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International Business Strategies

Mr. J. V. Vaidya, Strategic Business Unit Head and Joint General Manager Medical Equipment & Systems, Larsen & Toubro Limited

Topics :

  • L&T background

  • Global market scenario

  • Growth drivers

  • Issues/Hurdles in export market

  • L&T export strategies

Larsen & Toubro Limited :

  • Founded 62 years ago, by two Danish engineers Mr. Henning Holck Larsen and late Mr.Soren Toubro

  • Ranks among the top ten in Indias Private sector companies

  • In 2000-01, the sales turnover of the company was approx.

  • Rs. 80, 000 million ( 1.7 Bn US$)

  • Is in multiple business areas. One of the principal business area of the Electrical & Electronics business group is Medical Electronics

L & Ts Medical Equipment Business :

  • Started its Medical equipment business more than 10 years ago

  • Excellent brand equity

  • Profitable operations, growing at 31% CAGR (96-97 to 99-00)

  • Sales turnover: Year ended 31-03-01: Rs. 520 million

  • Expected for year ending 31-03-2002 : Rs. 600 million

  • Expected cumulative installed base of medical equipment till 31-03-2001 is about Rs. 2600 million.

L & Ts Medical Product Portfolio :

  • Ultrasound (B/W) scanner- Portable & trolley type

  • Patient Monitoring systems 

    • Bedside (Single & Multi-parameter models) Monitors.

    • Central Nursing station.

  • Electro-surgery (i.e. surgical diathermy) equipment.

  • All products manufactured are from in-house R & D

Global Medical Equipment market :

  • Current market is US$ 120 Bn.

    • 70% consumption in USA & Europe

  • Market is dynamic in nature

  • Competitive, cost sensitive & driven by technology

  • Diverse in nature, comprising of wide range of products:

    • Medical equipment

    • Medical Consumables

Growth Drivers :

  • Remunerative referral practice

  • Preventive medicine concept spreading

  • Surgical procedures commercialised & glamorised

  • Improving health care standards

  • Increase in reimbursement of health care expenses (Insurance sector opening)

  • World bank funding

L&T: Corporate plan :

  • "Convert L&T into an established Indian Multinational, by 06-07"- CEOs vision

    • Major initiative- Thrust on export market development

    • Specific countries identified for focussed approach

    • Business and administrative capabilities geared up, to negotiate the challenges of international markets

    • Clear action plan & strategy for penetrating the market

  • L&T MEDICAL:

    • A dedicated team formed

Issues/Hurdles :

  • " Made in India"- A mental block

    • Branding Licensing

  • Price-Volume game, hence

    • Marginal pricing to begin with

    • cost reduced to be profitable

  • Entry barriers leading to long gestation periods

    • Use channels for the time being

  • USA- FDA

Strategies :

  • New product development

    • Ultrasound :

      • New models with convex probes launched

      • Colour dopplers also being launched

    • PMS :

      • Market appropriate models developed

    • Surgical Diathermies :

      • Automatic power controlled units developed

  • Increased importance to aesthetics

Strategies :

  • Quality accreditations:

    • CE-entire range is certified 

    • UL

    • FDA-work in progress

  • Sales Promotion:

    • Participation in international exhibitions (Medica, RSNA etc.)

    • Advertisements in international journals (IHE etc...)

    • L&T Medical Website & Links

    • Roadshows

Strategies :

  • Value Engineering

    • Design improvements

    • Sourcing cheaper alternative modules 

    • Increasing volumes

  • SKD/CKD business opportunites

  • Branding

  • Contract manufacturing

  • Participation in major tenders

Key achievements :

  • Branding of patient monitors for a leading European manufacturer ( > 500 nos. p.a)

  • World bank tender for supply of surgical diathermies

  • SKD/CKD arrangement in Middle-East & South East Asia

  • Contract manufacturing

  • Breakthrough in China & Latin America

Award for Innovative Product/Service Design in Health care

The recommended route :

  • International safety & performance standards (IEC 601.1)

  • International quality certification for systems
    (EN-46001)

  • Products: Acceptability (CE,UL,FDA..)

  • Initially, branding for foreign distributors

  • Setting up marketing channels

  • Eventually, selling under Indian brand names

International Sales (Cum.)

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