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    GE Healthcare

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    Paskalis Sergius Noeng
    This document discusses GE Healthcare's strategy of developing low-cost medical devices for emerging markets through their research center in India. It provides details on GE's MAC 400 ECG device, which was developed in India for $500,000 and priced at $1000, much lower than comparable models. The MAC 400 achieved $20 million in revenues in its first two years. GE has since expanded this approach to other markets, with the MAC 800 being introduced in China and developed countries. The document argues that this "reverse innovation" strategy has promise for both developing and developed world healthcare.

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    GE Healthcare

    Uploaded by

    Paskalis Sergius Noeng
    547 views19 pages
    This document discusses GE Healthcare's strategy of developing low-cost medical devices for emerging markets through their research center in India. It provides details on GE's MAC 400 ECG device, which was developed in India for $500,000 and priced at $1000, much lower than comparable models. The MAC 400 achieved $20 million in revenues in its first two years. GE has since expanded this approach to other markets, with the MAC 800 being introduced in China and developed countries. The document argues that this "reverse innovation" strategy has promise for both developing and developed world healthcare.

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    GE healthcare

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    This document discusses GE Healthcare's strategy of developing low-cost medical devices for emerging markets through their research center in India. It provides details on GE's MAC 400 ECG device, which was developed in India for $500,000 and priced at $1000, much lower than comparable models. The MAC 400 achieved $20 million in revenues in its first two years. GE has since expanded this approach to other markets, with the MAC 800 being introduced in China and developed countries. The document argues that this "reverse innovation" strategy has promise for both developing and developed world healthcare.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    547 views19 pages

    GE Healthcare

    Uploaded by

    Paskalis Sergius Noeng
    This document discusses GE Healthcare's strategy of developing low-cost medical devices for emerging markets through their research center in India. It provides details on GE's MAC 400 ECG device, which was developed in India for $500,000 and priced at $1000, much lower than comparable models. The MAC 400 achieved $20 million in revenues in its first two years. GE has since expanded this approach to other markets, with the MAC 800 being introduced in China and developed countries. The document argues that this "reverse innovation" strategy has promise for both developing and developed world healthcare.

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    GE Healthcare Innovating for Emerging Markets

    Group 3 Click to edit Master subtitle style Anand S Xavier Mascarenhas Santosh Kumar Gupta Rohan Gopalakrishnan

    2/4/13

    GE Healthcare - overview

    $17 billion division of $180 billion GE 46000 employees Created in 2004 Merger of GE Medical systems, British medical imaging farm Amersham and some healthcare IT firms Strong record in selling medical imaging and diagnostic products CEO Jeffrey Inmelt
    2/4/13

    India presence

    Wipro GE Healthcare

    51:49 JV Helped avoid regulatory constraints and institutional complexities

    #1 provider of diagnostic equipment Sales to large hospitals main source of revenue

    2/4/13

    Global R & D

    4 major centers US(Niskayuna), India(Bangalore), China(Shanghai) and Europe(Munich) Criteria Availability of talent Vicinity to important markets Healthyimagination campaign Reducing cost Increasing access and quality BOP patient solutions CSR image
    2/4/13

    John F Welch Technology center (JFTWC)


    Healthcare, energy, aviation and transportation Largest outside US Started in 2000 4300 technologists with 1100 in healthcare by 2010 Cost, talent and presence of research institutions Traditional focus developed markets Increased focus on emerging markets and BOP customers post Healthyimagination

    2/4/13

    Indian Healthcare market


    USD 30 billion size expected to double in 5 years(2010 stats) Medical devices market 3 billion to 6 billion 10 to 15% growth High quality specialist products GE, Siemens, Philips Domestic device makers Around 700 Mainly low value products like needle Sophisticated equipment lacked in quality and performance Had cost advantages edge in mass markets

    2/4/13

    GE India scenario

    Revenue realization of $3 billion to $5 billion goal in 2010 Healthcare less than 2% Barriers Inability to tap mass market Limited channels and sources Low fraction of sales compared to global hence focus on products for high end markets

    2/4/13

    In country, for country strategy - India


    Decentralization 2 changes in organizational structure India as independent region in geographic dimension Own profit and loss center Own growth strategy Expectations Improved local adaptation Faster decision making Separate R&D team for value for money products Enhanced efforts in local marketing, sourcing etc.

    2/4/13

    GE Healthcare in-for approach


    Early adopter of the approach Long term vision to create new markets 3 benefits of local R & D Better knowledge of customers Greater knowledge of available products Lower development costs Early research for inexpensive ECG device to address Affordability Access to hospitals Baby warmers, X-rays, ultrasound devices

    2/4/13

    MAC 400 ECG


    22 months development time half the usual $500000 development cost compared to the usual millions Priced at $1000 1/3rd to 1/10th of available models Focus on core functionality eliminating non-core Expectation higher sales though lower margin Device features Small and light Rechargeable batteries Inexpensive printing gadget and 3 channel output One touch operation Software to interpret data Reliable and user friendly
    2/4/13

    MAC 400 ECG


    Cost reductions Smaller size Limited features Commercial chip and printer than customized ones Access to GEs accumulated knowledge Cost effective distribution JV with Wipro Novel partnerships with large pharmacies and surgical companies Courses to educate potential customers No-interest loans through SBI partnership Success Both experimentally and commercially 2/4/13 $20 million revenues in first 2 years

    Challenges with MAC 400 Channel constraints leading to initial sales with traditional customers mainly Bringing down price to match a true mass market product Introduction of MAC I at $500 in 2009 MAC 800 ECG in China Aimed to exploit higher income levels in China Telephone style key pad, windows platform and preview of ECG results as user friendly features Priced at $2500 Positive results with 20000 installations in 50 countries

    Aftermath

    2/4/13

    Reverse Innovation

    MAC 800 introduced in developed markets including US Aimed to loop in primary care doctors, rural clinics etc. USB and ethernet ports introduced for connectivity demands Reversal in direction of innovation Resistance to disruptive business models of emerging market companies Concerns Thinner margins Revenues still small Competition No clear competitive advantage Less control No scale advantages
    2/4/13

    GE Global Strategy analysis


    Reverse Innovation the way forward Unique vantage point into human need Central to corporate citizenship Pros Direct market participation Augments addressing real human needs Creates local jobs, develop human capital

    2/4/13

    Reasoning

    India and to some extent China per capita income lower Preference decent performance at ultra low cost Affordability drives demand. E.g. sachets Reverse Marketing in developed market healthcare technology at lower price points likely to create huge demand Concept holds great promise for developed and growing regions alike

    2/4/13

    Critical Decision
    Which products How to make and sell them Provision of ongoing service Requirements Deep knowledge of culture and business Local teams Frugal Innovation for the millions without millions

    2/4/13

    Way Forward

    Know your customer. E.g: Nokia, Tata Swach, Safaricom Kenya Identify price points Reshape value chain Identify Partnerships Supplier side and Distribution side Product Features

    2/4/13

    Frugal Innovation Tool Kit

    2/4/13

    Thank You

    2/4/13

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