Areas of Service

MEDICAL DEVICES

OUR INDUSTRY EXPERTISE

India is counted among the top 20 global medical devices market and is presently valued at USD 11 billion and is expected to reach USD 65 billion by 2024.[1] The Indian medical device market is dominated by imported products, which comprise of around 80% of total sales.[2] The sector is at present growing at around 35.4% CAGR for a plethora of reasons.[3] The domestic companies are largely involved in manufacturing low-end products for local as well as international consumption. Lately, many multinational companies have established a local presence by acquiring established domestic companies or starting a new business. The importance of the medical device industry was catapulted into the public eye during the early stages of the COVID-19 pandemic.

The sector is also witnessing strong foreign direct investment inflows, which reflects the confidence of global players in the Indian market. As per official data, the medical and surgical equipment sector received a total of INR 14,526 Crore (approx. USD 2.3 Billion) between April 2000 to September 2021.[4] By 2025, the Indian market for medical equipment is predicted to increase to USD 50 billion[5]. The Indian medical device market offers a great opportunity not only of its size, but also because of encouraging policies and regulations that the Government has introduced to give a fillip to the medical device industry. In February 2020, the Indian Government also significantly expanded the scope of India’s medical device regulation by way of a notification. When the above-mentioned notification came into effect on April 01, 2020, all medical devices were brought under the purview of India’s medical device regulatory framework prior to the notification, only 29 categories of medical devices were regulated in India.

The Medical Device Practice is an area of practice in which Nishith Desai Associates (“NDA” or the “Firm”) has built a significant expertise.  At NDA we endeavor to combine our rich international experience and expertise in domestic laws/regulations with our research capabilities to devise innovative structures and provide strategic advice on undertaking business activities to medical device companies. With the introduction of the Medical Devices Rules, 2017 domestic manufacturers are looking to tap into manufacture locally in light of the Production linked incentive scheme introduced by the Central government. The Indian Medical device industry is witnessing healthy foreign direct investment, amalgamations and collaborations (such as licensing, co- development, joint distribution and joint ventures). A significant percentage of purchasers of medical devices are private medical institutions and hospitals. Due to increased competition in Tier I cities, private enterprises have started to focus on Tier II and Tier III cities, a market which is until now untapped in India.

SCOPE OF SERVICES

Strategic advice on Industry Law issues: The Firm advises on legal, strategic and compliance issues related to the laws governing the medical devices industry. The Firm provides practical solutions, on the basis of the extensive domain knowledge of the industry including licenses, pricing, import and export and complex legal problems which arise in the industry.  

Documentation: The Firm undertakes drafting and review of product promotional and advertisement materials, policies pertaining to drug promotion to healthcare practitioners, import license applications, import agreements, authorisations, clinical trial agreements, etc. to minimize the risks arising out of non-compliance with the applicable laws.

Regulatory advice: The Firm provides advice with respect to licenses and permits and regulatory issues which may arise due to business models and transactions undertaken by the medical device companies which may have implications under the applicable laws.

Litigation: The Firm has a robust Dispute Resolution Practice with members having skill and expertise to represent clients in different forums ranging from the NCLAT, CCI, High Courts to the Supreme Court of India.

REGULATORY AND LEGAL FRAMEWORK APPLICABLE TO THE INDUSTRY

Drugs and Cosmetics Act, 1945 and Rules (DCA)

• Regulates manufacturing, import, distribution and sale of drugs (including medical devices) and cosmetics
• Prescribes product and labelling standards
• Regulates advertisements of drugs

Medical Devices Rules, 2017 (MDR)

• Issued under the DCA, it constitutes India’s primary medical device regulatory framework.
• The Ministry of Health and Family Welfare (“Health Ministry”) issued a notification on February 11, 2020, effectively bringing all medical devices in India under regulation of the MDR.
• The MDR regulates the following categories of substances as medical devices –
  • Specific devices intended for internal or external use in the diagnosis, treatment, mitigation or prevention of disease or disorder in human beings or animals which are notified by the government from time to time under the DCA;
  • Specific substances intended to affect the structure or any function of the human body which are notified by the government under the DCA. At present, the substances notified are mechanical contraceptives (e.g. condoms, intra-uterine devices, tubal rings), insecticides and disinfectants;
  • Surgical dressings, surgical bandages, surgical staples, surgical sutures, ligatures, blood and blood component collection bag with or without anticoagulant;
  • Substances used for in vitro diagnosis.

