The Indian healthcare sector offers great opportunities to global companies...
... but you can only seize them with the right strategy
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British medical device maker Biocomposites made the move to India 12 years ago. It took five years for the company to break even in India. That sounds like a long time, but it’s worth it, says Sumit Basu, director of Biocomposites India. “India’s healthcare sector is one of the largest in the world and has huge potential. If you don’t invest there, you’re missing out.”
The English Biocomposites develops implants made from the body’s own components, such as calcium, which can be used for bone fractures, spinal operations and serious injuries. The products that the company develops are very innovative and therefore fall into a higher price range. Nevertheless, Biocomposites decided in 2010 that it wanted to bring its products to India.
At the time, Biocomposites already saw the enormous potential of the Indian healthcare sector, but was also aware of the possible hurdles that had to be taken to become successful in India. Basu: “Biocomposites decided to work with a local employee from the start who had a good understanding of the Indian business culture and knew the ins and outs of the healthcare sector. That employee was me.”
Testing the Indian market with a liaison office
Basu started Biocomposites’ India adventure with a market survey to determine which specific locations the company should focus on. “I see many global companies passing by that do not realize how large and diverse India is. “You simply cannot approach the country as one big market,” Basu explains. “At the time, we decided to focus on the big cities of Delhi, Chennai and Mumbai, because there were opportunities for our more expensive product range.”
In order to further test the market and set up a solid infrastructure, Biocomposites opened a liaison office in India. “A liaison office was the best choice for us in that initial phase, because we really wanted to take the time to promote our products,” says Basu. “But the interest among surgeons grew very quickly and a liaison office naturally has restrictions, namely that you are not allowed to undertake sales activities. Our solution for that was to import and sell the products through distributors and provide as much support as possible from the liaison office, while we were also expanding our activities to new locations.”
Long-term strategy
According to Basu, the construction of a liaison office and sales via distributors seems cumbersome, but it gave Biocomposites the space to face the challenges that every global company in India faces in the start-up phase. “In the medical devices sector, products obviously have to be approved before they can be marketed. In India, there are strict rules for that,” says Basu. “Our long-term strategy gave us the space to go through such processes without pressure. In India, it is not difficult for European manufacturers to get their products approved, but it does take time, on average a year.”
According to Basu, the long-term strategy also ensured that the company was able to position itself well in the market. “The Indian market is extremely price-sensitive, so we knew that we had to initially market our product at a lower price to ensure that doctors would become familiar with it,” the director explains. “That turned out to be the right strategy. In the beginning, we really went well below our European prices and closer to Indian prices. Over time, as demand for our product started to grow, we increased the price step by step. It took us five years to break even, but we never had to adjust our product. And that really allowed us to gain a strong position in the market.”
The potential of the Indian healthcare sector
Basu has high expectations for what lies ahead for Biocomposites in the coming years. “The Indian healthcare sector is one of the fastest growing sectors in the country with a CAGR of 22%, which offers interesting opportunities for European companies,” says Basu. “The healthcare sector is growing incredibly fast on many fronts. Not only is the Indian population expanding and aging, which has increased the demand for healthcare, but in India the demand for better quality healthcare is also growing. One of the reasons for this is the health insurance options that the government offers. More Indians are now insured and are making use of it, which is causing the market to develop rapidly. For example, you see that hospitals are modernizing to meet the higher demand. I see robotization, the increase in new forms of treatment and also a growing demand for personal medical devices. The opportunities are enormous.”
Basu therefore advises global companies in the sector to spread their wings to India. “You will not find such a large and fast-growing market anywhere else and you cannot reach that volume anywhere else either. So take your time, determine your strategy and take advantage of the opportunities that this market has to offer.”
