Medical Device in India, India Medical Healthcare, 2012

1. India
Healthcare and Medical Device industry Analysis
Divya Kumar, Neel Mehta, Kavita Tangirala, Jared Mckee
HSM502
WP Carey MBA –Class of 2014
Tempe Campus

2. Introduction
Republic of India: Facts and Figures
• Location: South Asian country.
• 1.2 billion population, 2nd most populous country
• 3rd largest economy in Asia and expected to be 3rd largest in the
world by 2050.
• Steady GDP growth rate of 8.5% in last 5 years.
Demographics
• 28 states and 7 union territory
• 30 official languages + English is widely spoken
• World’s largest democracy
• Currency is rupees 1 USD = 54.47 INR (www.xe.com @ 12/7/12)

3. Foreign Direct Investment
• 1991 brought the economic reforms
• 3rd Most favorite nation for Foreign Direct Investment (FDI)
• $58 Bilateral Indo-US trade (2011)

5. Healthcare/Medical Technology Market
• $80 billion Healthcare
market (KPMG, 2012)
• Expect to reach $280 billion
in 2020
• Steady growth of approx.
15%
• $11 billion Pharma market
• Expect to reach $74 billion in
2020 (Ernst & Young)
• $5 billon Medical Device
market
• Expect to reach CAGR of 15%
(KPMG)

6. Why India?
• 2.3% medical device excise Tax in US from 2013
• India increases its government share of healthcare expenditure to 2.5%
by 2017 (12th 5 year plan)
http://www.emergogroup.com/files/2012-medical-device-industry-
survey.pdf

7. SWOT Analysis
Strength Weakness
• Hugh market opportunity • Slow Reforms Process
• English speaking population • The Long List Syndrome
• World’s largest democracy, stable • The No Follow –through Syndrome
democratic govt. • Lack of infrastructure
• Political corruption
• Low cost manufacturing
• Trade barriers
• currency restrictions and reduce tariffs • Poor productivity record, FDI, Economic
• SEZ (Special Economic Zones) reforms
• Tax break holiday • Delay in dispute resolution
• Second largest pool of scientist and
engineer
• IFRS Based Accounting practice
• Medical tourism
Opportunity Threats
• Rapidly growing market • Fraud and Reliability Checks
• Small Distributorship Advantage • Corruption and bribery
• Middle class disposable income • Poor copyright law
• Change in lifestyle of urban Indians • Foreign relations
• 1 billion+ market • Piracy
• Foreign Direct Investment Entry • Social blunders
• Macroeconomic concerns (inflation, etc.)

8. CGMS
• Continuous Glucose Monitoring System
 New Class III device
Effective management of blood glucose levels
Components: Sensor, transmitter & a wireless
monitor
Alerts the patient
Downloadable data
National Institute of Diabetes and Digestive and Kidney Diseases (NIDDK)
http://diabetes.niddk.nih.gov/dm/pubs/glucosemonitor/index.aspx

9. CGMS
• India
 Patient base of 63 million
 Causes for prevalence:
• Insulin resistance
• Abdominal adiposity
• Low adiponectin
• Higher C-reactive protein
• Diet and lifestyle
• Major impediments: Cost and affordability
International Diabetes Federation
http://www.idf.org/sites/default/files/IDF_SEA_5E_Update_FactSheet.pdf
Mohan, V., Sandeep, S., Deepa, R., Shah, B., & Varghese, C. (2007). Epidemiology of type 2 diabetes: Indian scenario. The Indian journal of
medical research, 125(3), 217-30.
Indian Human Development Survey
http://ihds.umd.edu/incomeRU.html

10. Recommendation
• Invest in Indian Market
– Medical Device Market growth rate of 15%
– “We can expect 12%–16% annual growth over the next 10 to 15 years. All the risk
factors put together are just irritants, which at most can bring growth to 8%–9%. This is
still significantly higher than the 2%–3% growth that developed, Western markets are
currently experiencing.”
Annaswamy Vaidheesh - Johnson & Johnson
– Emergent Middle Class
• Additional 580 million customers
– Growth of Insurance Market

11. Recommendation Investment Strategy
• Short-Term Strategy
– Develop local distribution to distribute Tier 1 products
• Minimize fixed investment
• Maintain flexibility
• Utilize local sales force
• Long-Term Strategy
– Invest in Manufacturing facilities
• Initially produce Tier 2-3 products
• 100% Foreign Direct Investment
• Utilize Indian facility to supply Asian markets
• As markets mature manufacture Tier 1 products