Medtronic looks to tap 20% Indians who can afford medical devices

US-based Medtronic, which manufactures cardiac stents and pacemakers, feels India is an important market where an "alignment of resources" is crucial to tap even the 15-20% of the demographics who can afford these medical devices. The company, with overall revenues of $27 billion, is now using the learnings over the past four years to align resources in India - infrastructure (hospitals), physicians (training) and awareness (screening of patients) - to ramp up its business, says Medtronic's global chairman and CEO Omar Ishrak in an exclusive interview.He adds that he wants to work with the stakeholders to bring in a "more coherent system" in the country built around "transparency and fairness, and affordability for patients". Excerpts:
What's your view on India?
India is an important priority market for us, but right now we are just scratching the surface. The healthcare industry in general and us, too, are way underperforming - not only from the financial perspective, but also from a delivery one. So it's something we have to address.
Why is the country underperforming? Is pricing - the financial aspect, or accessibility the reason?
They are all linked together, you can't put it on pricing alone. The infrastructure in terms of awareness, in terms of training and in terms of hospital capacity is either non-existent or not aligned. We look at an economic exclusion factor - at the people who can in fact afford it, and these will be people who have enough financial capacity to purchase them at the price these things are sold in other countries, plus those covered by some insurance scheme, either government or otherwise. So what I am saying is 15-20% of India's population can afford them.
So of that 15-20% of the %population who can afford, how much has been tapped by medical device manufacturers like yours?
About 5%. I don't know the India number specifically, but across emerging markets India should be at least 25% of (potential) business. We can roughly say over a billion dollars worth of revenue should be coming from India. I really think it is a matter of misaligned resources and lack of capability and if that is fixed, if India can reach its entitlement among people who can afford it, there is enough volume in that, which will automatically trigger the next level of prices as well as more infrastructure to leverage that.
What is Medtronic's strategy for growth?
The first step is alignment of resources to leverage the money that is already available in the system. We are now focusing on hospitals because we want to start at the point where we know that when patients eventually get there, we have something. We run screening camps where, again, we target patients with a likelihood of certain types of diseases in cardiology. We try to get patients to screening camps, where we partner now with local referral physicians who have been trained with our staff to do the diagnostics.
Over the years, we have learned that the alignment of awareness, referral and hospital, training - all have to come together for this thing to flow through most efficiently. We are finding at least now that starting with the hospital and trained physicians and established infrastructure is the most efficient way of doing this, and now we are scaling this up.
We have screened 100,000-plus patients in over 20-odd cities across the country. Screening through the right method and going to the right place in a streamlined way results in lower cost for patients. It is good for the doctors because their skill sets are improving, good for hospitals because they are getting more procedures. So this results in a fair division of value across the entire chain.
Have you devised financial programmes to tap the huge potential here?
Once we have all the other variables fixed and we find patients who can't afford it, we don't leave them alone but help them to the degree that we can through loans, etc. Financing is one of them, and we can think of other things.
Do you have a tiered-down pricing structure for markets like India, where over 70% of medical expenses are paid out-of-the-pocket? How would you react to the proposed regulation in prices?
We have systematic pricing and vary very little by geography. I think a systematic and transparent approach to pricing, where the patient is getting a fair price is important, where all stakeholders get a fair division of the profit that's generated through this, while maintaining that the patient pays something that is fair.
Some level of system that's transparent and objective is always better than not having one. The degree of a more coherent system is built around that with transparency and fairness and in the end the affordability for patients - something we want to work with our counterparts, hospital system and the government.