7 Not to do’s when entering the Indian healthcare market
Healthcare technology innovation can be the tool to make modern care available, accessible, and affordable to all by keeping the cost of the product or delivery as little. India is fast evolving as a global medical hub with domestic and international patient base rising in double digits’ every year. This expanding trend has resulted in an upsurge in investments by healthcare providers in installing world-class medical equipment, seeking quality accreditation and upgrading technology and revolutionizing Indian healthcare market.
At present, the market for medical technology in India is relatively small, but swiftly increasing. It is promising and highly fragmented with limited local manufacturing and imports establish over 75% of the 2.3 Billion USD market. An improving health care delivery, media changing medical technology landscape, and financing mechanisms are driving growth in the pharmaceutical industry.
However, some key impediments have stifled the industry which the global medical technology companies should look out.
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Do not overestimate market potential.
Despite the high growth of the Indian healthcare technology market in the last couple of years, industry growth is suppressed by low penetration. The per capita spend on medical technology in India is approximately 2 USD, as compared to 231 USD for Germany. Market Penetration in smaller towns &rural areas is low, due to lack of affordability, accessibility, and awareness. Foreign MedTech Companies may find it difficult to supply and support due to demography, income, and cost.
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Do not underestimate complex policies.
New companies entering the Indian Market will face a herculean task to establish themselves. Lack of specific regulation for the medical industry and coverage under the Drugs and Cosmetics Act has led to a lack of transparency about the rules. There are difficulties relating to several levels of government authority involved in applying the guidelines, proper communication, inconsistent interpretation and application of the regulatory standards at the state drug controllers, ports, etc. Due to the long and complex regulatory pathway, new products placement will be difficult for MedTech Companies.
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Do not ignore price sensitivity and localization.
An enormous amount of price sensitivity in this market, so the point of affordability is supreme. Assuming a firm is going to service a significant middle-class population, having a product priced at a very reasonable rate is crucial. One such innovation is GE’s Mac series, an ultramodern-portable electrocardiogram (ECG) machine. GE has also kept the reasonable price keeping in mind the price sensitivity. The device was conceptualized, designed and manufactured locally in India.
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Do not underestimate the role of local partnership.
Avoiding local players and entering directly into the healthcare market can be critical and a costly affair. An MNC may tie up with any performing domestic digital healthcare startup for gaining experience. Both the parties can influence each other’s strengths to bring inexpensive healthcare solutions within the grasp of masses. While such a model can deliver good quality care to a vast majority of the country’s population, medical technology companies can gain by the bigger patient volume and economies of scale. B Braun and GE are examples of businesses that have partnered with state governments to provide accessible and affordable and health care.
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Do not overestimate the labour market.
Despite emerging markets’ huge populations, large corporations have trouble recruiting skilled workers and managers because the quality of talent is hard to determine. The high-quality recruitment firms focus on top-level searches, so companies must seek to identify mid-level supervisors, managers, and engineers. Business schools, colleges, and training centers have thrived, but apart from an elite few, there’s no way to ascertain which institutions produce quality and skilled managers.
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Do not use cookies cutter strategies.
Health care companies can’t use similar strategies in all emerging countries, but they can generate collaborations by considering different markets as part of a system. For example, GE Healthcare manufactures product parts for its diagnostic machines in China, Mexico, and Hungary and develops the software in India. The company shaped this system when it understood that the diagnostic tools’ market was small in most low-income nations. GE doesn’t treat India and China just as markets but also as sources of innovation and talent that can push its growth trajectory. And that’s how global companies should involve developing markets if they wish to secure their future business.
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Do not overestimate RoI and break-even periods.
Indian healthcare market is having huge capital cost with high gestation period. Healthcare technology is capital intensive, and setting up a plant requires substantial investment. As the industry is on a steady growth curve, the overall market remains relatively small due to low market penetration. Thus, volumes are little and do not provide economies of scale for most manufacturers. Alpha X-Ray (acquired by Philips) is a key example. Alpha X-Ray began making its path labs from the base half the price of an imported one and expanded to many parts of western India. Alpha’s investors sold out since it was stressed for funds.
Looking forward to great opportunities
India has seen relatively steadier and balanced growth. MedTech MNC’s are likely to become an increasingly important part of the wider economy. Companies should invest and plan for a growth rate over the next 20-25 years that is higher than what has been achieved over the last decade.
India is set to become progressively able as domestic firms are building the resources required for success. By employing cost-effective and innovative business models, winning the support of prominent local organizations, and using a clear future roadmap to deliver results through strategic partnerships, Global MedTech Companies can not only skip business challenges but also succeed in India.
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