Device firms pull back from India following price caps

Mumbai India - saiko3p/iStock/Getty Images Plus/Getty Images
Mumbai, India. (Image: saiko3p/iStock/Getty Images Plus/Getty Images)

Evidence suggests price caps imposed on medical devices in India have deterred investment. Official statistics show a 59% year-on-year drop in foreign direct investment over the first nine months of 2017, implying multinationals have pulled back in response to the imposition of price caps. 

India capped the price of cardiac stents in February 2017 before going on to put a ceiling on what companies can charge for knee implants in August. On both occasions, India rejected claims that the latest types of device in each field deserve premium prices, prompting companies such as Abbott, Boston Scientific and Medtronic to try to pull products from the market or get the ceiling raised.

Those efforts ran into legislation forcing the continued supply of the devices. But statistics suggest the multinational device manufacturers and their peers have still managed to hit India where it hurts.


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Pharmabiz reports foreign direct investment in the Indian medical technology sector totaled $173 million over the first nine months of 2017. That compares to $417 million over the same period of 2016. 

The $173 million figure is an acceptable haul by historical standards. However, with India seeking to spur investment in medical devices and more generally present itself as a good place to do business, the fall back toward the mean following a bumper 2016 is a blow for the government and the industry.

Observers think the decision to cap the prices of cardiac stents and knee implants has affected the willingness of overseas investors to put money into the Indian market.

“Unnuanced market interventions or the atmosphere of regulatory unpredictability and haste often drive away strategic investors,” Pavan Choudary, director general of the Medical Technology Association of India, told Pharmabiz.

It is questionable whether the sharp drop in investment will make India consider changing course. The cardiac stent price cap is up for review soon. But the Indian price watchdog in charge of the process has said the lifting of the price cap isn’t an option. The best companies can hope for is what the agency terms “objective rationalization.”

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