The right product for emerging markets?

The last decade has witnessed a rapid shift of focus of large multinationals towards emerging markets, across diverse industrial domains. Apart from the obvious benefits of capitalizing on the new opportunities, much of this paradigm change has been driven by the need of fitting sustainability in their business models. The medical technology industry has joined the wagon as well, primarily driven by some prominent growth drivers in the emerging economies – changing medical technology landscape, improving healthcare delivery and financing and changing patient profiles with increased life expectancy.

The medical technology industry in these markets is extremely aggressive and split, with domestic firms mainly manufacturing low technology products and multinationals primarily importing high-end medical equipment. However, a new breed of home-grown mid-market innovators cognizant of the local needs, are shaking up the global competitive landscape with low-price, medium quality products whereas global giants have evolved from the distributer based business mindsets to setting up local manufacturing units. But because of insufficient knowledge of the clinical needs and usage patterns of consumers in the emerging markets, appended with the local competition barely visible to a multinational company headquartered in the U.S. or Europe, writing the requirement specification for the right kind of product is often a challenging task. GE Healthcare’s MAC 400 value-segment electrocardiography machine is a remarkable example of the right product which had the potential of converting a local community need into a viable and scalable business. Let us take a closer look at some of the salient features which could possibly define such a value segment product:

[Acceptable Quality] It does what it is destined to do, and does it well. The underlying technology allows the end-user to carry out its intended clinical use.

[Affordable] It is affordable by the ‘emerging market customer’.

[Appropriate] It serves a need and is very useful. It can be a basic product platform ripped off some of its premium features in response to the local needs. The usefulness indirectly infers that the product must be reliable and durable.

[Well-positioned] It is competitive but not an internal competitor. There should be clear lines of demarcation between the premium products and the value segment products so that the latter does not cannibalize the former.

[Innovative] It is nimble, evolving and innovative. The pressures of cost, pace and quality compel everyone to explore solutions outside conventional wisdom, which brings in the power of innovation. At its heyday, innovation can also become disruptive and give birth to a game-changing product altogether!

In the Indian context, it would be worthwhile to take a quick look at some of the home-grown value-segment product manufacturers, and learn their definitions of such products:

Company Product Segment Company Product Segment
 
Opto-Circuits Equipments, Interventional devices Sushrut Surgical Orthopedic Implants
Perfint Healthcare Soft tissue intervention Bigtec Labs Life Sciences
Poly Medicure Ltd Consumables SkanRay Diagnostic X-ray
Relisys Medical Stents, Catheters Trivitron Medical Cardiology, Imaging

The value-segment product for an emerging market is a paradigm, and perhaps can be better understood by analogies. The goal for such a product could then possibly be Mercedes-level quality and attractiveness, Toyota-level durability and margins, and Skoda-level prices.

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