Andhra Chamber Members Note - AMTZ , Vizag

Andhra Chamber of Commerce – Information Bulletin August 2016

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What is AMTZ?

� Andhra Pradesh MedTech Zone (AMTZ) is India’s first manufacturing hub for medical

devices.

� Set up in Visakhapatnam, the port city of Andhra Pradesh, the AMTZ will be developed

in 270 acres of land.

� This prestigious industrial park will accommodate around 200 independent

manufacturing units, each of a built-in ready-to-use of 1 to 2 acres of land.

� The zone will provide for certain capital-intensive facilities required by most medical

device manufacturers and modern state-of-art-facilities.

� All investment towards land development, and building of common facilities as above

would be done by the Government of Andhra Pradesh through formation of special

purpose vehicle (SPV).

� AMTZ would include the following facilities over an area of 50 acres:

� Component testing center

� Electromagnetic interference laboratory

� Medical-grade low vacuum molding, cabinet molding and injection molding centers

� 3D designing and printing for medical grade products

� Sterilisation & toxicity testing center

� Radiation testing center

� Warehousing

� Regulator’s office

� Other facilities commonly required in the manufacturing of medical devices


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� The foundation laying ceremony for the park was completed on August 19, 2016 by

Honourable CM of AP Shri Nara Chandrababu Naidu. Foundation laying ceremony was

completed with in 6 months of initial announcement by CM and getting necessary

approvals for the Park.

� The AMTZ is expected to be operational by the year 2017-2018.

AMTZ - Manufacturing to Destination

� The industry park is being built scientifically keeping the international quality standards

for manufacturing of medical devices in mind.

� The domestic and global markets will depend on two factors – Quality and Cost. As all

the scientific facilities in AMTZ are being provided by the government, the cost of

production for the manufacturer will go down.

� With quality and cost-effective devices, the manufacturers will become competitive in

the domestic market.

� They will also be able compete with China, Korea and Taiwan imported medical

technologies in India.

� AMTZ approach towards national market is cost reduction, which will lead to a better

competitive pricing.

� For international market, it is not just pricing, but also the concept of international

benchmark quality.


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What the Policy Makers Say :

The AMTZ is very unique project and the first-of-its-kind in the world,” says Dr Jitendar

Sharma, CEO of AMTZ, who is the brains behind this prestigious initiative. He says the project

provides as a package of all scientific facilities that are critical to medical device manufacturing.

The creation of such a zone is based on the fact that medical devices manufacturing requires

certain high investment facilities which are too capital intensive for individual manufacturers to

invest upon. The AMTZ with in-house high investment scientific facilities would help

manufacturers reduce the cost of manufacturing by more than 40 to 50 per cent.

AMTZ is adopting the cluster approach, where the manufacturers are not asked to go and work

out in isolation. They become part of an ecosystem where they thrive and survive together. And

to support them, we are creating scientific, commercial and social infrastructure within the zone.

The creation of such a zone is based on the fact that medical devices manufacturing requires

certain high investment facilities which are too capital intensive for individual manufacturers to

invest upon. The AMTZ with in-house high investment scientific facilities would help

manufacturers reduce the cost of manufacturing by more than 40 to 50 per cent.

AMTZ is adopting the cluster approach, where the manufacturers are not asked to go and work

out in isolation. They become part of an ecosystem where they thrive and survive together. And

to support them, we are creating scientific, commercial and social infrastructure within the zone.

Overall, no medical device manufacturing zone that is exclusive for medical devices exists in the

world as large as we are planning AMTZ to be. They all exist in a large zone where medical device

manufacturing is a small portion like in the case of Shanghai MedTech Zone in China or Jebel Ali

Trade Free Zone in Dubai.

A delegation from AP State Government visited Shanghai MedTech Zone in China and other medical

device manufacturing zones. The visit was a great experience in understanding the operations of

MedTech Zones.


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The AMTZ and its ecosystem will help reducing the cost of production of medical devices and will help

even small and medium scale companies in medical devices to become global players. In this regard,

AMTZ team is working with the industry apex bodies in attracting the top medical device manufacturers.

