by Brendon Nafziger
, DOTmed News Associate Editor | July 25, 2011
From the July 2011 issue of HealthCare Business News magazine
GE Healthcare, for instance, boasts a compound annual growth rate of 30 percent from its Indian division. And according to a recent interview with that group’s president, GE expects to keep in line with market projections, and more than double its sales over the next few years, going from $400 million now to $1 billion by 2015.
GE’s rivals tell similar stories. Royal Philips Electronics said its health care business grew 43 percent in India last year. And Siemens Healthcare’ most recent quarterly report, in May, found health care grew 47 percent over the same period last year.
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Many of these companies have turned to partnerships – or outright acquisitions – of local companies to produce “no-frills” products specifically designed for the Indian market. For instance, in 2008, Philips bought Alpha X-Ray Technologies, an Indian manufacturer of cardiac X-ray scanners. A Philips spokesman told DOTmed News the Dutch giant intends to use Alpha’s industrial footprint to make middle-range scanners that will cater to buyers in India and elsewhere in the developing world.
For imaging, imports lead the way
For now, the bulk of India’s imaging equipment comes from abroad, with refurbished and used equipment accounting for a sizable bit of sales, analysts say.
According to market analysts with Millennium Research Group, imports account for nearly 80 percent of new and used imaging systems. Foreign-made goods are especially dominant for high-end equipment, such as 3-Tesla MRI scanners and CT scanners with more than 64 slices, where the prestige of U.S. and international brands helps drive sales.
“Presently, the majority of India’s medical devices are based on foreign-made products; there is a tendency to view foreign-made products as more superior to locally manufactured devices,” Cindy Yip and Prabjot Bal, analysts with MRG, told DOTmed News by e-mail.
Indian dealers frequently trade in refurbished equipment manufactured abroad, and the country is relatively open to used and repaired goods. In fact, the U.S. Department of Commerce classifies it as one of several countries that allow the import of used products on the same terms as new ones.
Also, customs duties are typically lower for refurbished than for new equipment, Yip and Bal said, further increasing their appeal to thrifty buyers.
Low prices, big challenges
Still, the attraction of refurbished equipment points to one of the main challenges for foreign companies doing business in India: low price points and slow turnover. In fact, Yip and Bal said many Chinese companies have struggled to make a profit in India, because of the preference for low-cost goods.