Fresh Levies on Hospital Equipments, Accessories

Hospital equipment including linear accelerators that are used in cancer treatment, will now attract special additional duty. Certain medical equipment and accessories that were previously exempted from duty have now been brought under the five percent custom duty slab. Diabetes patients are among the few who stand to gain from the change in duty structures. Customs duty on glucometers and test strips has been reduced from 25 percent to 10 percent, Nicholas Piramal, Bayer and B Braun are the major players in this segment.

"The reduction in customs duty will have a positive impact on our business", says Swati Piramal, director, Nicholas Piramal. Glucometers constitute a major part of the sales of the company’s Rs.70 crore diagnostics business. The prices of glucometers, currently in the region of Rs.5,000 are expected to decline. The five percent duty slab has also been imposed on some ear, nose and throat (ENT) equipment used for eye surgery and parts used in the manufacture of ELISA kits which are used to test for AIDS.

Equipment comprise a major part of investments in the healthcare sector. Currently, between 20-40 percent of the total investment in most super-speciality hospitals is on imported equipment. "DSA angiography, a vital equipment used in cardiac procedures cost anywhere between Rs.3.5 crore and Rs.5 crore and the 5 percent duty on it will add up significantly to the cost", says B Gokani managing partner of medical equipment importing firm Edifice Medical Systems. Philip, Siemens, GE Medical Systems are among the major players in the high-end medical equipment sector.

[Ref: The Economic Times, 2/3/02]

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GE Medical to make key components in India

Buoyed by its Indian experience, the $8.4bn GE Medical Systems (GEMS) is moving to India the manufacture of crucial components like computed tomography (CT) detectors and magnetic resonance (MR) coils from Milwaukee, USA and CT tubes from Buc, France. GE BEL (a JV between GEMS and Bharat Electronics) will make CT detectors and tubes and GE X-ray will manufacture MR coils in Bangalore.

"We are expanding our facilities here, doubling the size of our production of our component facilities, said Joe Hogan, President & CEO, GEMS. The components part of GEMS is hardcore technology business. The components we will now be making are sophisticated products. They go into high-end, complex equipment. After a while we might be the only center making these components for GEMS globally. At present GEMS makes a part of the CT detector in India.

GEMS’ total asset base in the country is around $50m currently. GEMS has a 40 percent share of the Indian market. The Indian market for medical systems is estimated at $315m. The company is focusing on the cardiology market in India. According to Mr Hogan, "The need for expansion of the cardiology segment in India is incredible."

India is a very price sensitive market. Having figured that the market’s ability to absorb, $1.5m Cath labs is limited. GEMS is looking to develop products like C-arms and things like that at a lower price that will still perform.

According to estimates, in India, only five percent of the people in need of cardiac care can afford it. GEMS sees an opportunity in this for the country "to service other parts of the world." Said Mr Hogan, "Your clinical capability in cardiology is good or better than that available in other parts of the world. You should be able to take advantage of that. You can get customers from neighbouring countries to come here to have the surgery. This helps the market grow and it will fund more growth in India."

[Ref: The Economic Times]

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