The $15.8 billion Medtronic, the largest medical product and equipment company globally had started its journey six decades back in a garage as a medical equipment repair shop. Since then it has grown exponentially to employ over 40,000 employees worldwide and become a part of the Fortune 500 companies. Currently, the firm is changing a few significant rules of the game in its process of geographical reorientation with a focus on India and China. Pat Mackin, president, cardiac rhythm disease management, Medtronic shared with FE?s Soma Das how the firm is experimenting with a financing model here which would allow patients to pay for the implant in installments. Here are the excerpts from the interview:
Medtronic is in the midst of a geographical re-structuring process. At a time when you are rationalising workforce by over 1,500 globally, you plan to hire a substantial number in India and China.
It?s all about reallocating resources as we traverse different phases of business cycle. We have been in US for well over half a decade and have penetrated the market to a saturation level at the given level of technology. While we are constantly innovating and the US market is upgrading to those technologies, the growing Indian and Chinese markets are still unexplored and the rural and smaller centres within India are virgin markets when looked at from the angle of existing medical technologies. While sale of pacemakers in US is in excess of 300,000 annually, in India the same stands at around 22,000.
While cost is a factor that acts as a barrier, the more important factor is the lack of diagnosis here. Our cardiac rhythm disease management vertical touches the lives of around 15,000 patients per annum here today. That is about to change as we have set target to take this number to 150,000 in next five years. By then we also aim to double our revenue from these regions. The ten times increase necessitates increasing workforce here and we would be hiring around 600 people in India in next three-four years.
Considering you have grand plans for emerging markets with a special focus on India, do you plan a manufacturing unit here sometime in future?
We have just set up a manufacturing facility for cardiac devices in Singapore last month. This would cater to the increasing demand in the Asian markets including India and China. The hi-tech medical devices industry is not labour intensive. Most of the processes involved in manufacturing are automated and we just have a few key manufacturing locations across the globe. For instance, the global pacemakers market size in volumes is still in hundreds of thousands. The moment the demand in emerging markets shoot up, we can upscale the existing manufacturing to roll out additional units.
From the affordability angle, do you have special pricing schemes for the Indian market.
We are considering several options on those lines. Taking a cue from the popularity of EMI schemes here, we are experimenting with similar options where a patient can choose to pay a part of the device cost upfront and make the rest of the payment in installments. The model is at very initial stages and we have hired consultants to finetune it. But of course, implant inside your body is different from any other product and there are significant challenges to be overcome before we can share with you the final details. And as it happened with Nokia handsets or other technology innovations, once we reach the volumes, the prices would then start moving southwards.
Firms such as GE and Phillips are betting big on reverse innovation. The local conditions here could demand technologies different from what is suited to the western conditions. Is Medtronic doing the same?
Absolutely, we are headed in a similar direction. We have to account for differences in the height and weight of the people, the difference in their activity levels and so on. While any compromise in quality for reducing cost is not acceptable to us, we have deputed an R&D team here which is in extensive discussions with the doctors and cardiologists to understand nuances.
Besides, we gauge the need in other ways and make interventions such as identifying and training batches of medico-implanters who have an entrepreneurial streak who could go back and start practicing in smaller centres of India.