They will invite all medical device manufacturing companies for setting up their facilities at AMTZ and

availing the market benefits.

Govt of AP is committed to complete the physical infrastructure of the park and make it ready

as Plug and play factory space within one year from now.

AMTZ has three main unique selling points (USPs) – scientific facilities, affordable space and

plug-and play ecosystem,” says Dr Poonam Malakondaiah, Principal Secretary, Department

of Health and Family Welfare, Government of Andhra Pradesh, who is the Chairperson of the

Board of Directors of the Andhra Pradesh MedTech Zone.

Dr Poonam Malakondaiah says, “We set three goals for AMTZ, achieving them in five years.

They are:

� To build AMTZ as Indian Hub in medical device manufacturing;

� To make AMTZ in its core area as Asian Hub while competing with other esteemed

Asian market leaders – China, Korea, Taiwan, etc; and

� To reach the prestigious status of Global Hub. Here we will not only have to compete

with the South East Asian nations but also contend with global markets such as – Russia,

Germany, Italy, France, USA, etc.”

The domestic and global markets will depend on two factors – Quality and Cost. As all the

scientific facilities in AMTZ are being provided by the Government, the cost of production for

the manufacturer will go down. With quality and cost-effective devices, the manufacturers will

become competitive in the domestic market.

Through AMTZ, approach towards the national market would be cost reduction, which will lead

to a better competitive pricing compared to even imported products. For international market,

it is not just pricing, but also the concept of internationally benchmarked quality.


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In AMTZ, we are going to encourage the international certifying agencies, national regulatory

offices and quality support institutions to set up their offices. The approach would be to help

manufacturers achieve the quality of international standards.

What is the estimated cost of AMTZ?

The AMTZ is estimated to be ready by October 15, 2017. The participating companies in AMTZ

will need at least 6 to 12 months to set up their assembly units and start operations. Hence,

AMTZ would be operational by the beginning of 2018.

It is estimated that Rs 400 to 500 crore would be the cost of project establishment

approximately.

Why Vizag is the chosen destination for AMTZ ?

The proximity to port is a key factor to the success of medical equipment sector, given that many

components are imported and heavy machinery in the form of finished goods are exported. For

instance, the location of Shanghai MedTech Zone in China is next to the port.

For a country like India where currently a large proportion of the spare parts and equipment is

imported, port connectivity is critical.

Heavy machineries like MRI and CT scanners are transported to their destined country through

waterways.

Fortunately, AMTZ is not only close to water port, but also to the airport and the highway. The

surrounding part of AMTZ is a mountain area which will prove crucial to its scientific facilities

like electro magnetic interference, radiation safety testing and others, which need an isolated

environment.

Hence, the geographical location of AMTZ gives the strategic approach to port, airport and

highway which is critical, while the landscapes makes it more valuable and can be exploited for

various characteristic requirements.


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Medical Devices - Market Scenario

It may be noted that Indian medical device industry is worth over Rs 60,000 crore. And country’s

humungous import bill for this segment amounts to over Rs 23,000 crore (approximately USD 4

billion) while export amounts to only over Rs 7,000 crore (USD 1.1 billion).

India’s import dependency on high-end medical devices is over 80 per cent and 60 to 70 per cent

for other devices. And, this is where the dedicated medical device park would be of great value

– reducing humongous import dependency, and increasing export while generating wealth and

employment within.

The total healthcare expenditure in India was only 3.9 per cent of GDP, compared to 8.9 per cent

for Brazil, 6.2 per cent for Russia and 5.2 per cent for China. Out-of-pocket expenditure is as high

as 61 per cent, with only 25 per cent of the population being covered by health insurance.

While the government and value chain participants have undertaken several steps to address

the issues of healthcare access, quality and affordability, these have been executed in silos.

Specifically, while medical device companies have focused largely on extending life expectancy

and improving quality of care, there is a need to increase affordability for a widespread impact.

