A Wipro Trend Setter Conversation with Jyotirmay Datta, Global Industry Head for Medical Devices
Emerging markets will play a “big role” in altering the business mix of medical device manufacturers, posits Jyotirmay Datta, Global Industry Head for Medical Devices for Wipro.
Medical devices include any and everything physicians and caregivers use to treat patients or deliver healthcare services. Surgical equipment, MRI scanners, pacemakers, stents, medication delivery systems, imaging and diagnostic equipment, and even hospital workflow management and archiving tools (e.g. PACS) fall into the medical-device category. Major manufacturers include GE, Johnson & Johnson, Medtronic, Philips, and Siemens.
Until the current recession, Datta notes most of these manufacturers enjoyed operating margins of more than 20 percent serving the developed world and successfully growing their business. “They had no incentive to seek new markets,” he explains. The current economic conditions, coupled with strong Asian competitors, changed that viewpoint. “Consumers now have less discretionary funds to spend on healthcare,” he explains. Government regulation is adding to the challenging business environment, he adds. The result: these manufacturers are under “keen growth and cost pressures in their home markets,” continues Datta.
The answer is clear. “These companies have to look at growth options elsewhere,” says the Wipro executive. Emerging markets, especially China and India but also Brazil and Russia, are adding one billion new patients into the global healthcare system “who are relatively untouched,” he estimates. He predicts these markets will “become increasingly important to the medical device manufacturers in the next three to five years.”
The challenge: devices that are affordable for emerging markets
In India, for example, healthcare currently accounts for just three percent of the gross domestic product, Datta says. “There’s enormous potential,” he believes.
However, there is one major challenge: cost. Datta, quoting from other studies, states members of the Indian middle class earn $4,500 per annum. Currently they spend about $6 per year for medical devices; in the United States consumers average $230 a year. “A medical device conceived and successful in America is not likely to sell in China or India as is,” he says matter of factly. Manufacturers either have to find a way to bring costs down or come up with different products.
Datta says they can do that by changing their research and development, their processes, and their technology. “They can’t just replicate what they are doing in the Western market if they are going to be successful in the emerging markets,” says Datta.
How Wipro helps medical device firms compete in emerging markets
That’s where Wipro comes in. Its consulting team can help medical-device manufacturers do just that.
Many of the major manufacturers already have set up plants in India. Wipro has the experience to help others set up supply chains in these markets. Ditto for their distribution systems and validated processes. Wipro is also capable of aiding them in brand building, “which has to be different.”
Currently Wipro is the one of the world’s largest third-party research and development services companies according to Datta. Wipro’s 18,000 engineers can aid the manufacturers in developing new, affordable products end-to-end.
One example is Wipro’s Telehealth Solution, a device that enables effective patient monitoring in remote places. It automatically captures vital data from various devices (like blood pressure monitors) and then transmits the data through wireless or wired connections to patient management systems. It has live video and audio for real-time patient-caregiver interaction. The Telehealth device can deliver quality care at an affordable cost to patients globally.
In addition, compliance to global requirements can be a challenge for medical device manufacturers. Legal scrutiny can be difficult in various markets. Wipro has a regulatory practice that is up-to-date with the latest policies from regulatory bodies and associations worldwide. Wipro’s knowledge ensures engineering specifications meet the requisite criteria.
Finally, Wipro, a company having its roots in India, has a deep understanding of how to do business in Asia and the Middle East. “We understand the Indian market and can help companies gain a foothold in the Indian market,” he says. Indian’s population of 1.2 billion people “is a huge market for anybody.” Last year he says 50 percent of the $1.7 billion worth of medical devices Indians purchased were imported. But he predicts that should change by 2015. In the next few decades he expects the Indian appetite for medical devices to equal that of the United States and larger than any market in Europe.
Different routes to success
The Wipro executive reports there are several current strategies for success. Large players “with money and muscle” are setting up their own captives. Some medium-sized firms are forming joint ventures with local players. Some of the larger Indian companies are buying smaller European companies to enter their markets. “They are designing products for the Indian market and also selling them in their European market,” he explains. And some have partnered with Wipro itself.
Lower device costs can help make everyone healthy: consumers globally who can now afford the device and the manufacturers that make them.