Thursday, November 19, 2009

Covidien in India

Recession or no recession, quality healthcare is a need we can’t ignore.

And despite the challenges, Junichi Obata of Covidien admits he can’t ignore India either.

“If it were about discretionary spending, healthcare companies would have been one of the worst casualties of the slowdown.

“But imagine having half the pills the doctor recommends, or staying half the duration of the suggested hospital stay, because you want to save for a rainy day! Not possible right? That is why we could say that if a healthcare company’s fundamentals are right, the impact of recession will be severely limited.

“Covidien International, a $10 billion player in the global healthcare market, is one such company.”

That’s the opening of a recent article by Neha Saraiya, in “4Ps Business & Marketing,” one of the largest business weeklies of the India. Here are highlights from her interview published earlier this summer with Junichi Obata of Covidien International:

Covidien International currently operates in four segments of product lines, which include medical devices, imaging solutions, pharmaceutical products and medical supplies. It prides itself in working closely with medical practitioners for innovation and product development. Although it announced its entry recently, the company is not a new entrant into the Indian market as it had a small presence earlier as Tyco Healthcare since 2002. In fact, in the areas of Bariatic surgery and laparoscopic gastrointestinal surgery, the company already has a credible market share.

Junichi Obata is the President of Covidien International and is credited with helping the company make great strides into the emerging markets, where neither economies nor populations are aging. Jun believes in ‘talking less and doing more’. Jun attributes the solid operational performance to constant innovation and market share gains made by the company.

On India operations, Jun explains, “We have been operating in India much earlier. Brands such as ValleyLab and Puritan Bennett are trusted brands among the medical professionals. We will leverage our earlier experience to confirm our commitment to India, and more importantly, we will leverage the aforementioned competitive advantage to accelerate the growth in India.” But what about the logic of moving into India formally, at a time when companies are putting a halt on their expansion plans? “The Indian healthcare scenario is undergoing a complete makeover, with world class healthcare demands by the country’s increasingly prosperous middle class. Therefore tremendous synergy exists between what Covidien offers and the (requirements of) the roles played by leading Indian physicians and healthcare providers,” points out Jun.

As Jun would have us believe, there are several factors which distinguish Covidien from the competition globally, including exemplary customer relationships and professional education programs, diverse portfolio of leading brands, innovative products & solutions and global scale. Covidien has flexed up all its muscle and is banking on its overseas diversification in a big way, “Globalization is a key strategic focus for the company, and we do look at all emerging market opportunities. They include Asia, Eastern and Central Europe, Middle East, and Latin America. Besides India, China, Korea, and Taiwan are among the biggest market opportunities for Covidien,” affirms Jun. But that does not mean that the company has lost its focus for India.

It’s not easy to develop the market though, as India’s per capita spending on health is still below $100 per annum as compared to US, where it is around $4,000. This is despite increasing government spends, rise in standard of living and growth of medical insurance business. Moreover, MNCs in the pharma sector do face major problems in terms of patent laws too. While Jun does not want to comment on India-specific challenges at the moment, he talks to us about his plans for the company’s India operations as he says,“We currently have 120 people in India, and we have recently opened our new headquarters and dry lab in New Delhi. We will continue to accelerate the investment in our advocacy of world-class healthcare for India.”


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