The medical devices industry in India has a huge potential in the outsourcing programmes of the foreign medical devices companies from countries like Europe and United States, according to a latest study.

Many of the European and US medical devices companies are actively considering outsourcing or relocating their manufacturing operations to Asia, especially Indian and China to take advantage of its apparently lower costs for skilled labour. The Indian companies could grab the opportunity for outsourcing, which will provide benefits to the domestic players too, through complying with the latest quality standards mandated by these regulated markets, comments a sector analysis conducted by National Institute of Pharmaceutical Education and Research (NIPER) - Ahmedabad.

Once the Indian companies comply with the quality requirements to international standards, more healthcare providers in western countries who are struggling to contain costs and facing tightening budgetary restrains would be attracted to the Indian market. "Indian medical devices manufacturing industry will benefit largely from the outsourcing activity in future," predicts the report which is currently under the consideration of Department of Pharmaceuticals to prepare future strategy in the sector.

Setting up of manufacturing facility in India could provide the foreign companies an ideal location to penetrate the vastly underdeveloped Asian medical devices market, while also keeping product prices closer to those typical of the region. The study points out the example of the R&D facility set up by Siemens India Ltd in Bangalore in 2004 for developing user-friendly medical imaging systems.

However, lack of compliance with international manufacturing guidelines and standards by most of Indian medical device manufacturers and fear of Intellectual Property (IP) protection for devices and technologies are the major challenges for the medical devices outsourcing industry in the country.

Many of the Indian companies are gradually turning their interest towards complying with the international standards, though the Asian market does not follow any particular standards. Companies like the Chennai-based Trivitron Healthcare and Bangalore-based Wipro-Biomed, the biomedical division of the IT major Wipro which has been acquired by RFCL Ltd in 2007, has already received International Organisation for Standardisation (ISO) for their business.

"Indian Manufacturers are realising that pursuing CE Mark certification can help them compete more effectively with companies producing higher-quality goods for sales into Europe," avers the report.

Another major concern of foreign manufacturers outsourcing to India is regarding IP rights protection. Here also there is a positive move from the contract research organisations (CROs) who have, of late, started introducing intellectual property standards to increase confidence levels of foreign companies to greater outsourcing interests. The medical devices sector could also follow these efforts to win the outsourcing deals with western majors, which will benefit the Indian players both financially and in accumulating experience both in R&D and manufacturing, suggests the report.