The Legal Metrology (Packaged Commodity) Rules, 2011

• Notified under the Legal Metrology Act, 2009, regulates the packaging and labelling of pre-packed commodities in India

The Drugs & Magic Remedies (Objectionable Advertisements) Act, 1954

• Regulates advertisements of drugs relating to diagnosis / cure / mitigation / treatment / prevention of certain prescribed diseases and conditions
• Diseases and conditions include AIDS, Asthma, Cancer etc.

Indian Patent Act, 1970

• Provides for product and process patent for 20 years
• Specific provision for compulsory licensing and prevention of ever- greening

Trade Marks Act, 1999

• Provide exclusive right to use registered trademark in connection with the specific goods and services in the territory of India
• Act extends protection to only registered trademarks. For infringement of an unregistered trademark, an action for passing- off will lie.

Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations 2002 (MCI Code)

• Regulates professional conduct of registered medical practitioners in India
• Prescribes that, inter alia, registered medical practitioners must not receive any gift from pharmaceutical or allied healthcare industry or their sales representative and that the practitioner must not endorse any drug or product publicly
• Makes recommendations to institutions (such as hospitals) regarding non-ethical nature of solicitation of patients
• Violation of MCI Code may amount to professional misconduct resulting in penal action to the extent of permanent disqualification to practice, over and above any other civil or criminal action which may lie under relevant law

Drugs Price Control Order, 1995 (DPCO)

• Regulates prices of controlled bulk drugs, formulations and notified medical devices
• Regulates margins offered to dealers and retailers
• Imposes obligation to sell bulk drugs, formulations and notified medical devices to dealer (conditionally) and consumer (unconditionally)

Uniform Code for Pharmaceutical Marketing Practices (UCPMP)

• Regulates marketing practices of pharmaceutical industry
• Imposes requirement of prior permission from Drugs Controller General of India for promotion
• Requires promotion to be accurate, fair, objective, verifiable and not be misleading
• Lays down standards for competitive product comparison
• Mandates that promotion should not involve exchange of gifts in any form
• Voluntary code with a condition that non-compliance may result in conversion to statutory code.

Information Technology Act, 2000 (IT Act) and Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011 (Data Protection Rules)

• Imposes a liability on such body corporate or person who deals with sensitive personal data or information for negligence in implementation and maintenance of reasonable security and procedures for securitization of such data, if such negligence causes wrongful gain or loss to any person
• Penalizes disclosure of personal information to a third person, if it is done without consent of the person to whom such information belongs or in breach of a lawful contract, and with the intention or knowledge that the disclosure may cause wrongful gain or wrongful loss
• Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011 define sensitive personal data or information to include medical records and history and such personal information relating to physical, physiological and mental health condition
• Impose several obligations on body corporate dealing with personal information and sensitive personal data or information
• Violation of Data Privacy Rules may lead to penalty under IT Act

National List of Essential Medicines (NLEM)

• List published by Ministry of Health and Family welfare
• All drugs or medical devices in the list are deemed essential, and are available or made available at affordable costs and with assured quality
• The latest list was published in 2015 and is in the process of being revised.

CONCLUSION

The Indian medical device industry continues its upward march of growth and is strongly supported by India’s robust legal framework. Several MNCs have been increasing their manufacturing footprint and locating research centers in India to serve both the Indian and global markets. Increased funding and investments have also reflected in other supply side changes in healthcare delivery in India such as the growth in the healthcare infrastructure post pandemic, increasing recognition to healthcare providers and focus on availability and distribution of medical devices, etc. There is no denying that despite the odds, the medical devices industry in India continues to offer unprecedented opportunities to present and potential investors and stake holders, now more than ever before. With increasing investments flowing into the industry the medical device sector shows immense potential for growth in our country and the proactive steps taken by the government in this regard by way of introduction of the Make in India schemes and online registration of medical devices is aiding this growth. Make in India initiative is essential to leverage the initiative to kickstart indigenous manufacturing and realize the twin objectives of accessibility and affordability in India.

REPRESENTATIVE CLIENTS

• Leading MNC Companies in India: Sanofi Aventis, Johnson & Johnson, Novartis, Abbott, Takeda, Roche, Mylan Pharma, Smith & Nephew, Zimmer Biomet.
• Important industry associations: Advanced Medical Technology Association (ADVAMED), Association of Indian Medical Device Industry (AIMED), Medical Technology Association of India (MTai), Asia Pacific Medical Technology Association (APACMed), NATHEALTH, Association of Diagnostics Manufacturers of India, All India Plastics Manufacturers’ Association, Medical Disposables Manufacturers Association, Society of Biomaterials & Artificial Organs, National Biomedical Engineering Society and Medical Surgical and Healthcare Industry Trade Association.