The challenge therefore for companies in India is to produce medical devices that are both cost

competitive and effective to increase penetration and use.

It is in this context that the Make in India initiative becomes significant for the medical devices

industry.

Medical devices play a role not only in screening, diagnosing and treating patients, but also in

restoring patients to normal lives and in regularly monitoring health indicators to prevent

diseases. With technological advancements, the role of medical devices is now expanding to

improve quality of care across each stage of the healthcare continuum.


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According to an industry report, in India, the medical devices industry is small, with a

disproportionate reliance on imports and a complex regulatory environment. The global medical

devices and technology market is expected to grow to USD 520 billion by 2020 from an

estimated USD 3.7 billion in 2014.

The Indian market is among the top 20 in the world by market size, and fourth in Asia after Japan,

China and South Korea. However, the per capita spend on medical devices in India is the lowest

among the BRIC countries at USD 3 (USD 7 in China, USD 21 in Brazil and USD 42 in Russia). It is

significantly behind developed economies like the United States (US) (USD 340). This current

under – penetration of medical devices in India represents a sizeable growth opportunity.

The inflow of foreign direct investment (FDI) in medical devices was USD 90 million between

December 2014 and August 2015, post the government permitting 100 per cent FDI under the

automatic route. 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:

� Overall growth in healthcare infrastructure

• There is a significant increase in the number of hospitals and hospital beds in India. Bed

strength had increased from 0.8 million in 2002 to 1.6 million in 2012, and is further

expected to increase to around 2.9 million by 2025. This increase has been driven

primarily by the growing presence of corporate hospital chains, international companies

and service providers entering tier-II and tier-III cities.

• There is an increasing presence of diagnostics laboratory chains focusing on imaging and

pathology. It is estimated that there are more than 100,000 diagnostic laboratories

across the country, with the number expected to grow at a rate of 15 to 20 per cent.


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• The healthcare industry is also witnessing the emergence of new formats, such as the

chains of multi speciality outpatient clinics, mother-and-child hospitals, short-stay

surgery centers, IVF centers, etc., which are driving demand for medical devices.

What Next?

“Our roadmap for next 5 years is ready,” says Dr Jitendar Sharma. The AMTZ has strategized

year-wise outlook for AMTZ.

� Between first and second year, the interested manufacturers in AMTZ will set up their

assembly units. The first year will go for us to establish AMTZ and the second year will

take manufacturers to set up their brand-specific interior assembly units.

� Between third and fourth year, the AMTZ will be established into a manufacturing hub

that will be able to meet the medical device requirement in India.

� It is expecting over 200 to 300 manufacturing factories in AMTZ, each worth Rs 50 crore.

� On average, it means total factories worth Rs 15,000 crore. The total import dependency

of India is Rs 24,000 crore.

� In the fifth year, it will exceed the capacity to meet the entire domestic requirement while

also trying to be exporter in the global market.


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For more investment related queries , please write to :

Shri Nandagopal

Secretary

Andhra Chamber of Commerce

Shri P. Nandagopal , Secretary

Andhra Chamber of Commerce.

"Velagapudi Ramakrishna Bldg.",

23, Third Cross Street, West CIT Nagar,

Nandanam, Chennai-600035

Phone: 24315277/78

Mob:9840064295

Email: [email protected],

[email protected] Web: www.andhrachamber.com

Mrs. Rama Venugopal

Chairman - Women

Entrepreneurs Sub Committee

Andhra Chamber of Commerce

Mrs .Rama Venugopal

Executive Director

M/s.Value Added Corporate Services P Ltd "VANITHA",

No 5, Third Avenue, Besant Nagar, Chennai – 600090

Ph:+91 044 24462337/38|

Email: [email protected]|

http://www.valueadded.in

Kindly send your communications / enquiries to Shri Nandagopal with a cc to Mrs. Rama

Venugopal.

For More info om AMTZ, please visit :

http://amtz.in/

Enclosures :

Investors Guide prepared by AMTZ is enclosed along with this mail.

Devices & Hardware

Andhra Chamber Members Note - AMTZ , Vizag