29th December 2009,Bangalore, India–
Medical equipment and services giant GE Healthcare is on a consolidation drive in India.
Early October, GE announced plans to integrate three of its stand alone business units and manufacturing plants under its 51:49 JV with Wipro — Wipro GE Healthcare. Post-merger, GE is now drawing up plans to grow its India business and develop the country as a global hub for manufacturing low-cost medical devices in line with its ‘reverse innovation’ strategy. GE Healthcare South Asia president & CEO V Raja, who also happens to be the Wipro GE Healthcare MD, shared his plans in a free wheeling interview with ET. Excerpts:
When do you expect the integration process to be over?
We’ve set a target to complete the merger and integration process by March 2010. We are merging three separate GE Healthcare entities into the joint venture. This apart, there is another entity in India, GE-BEL — a joint venture with Bharat Electronics — which will continue to remain as it is since this is focused on the exports market. The merger will provide a single face of GE Healthcare to Indian customers, which will help increase our footage and grow manufacturing in India.
So, what kind of revenue growth do you expect, post-merger in India?
The merged entity will have a revenue of about $250 million and make us the largest player in the Indian healthcare equipment market. We are now targeting revenue growth upwards of 20-25% and are confident of achieving that. After all, the merged entity will now have huge strengths, which will help us grow the business.
What sort of competitive advantage you expect will come from the integrated Wipro GE?
Post-merger, we would be an end-to-end solutions provider in the medical equipment space. What this means is that Wipro GE Healthcare can now provide up to 45-50% of all equipment, which are required in a hospital. Moreover, we are also the only company, which provides in-house financing to customers directly through GE Capital. We are also investing much on local manufacturing. The plan is to ensure that almost 40-50% of the products sold in India are locally manufactured in the next three years. This is currently at some 10%. There is an equal thrust on developing products, which are suited for the Indian market, with prices that an Indian client will be comfortable to pay.
What about your investment plans?
GE Healthcare typically invests some $15-20 million every year in India on research and capacity expansion. This investment will continue. In fact, this might even go up, as we move towards a greater play in manufacturing and product development in India. There are also plans to assemble some of the hi-end products like MRI machines and Cathlab in India, undertake quality check and roll them out in the market. We will also locally source components for these products. In fact, our sourcing from India for the healthcare business is already worth $150 million.
How will GE’s famous ‘reverse innovation’ strategy play out in the healthcare business in India?
India has the potential to emerge as a global hub for low-cost yet quality product development, which can then be exported to other markets, including the West. In line with the reverse innovation strategy, we see great potential in segments like cardiology, maternal and infant care, and infectious diseases. Work is already on in this regard and this may soon be a reality.
courtesy: ET Bureau