Welcome to our latest edition, where we focus on pricing strategies for success in the Indian MedTech market. As the medical device industry in India continues to evolve, striking the right balance between affordability and profitability has become a critical challenge for companies.
The
Indian medical device market, estimated at around US$ 14B as of FY24, is
projected to reach US$ 23B by FY29. However, this growth is accompanied by
unique challenges, such as the need to cater to a diverse population with
varying income levels, the impact of government price controls, and the influx
of low-cost alternatives from international competitors.
Challenges
to pricing in the Indian MedTech Industry
Highly
fragmented market: The Indian MedTech industry comprises approximately 750-800
players, 90% of whom have sales less than US$ 10M and only roughly 1% exceeding
US$ 100M. The high fragmentation leads to intense downward pressure on
manufacturers to reduce prices. Exhibit 1 illustrates the split of different
player's basis sales.
Pressure
from Asian players:There has been a 13% increase in imports,
rising from US$ 7.5B in FY23 to US$ 8.4B in FY24. Imported medical devices
account for ~70% of the domestic MedTech market, with US, China
and Germany being the top suppliers. This coupled with their cost-effective
production and low-priced outputs significantly hamper the
profitability of Indian manufacturers.
Price
sensitivity: The per capita consumption of medical devices in India is low at
around US$ 10, compared to the global average of US$ 67 (Exhibit 2). This
indicates that affordability is still a major challenge for a large portion of
the population. In addition, the influx of cheaper Asian alternatives into the
market has made Indian consumers more price sensitive. On the other hand, the
increasing penetration of health insurance through government schemes like the
Ayushman Bharat provides some relief to manufacturers. It acts as a buffer for
them by reducing the out-of-pocket expenses of the patients. This way,
manufacturers can continue to favorably price their offerings while ensuring
that healthcare remains accessible to the population.
Factors governing the pricing power in the MedTech industry The
pricing power of different Indian MedTech manufacturers is determined by
several factors such as segment competition, specialization of devices,
presence of government price caps, and so on. Exhibit 3 provides a detailed
breakdown of these factors. 
Pricing strategies to balance affordability and
profitability
Tiered
pricing: This is a win-win strategy for both MedTech companies and consumers. By
offering products at different price points, manufacturers maximize profits
while expanding access to previously unaffordable technologies. Volume
discounts: Manufacturers vary pricing across volume tiers offering bulk
discounts to customers that place large orders across the company’s portfolio
of products. It also creates cross-sell opportunities for players.
Dynamic
pricing:Companies adjust prices in real-time based on market conditions and operational
costs.This helps them maintain profitability and quickly respond to changes in
the market. Value-based
pricing:
By linking a part of their payment to the outcome or value generated, MedTech
players can align incentives, share risk, and optimize pricing to remain
profitable while keeping products affordable for providers and patients. As
detailed in Exhibit 4, this type of pricing can be implemented in 3 different
ways 
Conclusion Navigating
pricing challenges in the Indian MedTech market demands a strategic approach.
Tiered pricing helps differentiate commodified devices, while value-based
contracts add value in competitive segments. Bulk discounts counter government
price caps, and dynamic pricing addresses fluctuating demand through local
insights. Applying these strategies effectively ensures broader access to
medical technologies while driving sustainable growth for manufacturers. These
tailored pricing models are essential for ensuring advanced medical
technologies reach more people while simultaneously ensuring that Indian
MedTech players continue to grow. Exhibit
5 talks about how these pricing strategies can be used to resolve the
previously mentioned pricing issues that manufacturers could face. 
Our Offerings at Praxis At
Praxis, we are committed to helping MedTech companies navigate this evolving
landscape. We believe that with the right strategies in place, there are enough
opportunities to grow and improve performance. 
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