CT for the Billions.pdf

8/13/2019 CT for the Billions.pdf

http://slidepdf.com/reader/full/ct-for-the-billionspdf 1/7

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CT for the Billions

Introduction

Mr. Krishnan is a real estate sales man living in Hassan, Karnataka, approximately 100 km west ofBangalore. He extensively travels on his motorcycle for business. On one fateful day, Mr. Krishnan

was seriously injured while trying to avoid an erratically driven tractor. The tractor driver fled and

thirty minutes later, an auto-rickshaw driver arrived to Mr. Krishnan’s rescue and drove him to the

nearest clinic. Although the clinic rendered basic first aid, hospitalization was necessary. This meant

another 50 km travel to Hassan. The admitting doctor immediately prescribed for a CT scan. The CT

scan was performed in less than 5 minutes and the doctors found severe internal bleeding of the

brain. He was rendered emergency surgery but…it was too late.

Mr. Krishnan’s story happens on a daily basis in every city, town and village across India. A few, who

find a nearby hospital with adequate facilities including a CT scanner, are diagnosed quickly, treated

immediately and given the opportunity to recover well. Others are not so lucky. To them the access to

life-saving healthcare facilities with equipment like CT scanners at this critical moment remains a

distant dream.

The Challenge

Our constraint is the reach and visibility of a CT scanner to the large base of more than 20,000private diagnostic centers and small private hospitals in tier II & tier III towns. We need to devise a

go-to-market strategy to grow CT volumes from 4000 to 10000 over the next 5 years.

The Healthcare Industry in India

A report on Indian healthcare forecasts the USD 70 billion sector to grow at a significant rate per

annum. It is expected that the healthcare sector will cross to USD 100 billion in the next five years.

The healthcare industry is poised for growth with these drivers:

Changing landscape (faster up gradation in technology, new product innovation, burgeoning

middle class, political agenda, government expenditure as a per cent of GDP)

Improvement in healthcare delivery and financing (large private sector players, rise in

insurance, large players targeting small towns)



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Changing patient profile (increased incidence of lifestyle diseases, rise in disposable income,

growing patient awareness, access and preferences, increased life expectancy)

Industry bodies have been lobbying for the healthcare sector to be given infrastructure status and

associated tax benefits that will trigger investments in hospitals. If this demand is accepted, it would

give an additional fillip to the healthcare industry in India. However, there are some alarming

statistics to be shared here. The healthcare industry in India has more than 75% share of private

healthcare players. Healthcare expenditure at a per capita level continues to be predominantly out of

pocket. Diagnostic equipment and devices market is estimated to be around USD 2 Billion and also

growing with the total healthcare market.

Computed Tomography

Computed Tomography (CT) is like the Swiss army knife tool in radiology as it is used in a variety of

clinical care areas from injury, trauma, stroke, cardio-vascular, GI, oncology to name a few. It is

preferred for its ability to perform a scan within a few seconds, provide high quality and high

resolution 3-dimensional images of cross-section of the body to allow doctors diagnose the problem

quickly. India leads the world in the number of non-fatal injuries, occurrence of stroke and cardio-

vascular disease, and with rising awareness a large incidence rate of cancer. CT is becoming a lifeline

to diagnose and manage disease with such high prevalence.

The total CT market is estimated to be around $125MM with a total installed base of around 4000

scanners across India (EXHIBIT 1). Yearly volumes are estimated to be around 400 units. Access to CT

scanners is lopsided, with 75% of the installed base serving less than 25% of the population. Patients

in tier 2/ tier 3 cities typically get access to diagnostic services with imaging at ~20000 private

diagnostic center or small private hospitals. However, only a fraction of these facilities have CT

scanners and charge an average price of INR 2000 per scan. As one of the leading suppliers in

the CT scan market in India , GE has a strong brand image and its products are held in high regard

by medical practitioners (Refer EXHIBIT 2 for some points to note). GE offers a wide product portfoliowith varying price points to attract customers. The typical product lifecycle is 3-4 years. For each

product segment, vendors refresh their products every 3 years approximately with small

enhancements along the way.



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CT scanners allow clinics and hospitals to expand their services (EXHIBIT 3) and also enhances their

reputation within their market. However, viability and low patient load are the biggest barriers

towards purchasing a CT despite the known benefits. They either refrain from investing in a CT due to

the financial risk or purchase an old refurbished CT at a very low cost despite the limitations and lack

of reliability. Customers in these markets are neither trained nor skilled enough to use CT scanners.

The poor infrastructure and connectivity of these markets makes it difficult for both GE personnel

and external engineers who are not readily available to service these markets.

Being a medical radiology product, CT scanners are also subject to regulations stipulated by the

Atomic Energy Regulatory Body. The ability to use GE equipment is critical for winning in this market

and depends on the following parameters:

Ease of use & intuitiveness of operation

Parts & Service Delivery Maintenance (regular maintenance and replacement of parts)

Logistics to serve the population in tier 2/3 towns

Company Background

GE Healthcare provides transformational medical technologies and services that are shaping a new

age of patient care. Our broad expertise in medical imaging and information technologies, medical

diagnostics, patient monitoring systems, drug discovery, biopharmaceutical manufacturing

technologies, performance improvement and performance solutions services help our customers to

deliver better care to more people around the world at a lower cost. GE has a unique capability of

providing wing to wing solutions including hospital equipment, software, lighting, financing and

water purification. (http://www3.gehealthcare.in/)

GE Healthcare is basically structured around 2 pillars. A “Product organization” , that consists of

Regional Product Managers who are sales specialists with deep product knowledge. They are

organized based on the segment of CT products being offered by GE (premium CT, performance CT,Value CT for example).

The parallel pillar “Sales organization” is a direct sales force that extends from metros and tier II/III

towns. This sales force provides reach and coverage across segments of customers and across

http://www3.gehealthcare.in/






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Sr. No. Modality Approx. Cost

to customer,

per scan (INR)

Approx.

Cost of an

entry level

equipment

(INR)

Market

Penetration

Approximate

break-even

point

Used for

1 X Ray 200 5-10 L 40,000 1 year Chest imaging &

simple trauma

2 Ultrasound 500 5-10 L 40,000 1 year All abdomen, including

obstetrics &

gynecology

3 CT 2000 40 L -80 L 4,000 3 years + Head to toe

The typical stakeholder map for CT

scanner purchase looks like the following.

A key issue for the buyers is getting

financing. The PSU banks typically

operating in these areas have limited

understanding of the product and thus

securing funding is a challenge.

Furthermore, while GE has a financing

business, GE Capital, its footprint in Tier 2 -

3 cities is limited.



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We have attempted to understand the 2 primary consumer segments.

A) PRIVATE DIAGNOSTIC CENTRES

B) SMALL HOSPITALS

Town of 900k population in Karnataka, 150 km from the highway &nearest small town with CT scanner diagnostic facility



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EXHIBIT 1: Installed Base of CT Scanners in India

Source: Tech Navio, Market Research firm

EXHIBIT 2: Points to Note

Being an emerging market, it is highly unorganized

Entry of new players is highly likely

There are a large number of non-traditional competitors (example: 3rd party resellers)

GE is one of the leading suppliers in the CT Scan market in India

EXHIBIT 3: Uses of CT Scanners

CT for the Billions.pdf

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