The word, “innovative,” has become the media’s equivalent of the advertising’s “new and improved!” label, over-used to the point of meaninglessness. But I am always curious when I see innovation connected to business and global health since past assumptions and models haven’t succeeded. So I was pleased when I found a recent report, “Taking advantage of the Medtech market potential in India: Success will hinge on operating model innovation,” released last week by the consulting firm, PwC, (PwC report) used the concept correctly. Moreover, since many of my colleagues are current or former members of the local medtech industry, which encompasses a large range of medical products from diagnostics, to imaging equipment, to orthopedic repair parts and is an important part of the Massachusetts economy, the report provided me with ammunition for encouraging them to consider markets outside the US.
The report is based on a survey of an unspecified number of international medtech companies currently operating in India and is accessible (a free download) and readable (under 20 pages). The authors begin with a summary of why medtech companies should consider increasing their business in India:
- the medtech market is about $3 billion per year, which is less than that in China, Brazil, and Russia, but is growing at the fastest rate (16% projected 5-year CAGR);
- the government is increasing its spending on health care, both on acquisition (25% of total) and infrastructure;
- the insured population while small (3%) is growing;
- local medtech manufacturing capability is substantial; and
- 23 of the largest medtech firms have at least a sales/marketing office there.
The meat of the report is guidance on finding “the right operational strategy,” which is consultant-speak for how to run your business but not into the ground. Here’s my list of take-away advice:
- set up manufacturing in India to lower costs, ensure supply, and position for entry into other south Asian countries;
- understand the market and buyers’ needs and concerns, especially the middle- and lower-income out-of-pocket buyers;
- redesign existing products to simplify procedures and decrease accessory cost;
- design new products for affordability and value, not just low price (more focus on life-saving and less on life-enhancing) and partner with local universities or firms for R and D;
- offer multi-location or mobile training centers to introduce and educate potential customers;
- emphasize and deliver good service not only sales;
- decrease the use of distributors and increase direct, in-person sales to maximize interaction with customers;
- recognize and prepare for infrastructure limitations in communications and distribution; and
- to be competitive encourage continuous improvement in products, service, and pricing (always good advice).
The authors also mention that the Indian regulatory system needs improvement, consistency, and funding, but doesn’t say what companies should do. My naïve suggestion is that companies could offer representatives to an advisory group that would provide expertise and contact with other regulatory authorities. There is an Association of Indian Medical Device Industry (AIMed) that seems to have an regulatory advisory group which may be a place to start. Other ideas that I have for medtech companies to improve their competitiveness in India are:
- reach out to NGOs or other groups that are delivering health care to understand the environment better;
- utilize the services, knowledge, and resources of international economic development groups like the IFC/World Bank (see IFC Medtech Discussion), UK’s DFID (DFID Trials Program), and US’s USAID; and
- look for successful operational models in used by technology-based companies in similar countries.
In the first category, a medtech company in the orthopedic/trauma care area could be a sponsor of the non-profit SIGN Fracture Care International (SIGN). SIGN has developed and manufactures its own products for treating fractures and provides them and training to a network of hospitals and surgeons in the ROW and seems to have a presence in India.
In the last category, I noted some examples from the pharma sector in my review of the report, “Bringing Medicines to Low Income Markets: A guide to creating inclusive business models for pharmaceutical companies” (Medicines for BoP) (my 2/9/12 post, “Putting the Biz into BoP”):
- Novartis/Sandoz creating decentralized education/delivery program in rural India which now reaches more than 42 million people;
- German Federal Ministry of Economic Cooperation and Development and Bayer Healthcare conducting a sexual health awareness campaign in Bosnia;
- Gilead and Cipla (a generic drug company) developing fixed doses combination antiviral drugs to make compliance to anti-AIDS treatment easier;
- WHO bringing together several groups and representatives of the vaccine industry to write specifications for future vaccine appropriate to developing countries;
- Novo Nordisk collaborating with the Chinese Ministry of Health to provide education and training to health care providers on diabetes;
- Abbott’s Indian subsidiary holding small-scale educational events;
- Square Pharmaceutical of Bangladesh creating a vertical drug distribution system to decrease costs and increase quality;
- Novartis working with other companies and the Tanzanian government to use a mobile phone platform to track drug supplies in public health facilities; and
- Pfizer providing an “eCard” discount drug purchasing card in the Philippines and Indonesia.
Innovate and prosper!