How does the company's India business compare with that in China
China today contributes to 12% of Omron Healthcares global revenue while India is still a minnow compared to that pitching in just 1.25% towards revenues. However, the Indian market is growing at 150% compound annual growth rate (CAGR) while the Chinese market is also clocking fast growth at 120%.
This has partly got to do with the fact that we have been present in China for the last 18 years while we have just created a direct foothold in India two years back by floating a marketing company. Before that, Omron products were marketed in the country but only through third-party distributors. But India is a very important and high-potential market for us, and from hereon you would see our focus on the Indian market growing.
What are the fundamental differences in the strategy Omron has adopted for India and China
The fundamental difference is in the organisation of pharmacy business the structure and the size. While China is characterised by chains of pharmacies with business groups having over 1,200 stores, in India, the pharmacy sector is immensely fragmented barring a few exceptions such as the Apollo Group. With the FDI retail reforms, we see the pharmacy landscape in India transforming in near future, we expect organised pharmacies to penetrate deeper and spread wider networks. Secondly, the average size of stores in China is much bigger at 73 square metres while in India an average chemist store could be anywhere between 9 to 30 square metres. So, while in China, the turnover of each store is much higher and we have generally adopted a store-within-store format to improve visibility, in India per store turnover is much lower and one is hardly left with any space to play around with concepts like store within store.
What are your sales targets for India And how do you plan to achieve them
Our strategy in India would entail increased focus on hospitals business and expansion into tier-I and tier-II cities where we are not currently present. While the blood pressure monitor remains our flagship product here, we would be bringing in a series of products in the immediate future both for hospital as well as domestic use. We are currently present in 15,000 outlets in India. Over next three years, this should more than double to 33,900 outlets. And the number of distributors, which stands at 60 today should also multiply significantly.
Are you tapping e-commerce channels to penetrate tier-II cities
While we understand the importance of tapping e-commerce channels, we are slightly apprehensive about using them in countries like India at this juncture. Considering ours are medical products, we need physical engagement wherein a pharmacist demonstrates how to use the equipment. Although we give out detailed manuals with the devices, we do not think the market is ready.