Bringing technology to the bedside of patients and ensuring that it fits the pocket size of the poor is bearing fruits for GE Healthcare in India
“You have just got to constantly focus on innovation. And more competitors. You’ve got to constantly produce more for less through intellectual capital. Shun the incremental, and look for the quantum leap.” These words of Jack Welch would still be resounding in the hearts and minds of GE employees long after he quit the hot seat. And the spirit is visible in the way GE Healthcare has developed a strong business model in India. “In India, for India” may sound a bit queer in the context of the $35 billion (expected to reach $75 billion by 2012 and $150 billion by 2017) Indian healthcare industry, which is struggling to make its offerings more accessible and affordable to the common man. But then, that’s where General Electric (GE) Healthcare India plans to make big money and as such, has been focusing upon “bringing technology to the bedside of the patient and to fit the pocket size of the poor.”
For the $17 billion global entity (GE Healthcare), the mission to take modern healthcare to semi-urban and rural India certainly seems to be an ambitious one. But, considering the 15-17% annual growth rate with which the $3 billion medical equipment and devices market in India is galloping ahead (expected to reach $4.97 billion by 2012), the imagination, to a certain extent looks like a healthy one. However, here lies the catch! Given the fact that the propensity to pay is much lower in India, the domestic market in all probability will offer lower profit margins. So, how can GE Healthcare India, which contributes to about 3% of the parent’s topline, remain competitive in the long run?
For starters, GE Healthcare India has reversed the trend of importing medical care technologies to India. In fact, it has built a portfolio of innovative indigenous products that are being sold globally, including developed markets of US & UK. V. Raja, President & CEO, GE Healthcare, South Asia comments, “The answer (to bringing prices down) came in the form of local manufacturers as it was cheaper as well as import duties were not applicable. However, local manufacturing called for significant investments in the form of buildings, tools and manpower. Moreover, there was this myth that locally manufactured products are not good in quality.” Indeed, relying upon local manufacturers for global quality products and that too at local costs is risky business. In fact, the only way out is acquisition and GE has been consistent with this strategy to invest in high technology, innovative businesses that deliver healthy toplines & bottomlines.
Besides, GE Healthcare India has invested a huge amount in R&D of medical equipments, and also unveiled a multi-billion dollar initiative called “Healthymagination” that aims to have a significant impact on improving health of patients worldwide by increasing access to cost-effective, quality health care products and services. GE Healthcare has partnered with the Government of India, state governments, and various Indian healthcare experts, thus making the initiative truly reflective of India’s healthcare needs. Further, at a time when others are shying away from investing in R&D (given the time & investment it requires) GE has gone ahead. In fact, it plans to spend $3 billion over the next six years on R&D that will help deliver better care to more people. In addition, GE has committed $2 billion of financing over the next six years to drive healthcare technology in rural areas, plus $1.5 billion for partnerships, content and services.
“You have just got to constantly focus on innovation. And more competitors. You’ve got to constantly produce more for less through intellectual capital. Shun the incremental, and look for the quantum leap.” These words of Jack Welch would still be resounding in the hearts and minds of GE employees long after he quit the hot seat. And the spirit is visible in the way GE Healthcare has developed a strong business model in India. “In India, for India” may sound a bit queer in the context of the $35 billion (expected to reach $75 billion by 2012 and $150 billion by 2017) Indian healthcare industry, which is struggling to make its offerings more accessible and affordable to the common man. But then, that’s where General Electric (GE) Healthcare India plans to make big money and as such, has been focusing upon “bringing technology to the bedside of the patient and to fit the pocket size of the poor.”
For the $17 billion global entity (GE Healthcare), the mission to take modern healthcare to semi-urban and rural India certainly seems to be an ambitious one. But, considering the 15-17% annual growth rate with which the $3 billion medical equipment and devices market in India is galloping ahead (expected to reach $4.97 billion by 2012), the imagination, to a certain extent looks like a healthy one. However, here lies the catch! Given the fact that the propensity to pay is much lower in India, the domestic market in all probability will offer lower profit margins. So, how can GE Healthcare India, which contributes to about 3% of the parent’s topline, remain competitive in the long run?
For starters, GE Healthcare India has reversed the trend of importing medical care technologies to India. In fact, it has built a portfolio of innovative indigenous products that are being sold globally, including developed markets of US & UK. V. Raja, President & CEO, GE Healthcare, South Asia comments, “The answer (to bringing prices down) came in the form of local manufacturers as it was cheaper as well as import duties were not applicable. However, local manufacturing called for significant investments in the form of buildings, tools and manpower. Moreover, there was this myth that locally manufactured products are not good in quality.” Indeed, relying upon local manufacturers for global quality products and that too at local costs is risky business. In fact, the only way out is acquisition and GE has been consistent with this strategy to invest in high technology, innovative businesses that deliver healthy toplines & bottomlines.
Besides, GE Healthcare India has invested a huge amount in R&D of medical equipments, and also unveiled a multi-billion dollar initiative called “Healthymagination” that aims to have a significant impact on improving health of patients worldwide by increasing access to cost-effective, quality health care products and services. GE Healthcare has partnered with the Government of India, state governments, and various Indian healthcare experts, thus making the initiative truly reflective of India’s healthcare needs. Further, at a time when others are shying away from investing in R&D (given the time & investment it requires) GE has gone ahead. In fact, it plans to spend $3 billion over the next six years on R&D that will help deliver better care to more people. In addition, GE has committed $2 billion of financing over the next six years to drive healthcare technology in rural areas, plus $1.5 billion for partnerships, content and services.
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