Advertisement

  • News
  • Columns
  • Interviews
  • BW Communities
  • Events
  • BW TV
  • Subscribe to Print
  • Editorial Calendar 19-20
BW Businessworld

Rivals Pose Opportunity

Photo Credit :

New Jersey-based Becton, Dickinson and Company (BD), the century-old medical device giant, is not new to India. Its first office in the country was set up in 1995. BD's India revenues, which topped $100 million in the past year, come from selling syringes, diagnostic kits, lab equipment and related gear used in healthcare. As growth prospects get bleaker at home, the company is looking for new growth avenues in emerging markets, and India, with its Rs 5,750- crore medical technology market, looks attractive. Now the $7.1-billion giant wants to ramp up its development and manufacturing operations in India — it is shifting production from Sweden to India. Company chairman and CEO Edward J. Ludwig speaks to BW's Noemie Bisserbe about the company's strategy and plans for India.

The medical technology market in India is growing fast. But its needs are very different from that of the West. How are you addressing these needs?
Let me go back. We have been in India since 1995, and our first efforts, frankly, were not that successful. I don't think we had a good sense of what the market needed. The need for safe injection, safe blood collection and evidence-based therapy are universal. But the way these are delivered here — through a combination of external forces such as NGOs, a federal policy level and a state policy level —is unique.

We initially had one basic product — a two-piece syringe that was successful in southern parts of Europe. We moved manufacturing from Spain to India and started selling it here. But it turned out that the market here wasn't really a two-piece market, but rather a three-piece market. The two-piece doesn't have the rubber stopper and many markets prefer that for whatever reasons; but not this market.

So, first we had the wrong product. Secondly, we exported a lot of expensive equipment that we paid duties on. So, it was not cost competitive. We can look back now and say we should have known better, but sometimes you just have to move in and learn from experience.

 FAST FACTS
 
Established
1897

CEO
Edward J. Ludwig

Headquarters
New Jersey

Revenues
$7.1 billion

Employees
29,100

Business
Three divisions: BD
Medical, BD Diagnostics and BD
Biosciences

Key Products
Needles, syringes, other medical devices and  diagnostic systems, and reagents

 
We are now developing products that are lower priced. Though they are still of very high quality, they may have a few features less and are easier to use. We are going to take a couple of years to fill in the pipeline of products here. We do not do any research and development yet in India. This situation will change in the next five years, and we will be doing more development in India. We will also expand our plant. It has some spare capacity, so we are moving some manufac-turing lines from Sweden to India. We will then export the products back to Europe.

Is there a larger plan to make India a manufacturing hub?
Not immediately. But over time, we will continue to expand. So, maybe over a period of 10 years, we will call India a hub for certain products.

What is your pricing strategy for India?
The simple thing is that we do not determine our prices. This is a very competitive place, and the market determines prices. We just have to make sure that our cost structure and value proposition is appropriate, so that we can get acceptable returns.

Indian companies have now started developing indigenous devices at an affordable cost. How do you look at this new competition?
There is a lot that we can learn in India. If you look in this building, you will find that most people who work here are generalists. When we start thinking about developing products here, we will have to start getting people with a medical background who understand technology. They will scan the market and look for such companies. Most innovations come from smaller companies. So we can partner with them or at some point, think about making acquisitions.

Clearly, this is a threat. But I like to think of it as more of an opportunity too. We have always been very big on partnering with small entrepreneurs and licensing. What we have to offer is a global standard. Very often a small company has a great idea, but it does not have the resources to scale manufacturing or hire 200 sales executives. That is where synergies come in. We could acquire these companies or may partner with them for production and sales.

What role can mobile and rapid diagnostic tools play to improve quality of care in India?
Rapid diagnostic has been applied successfully in a number of settings, so I do not see why it could not be applied here as well. Probably, the only rapid test in India today is for pregnancy, although there are some tests for flu. We don't yet have adequate tests for diseases such as TB. Technology is struggling to keep up with the need.

How important a market is India for you?
The absolute size is not great. We are under $100 million revenues, but going forward, emerging markets will gain more importance, mainly India and China. Until two or three years ago, India was part of what we called Asia Pacific. Today, it reports directly to the head of international operations. We think of India as a region all by itself. India has the same status in our company as Europe. Our Indian business is growing at 20 per cent a year. In many parts of the world, including the US, we are holding our expenses flat because of economic realities. But in India, we are adding 100 people a year. We have a team of 450 people in India — twice the number of people we had three years ago. We are putting resources where we think the greatest opportunities are.

(This story was published in Businessworld Issue Dated 12-04-2010)