British medical device maker Biocomposites made the move to India 12 years ago. It took five years for the company to break even in India. That sounds long, but it is well worth it, says Sumit Basu, managing director of Biocomposites India. "The Indian healthcare sector is one of the largest in the world and offers enormous potential. If you don't invest there, you will miss the mark."
The English company Biocomposites develops implants made of components native to the body, such as calcium, which can be used in cases of bone fractures, spinal surgery and serious injuries. The products the company develops are highly innovative and therefore fall into a higher price category. Nevertheless, Biocomposites decided back in 2010 that it wanted to bring its products to India.
At the time, Biocomposites saw the huge potential of the Indian healthcare sector, but was also aware of the potential hurdles that needed to be overcome to become successful in the country. Basu: "Biocomposites decided to work with a local employee from the outset who had a good understanding of Indian business culture and knew the ins and outs of the sector. And that employee, was me."
Testing the Indian market with a liaison office
Basu is starting Biocomposites' Indian adventure with a market survey to determine which specific locations the company will target. "I see a lot of European companies coming along that don't realise how big and diverse India is. You simply cannot approach the country as one big market," Basu explains. "At the time, we decided to focus on the major cities of Delhi, Chennai and Mumbai because that was where there were opportunities for our innovative and therefore more expensive products."
To further test the market and set up a sound infrastructure, Biocomposites then opened a liaison office in India. "A liaison office was the best choice for us in that initial phase, because we really wanted to take the time to bring our products to the attention of the public," says Basu. "But interest among surgeons grew incredibly fast and a liaison office naturally has restrictions, as you are not allowed to undertake any sales activities. Our solution was to import and sell the products through distributors and provide as much support as possible from the liaison office, while also expanding our business to new locations."
Long-term strategy
According to Basu, the construction of a liaison office and selling through distributors may seem cumbersome, but it provided Biocomposites with the space to meet the challenges that every European company in India faces in the start-up phase. "In the medical device sector, products obviously have to be inspected before they can be marketed. In India, there are strict rules for this," says Basu. "Our long-term strategy gave us the scope to go through such processes without pressure. In India, it is not difficult for European manufacturers to get their products approved but it does take time, on average a year."
According to Basu, the long-term strategy has also enabled the company to position itself well in the market. "The Indian market is super price-sensitive, so we knew we had to initially market our product at a lower price to ensure that doctors would be introduced to it," explains the managing director. "That turned out to be the right strategy. We really went far below our European prices and closer to Indian prices in the beginning. Over time, as the demand for our product started to grow, we slowly started to raise the price step by step. It took us five years to break even, but we never had to change our product. And because of that, we have really managed to secure a solid position in the market."
The potential of the Indian healthcare sector
Basu has high hopes for what lies ahead for Biocomposites in the coming years. "India's healthcare sector is one of the fastest growing sectors in the country with a CAGR of 22%, which presents interesting opportunities for European companies," says Basu. "The healthcare sector is growing incredibly fast on many fronts. Not only is India's population thinning and ageing, which has increased the demand for care, but the demand for better quality care is also growing. One of the reasons for this is the health insurance options offered by the government. More Indians are now insured and are making use of them, so the market is developing rapidly. You can see, for instance, that hospitals are modernising to meet the higher demand. I see robotisation, the increase in new forms of treatment and also a growing demand for personal medical devices. The opportunities are huge."
Basu therefore advises European companies in the sector to spread their wings to India. "You will not find such a large and fast-growing market anywhere else. You can't get that volume anywhere else. So take your time, determine your strategy and come and take advantage of the opportunities this market has to offer you."
Wondering what opportunities there are for your business in the Indian healthcare sector? You will find an insightful summary of the growth opportunities on our sector page: