Readiness of Medical Device industry for engaging with Bottom of the Pyramid Market

 
Readiness of Medical Device industry for engaging with Bottom of the Pyramid Market

-By Tanya Agarwal

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Bottom of the pyramid is a concept which has been around for a while now. The term was first used by the U.S president Franklin Roosevelt in his radio address, ‘The Forgotten Man’, where he talked about how poor people are often overlooked just because they live at the bottom of the economic pyramid. The base of the pyramid or bottom of the pyramid is a term used by the economist to refer the poorest two-thirds of the economic pyramid, a group of more than four billion people earning less than USD2 per day.  BoP gained momentum when management scholar C K Prahalad and Stuart Hart came up with their groundbreaking article, ‘The Fortune at the Bottom of the Pyramid’, in Stratergy+Business magazine, (later converted into a book with series of case studies), where they argued that the world’s poorest population are a vast, rapidly growing and untapped market and the companies who serve these market can not only make massive money but help eradicate poverty. It has now become a widely discussed topic in management classes exploring new opportunities that lie for segments of different markets and companies.

BoP is a population which is consistently underserved when it comes to basic amenities, specifically medical care. Poor health outcomes not only dampen human development but overall economic growth. While many consumer good companies like Uniliver, Godrej etc. have found their pot of gold at the bottom of the pyramid in India, it’s time for medical device and equipment companies to leverage this opportunity and target the untapped 70% of the population in rural India with low-cost innovations explicitly developed and manufactured by domestic manufacturers.

According to a study by Skp group, 69% of the Indian population lives in rural areas while 73% of qualified consulting doctors reside in urban India. This gives an immense opportunity to Indian manufacturers as well as multinationals to come up with cost-effective products and innovations to carter the demands of that 69 % of rural population with inadequate medical assistance.  In medical device industry, the hospitals and doctors are usually the customers, domestic manufacturers can gain by tapping those practitioner working in rural and semi-rural areas as they would be more loyal to these companies who would provide them with better and cost effective equipment reducing their switching rates. There however lies a greater opportunity for domestic players as the industry is already dependent upon multinationals contributing to 73- 75% imports of devices and equipment, the domestic players can target the rural population as their new segment and make a dominant presence in tier 2 and 3 cities.

Few multinationals have already started experimenting with BoP business model strategy by innovating technically advanced yet affordable equipment. For example GE Healthcare, the global manufacturing company, known for its premium products across the world and India, faced a supreme challenge to bring a low-cost medical device to the rural Indian Territory. They spend enormous time to develop an in-depth analysis of their customer requirements and problems faced by the users of the products. They found out that doctors and small clinics in rural areas cannot afford the existing premium electrocardiography (ECG) machines as their patients had a lower-paying capability. In addition to this, the existing model of ECG machines was bulky and heavy, need trained operator, and require extensive service support with continuous electricity supply. The company overcame this challenge by introducing their Mac 400 series of ECG machines which was not only affordable that runs on battery but easy to use, robust and require way lesser maintenance. Portable Mac 400 machines cost less than a fifth of the conventional ECG machines available in the market. They now have rolled out a newer version of the device, MACi with a slightly heavier processor.  They also observed that people kept pre-mature babies warm with a 200watt bulb and this need couldn’t be filled through existing models of incubator and de-featuring it to a lower price, instead they developed an affordable Lullaby Warmer which was easy to use with single function buttons with easy-to-follow graphics instructions making operation simple. The company has developed around 28 portable devices like ultrasound machines, CT scanner and X-ray machines, under the campaign, ‘In India, for India’, which are not only affordable but backed by newer technology requiring lesser power and technical knowledge to operate while addressing the unmet needs of the people at the bottom of the pyramid.

Philips India is another company which has delivered cost effective products to bridge the rising healthcare needs of rural India. They recently unveiled their campaign ‘Affordable technological Solutions’ on wheels- IntelliSafari. Featuring a mobile van- the IntelliSafari which reached out to hospitals, nursing homes and clinics in Tier 2 and 3 cities in India and made them aware of the latest technological advancements in healthcare, available at a low cost. The van was equipped with devices to treat patients from dusts to infants in ICU, CCU, general wards and nursing care units. The company has developed many such products under in country, for country campaign.
 
However, domestic players have also started to develop products that are cost efficient and affordable for billions of people who don’t have access to premium healthcare.
Domestic players such as Jaipur foot, developed a complete limb which costs less than $40 including a prosthetic foot made of wood and sponge rubber, which itself costs less than $5 and can be made in under 3 hours. Alternatively cost of a prosthetic limb in developing countries usually ranges from $125 to $2,000 which is quite high in comparison to Jaipur foot’s product.
 
Another company Biosense Technologies brought high quality yet low cost products to Indian masses. They develop simple to use diagnostic devices that are non-invasive and makes use of smart phones for screening diseases, making it a viable solution in remote areas where trained medical professionals are few and far between. They have launched devices like TouchHb, uCHeck, and SuCheck. TouchHb is a portable, needle free anemia-screening tool that requires no expensive equipment and little training to use. ToucHb allows local health workers to painlessly test patients, immediately read results, and administer treatment where necessary. Similarly, uCheck and SuCheck are smart phone based portable urine and blood sugar screening tools respectively that make use of a cloud based operating system to estimate the results accurately.
 
Due to favorable government policies and initiative like make in India, 100% FDI, GST and rising expenditure on healthcare along with increasing penetration of mobile phones with internet and rising incomes, medtech companies are now shifting to a holistic market view where they don’t only want to serve the premium but the rural segment as well to get a greater market share.
There are maby players who have sensed an opportunity to serve this gold mine at the bottom of pyramid to gain a bigger piece of pie.

There are many such multinations including Medtronic, Johnson & Johnson and Siemens Healthcare etc. which have started leveraging the R&D to develop more affordable and technological advanced products which are more suitable for Indian consumers.