiral; Digital Reconstruction Radiograph
and high-definition PET (Positron Emission
Topography)/CT scanners.

The CT scanners market is segmented into low-end, mid-

end, and high-end scanners. The low-end segment
includes single and dual-slice CT scanners; mid-end segment includes multi-slice
scanners (6, 10, 16, and 32 slice); while the high-end segment includes 40-slice, 64-slice,
open versions, and the cardiac CT. An estimated 180 units of CT scanners was installed in
India in 2006. The low-end CT scanner segment accounts for 50% market share. The low-
end segment is continuing to grow in spite of availability of superior technology. This
segment is primarily dominated by GE Healthcare and Siemens Medical, though other

4
Economic Analysis for the Indian Healthcare Industry
5
The Medical Buyer, Oct 2008 issue

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major players in this market are Toshiba (Erbis), Blue Star (Hitachi), Trivitron (Neusoft),
and Shimadzu.

In 2006, mid-end scanners contributed toward 22% of the total market while high-end
scanners contributed toward 28% of the market. As most Indian consumers are not ready
for costly technology, low-end scanners continue to have a major market share. The
leaders in the mid-end segment in 2006 were Philips Medical and Siemens Medical while
GE Healthcare, Siemens Medical, and Philips Medical were the leaders in the high-end
segment.

High-end scanners being highly priced accounted for the highest sales value among the
three segments with an estimated value share of 53%. The mid-end and low-end
segments accounted for 25% and 22%, respectively6.

X-Ray: Acquisition and development of domestic product in general x-ray segment

General x-ray market is expected to grow at a CAGR of 10% of higher. It is one of the
more exciting and competitive segments in imaging, where acquisition activities and new
product launches have been observed in the last year. GE Healthcare for instance,
launched HF Advantage, the next generation X-ray equipment, designed and developed in
India. The HF Advantage is considered an affordable high quality x-ray that offers
precision diagnostics at a lower radiation unlike conventional systems priced less.

Philips on the other hand, has undergone a flurry of acquisitions in 2008. They acquired
two Indian x-ray manufacturers; i) Alpha – a leading manufacturer of cardiovascular x-ray
systems and ii) Meditronics – a leading general x-ray systems manufacturer, in their
accelerating efforts to expand their healthcare business in India.

Overall, the x-ray market is estimated to be worth approximately US$35 – 38 million,

where most of these (over 60%) are conventional general x-ray equipment. Other segment
of the x-ray market such as fluoroscopy, mammography, mobile x-rays and surgical C-
arms have about 10% of market share each7.

Ultrasound: Competition heats up with the introduction of Chinese products and

locally manufactured ultrasounds

The current market for ultrasound equipment in India is approximately US$105 million and
is growing at a CAGR of approximately 20%. The Black & White (B&W) ultrasound market
is segmented into low and mid-end machines. The low-end B&W machines are mainly
portable units with limited applications. The B&W ultrasound market sells around 500 - 600
units sold a year in India, albeit at a low market value8.

6
The Medical Buyer, Nov 2007 issue
7
The Medical Buyer, Oct 2008 issue
8
The Medical Buyer, Oct 2008 issue

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The Color Dopplers ultrasound segment, on the other hand, has a lower unit volume sale
but represents over 70% of the market value. This segment can be categorized by low,
mid and high-end as well.

India’s ultrasound landscape is becoming more competitive not only

for its domestic demand but also for its potential to set itself as a low
cost manufacturing hub to meet rising global demand. Low-end
Chinese ultrasounds are finding their way into the low and mid-end
segments and are increasingly making headway in market share.
Acquisitions and joint ventures activities have increased over the
years. Japanese ultrasound manufacturer Aloka has entered into a
60:40 joint venture with Chennai-based Trivitron. The joint venture
will invest Rs 50 crore and manufacture 1,000 ultrasound equipment
annually. Wipro-GE has facilities in India at its Bangalore plant to
manufacture low end Ultrasound machines. Similarly Siemens also
manufactures ultrasound machines at its Goa factory.

MRI: High-field 1.5 and 3.0 tesla MRIs replacing older 1.0 tesla drives market growth

The total market size for MRI is estimated to be around US$82 million in India in 20079.
MRI can be segmented into two categories, permanent magnet and super conducting
magnet. The super conducting segment represents the majority of installations with over
80% of the market value. Around 15% of the market size is occupied by the permanent
magnet segment while less than 5% is accounted for by refurbished equipment segment.

The MRI market can also be further segmented by magnetic field strength. The high-end
1.5 tesla and above segment is equally shared by Philips, GE and Siemens and has a
potential of approximately 18 - 20% of market size. There is also a rapidly growing
demand for the very high-field segment, the 3.0 tesla system, where installations have
been prominently seen in key facilities in the past 3 years. Siemens and Philips are market
leaders in the 3.0 tesla segment.

In the 1.0 Tesla segment, Siemens are market leaders closely followed by Philips and GE.
In the 0.5 Tesla segment competition mainly exists between Philips and GE. In the low
end Permanent Magnet system Hitachi poses tough competition for GE and Philips10.

9
Healthcare Management Technology, Feb1, 2008
10
Digital Technology in X-Rays, Express Pharma

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Problems Clearstate solves:

 Clearstate offers strategic advisory and intelligence services to help medical

devices, healthcare services, pharmaceutical and biotechnology firms
understand their current and potential markets, and implement pragmatic
and innovative strategies to ultimately tap into new growth opportunities.
 Our approach to engagements is centred on thorough analysis of fact-based
intelligence and seasoned understanding of markets, practical strategy
recommendations and implementations. We work collaboratively with our
clients to deliver comprehensive answers to their growth issues in the
healthcare industry.

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Ivy Teh is the Managing Director at Clearstate. She has advised international
medical device and equipment companies on market entry strategies,
acquisitions, R&D outsourcing, competitive benchmarking and marketing
strategies.

You may contact the author via email at: thinking@clearstate.com

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