Refurbished Medical Equipment: Challenges and Opportunities
The demand for refurbished medical equipment is increasing in India, along with the new equipment market. This article outlines drivers and restraints of the refurbished market.
India is one of the largest emerging medical equipment markets in the world. It is estimated to grow at a rate of 14% Compounded Annual Growth Rate (CAGR) to exceed $4 billion by 2015. The Indian medical equipment market was worth more than $2 billion in 2010. A large part of Indian population does not have access to quality healthcare infrastructure. The healthcare service provider’s view refurbished medical equipments as an alternative to new equipments that drive the costs high.
The demand for refurbished medical equipment is increasing in India, along with the new equipment market. As the service providers are focusing on Indian rural markets coupled with cost sensitivity, the demand for refurbished medical edquipment is anticipated to grow.
The equipments are bought on the basis of technology and year of manufacturing. Refurbished obsolete equipments are extremely cost effective.
The refurbished equipments are 50% to 60% cheaper than the original equipment cost.
Due to complex nature of the equipments, the after sales support, quality of the product provided by the vendors directly impacts the reliability.
After Sales Support
The promptness in attending to customer needs and availability of the spare parts and cost of after sales services are critical success factors for spare parts and cost of after sales services are critical success factors for any vendors.
The above are the various market parameters refurbished medical equipment market in India. factors are crucial for the vendors to be successful.
Refurbished equipments can sometimes cost less than 50% the price of the original equipment. Most hospitals cannot afford to buy new equipments every 5-7 years. So buying refurbished equipments can save significant amount of capital expenditure.
Refurbished medical equipment vendors offer post sales service contracts like the new equipments. This adds to the consumer’s confidence in the products
The Indian refurbished market is characterized by many precarious players. Due to which the consumers are forced to take additional care in purchasing.
- Quality: Depending on the original manufacture the durability of the product varies. The quality of the refurbished product may be at par with the new equipment but the durability remains uncertain.
- Perception: The perceived risks associated with used equipment impede the growth. The accuracy and the quality of the output that vary impacts the large corporate hospitals to buy only the brand new equipments.
The medical devices sector in India got a boost from the Union Budget 2010-11. A uniform concessional basic duty of 5% for all medical appliances is introduced. Various other concessions like exemption of import duties have been brought about in specialized equipments as well.
At present multinational companies dominate the refurbished medical equipment market in India. Most of the equipments are imported from developed nations namely USA, Germany etc. The domestic players contribute to less than 10% of the market. The highly consolidated market is characterized by the multinational players such as EverX, Zigma Meditech, Masters Medical Equipments, GE Healthcare, Siemens Healthcare, and Philips Electronics NV.
Dominance of GE, EverX
Major multinational players like EverX, GE Healthcare, etc. are already present in India and have an established supply chain network
There are players in the unorganized sector that do not do proper refurbishing of the equipments and hence are able to price the equipments lower than their organized counterparts
Many people perceive used or pre-owned products to be of inferior quality and hence don’t want to buy refurbished products
No after-sales service
Most of the refurbished medical equipments are imported and so there are no after sales services, which add to the cost of such products by roughly 50-60% of the cost of the refurbished product
The market for refurbished medical equipments is growing at a good pace in India. Companies can seize this opportunity and increase its market share in this segment
No major domestic player
No major domestic players are present in India for the refurbishment market. An already established domestic medical equipment company can exploit this to diversify into this category
The small town and rural markets are still untapped. Although affordability is a major issue here, collaborations with state and central governments can be used to exploit these markets
Companies can open up new domestic centers to provide customers with aftersales services, thereby adding to a safety factor in the minds of the customers for its products