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Mr. Amit Dave,
M. Pharm, MBA,
Former CEO - Brazil Operations/ Vice President Export
– Zydus Cadila/Claris Lifesciences |
As mentioned in the last article in this series, we
found a very interesting and relevant Ph D thesis
written by Mr. Abhishek Agrawal from GLS University,
Ahmedabad (under the guidance of Dr Hitesh Ruparel).
This doctoral thesis has analysed some highly
pertinent issues for Medical Devices industry from the
Export perspective and this will provide very useful
decision tool for our readers. Mr. Agrawal has
collected data from 163 medical devices companies of
India which is a substantial number considering total
Medical Devices companies’ universe being of around
1000 in India. Again, out of these close to 1000
players, companies involved in Export activity will be
further limited, reducing the universe size and so,
163 number is a significant number giving high
reliability to this study. As also mentioned last
time, these companies represent a cross section of all
the subsectors of turnover as well as almost all the
subgroups of Medical Devices industry. This
heterogenous universe of medical devices makes the
study more useful. This data was collected by means of
questionnaires administered to the right people of
these companies. International trade fairs was coming
out to be the most common means of export product
promotion (for 97% companies!) followed by one-to-one
meeting with clients (92.6%). |
As also mentioned last time, this dissertation mentions
very interesting study about overseas Distribution
channels and Pricing models followed by the Medical
Devices companies for Exports market and we will see
that part in the current issue of Medical Plastics Data
Service magazine.
Distribution channels for overseas markets
Distribution channels decision is an important decision
for exporters of Medical Devices. Not only the
distribution channel selection is important, this
strategy also influences all the other decisions of
marketing mix being adopted by the Companies, as widely
known.
The study confirms that in Medical Devices sector,
alternative distribution channels being used frequently
are -
- Direct distribution to the client overseas
- Distribution to agents/buying agencies.
Alternatives like Regional logistic warehouse, and
Online sales are not preferred nor practiced.
Readers will quickly appreciate that digital sale (on
line sale) is not suitable for Medical Devices in India
also due to the nature of these products and the same
dynamics apply to the outside markets also. This new and
upcoming channel, which is highly effective for consumer
products, has limited significance for Medical Devices
sector in the export market.
Pricing policies and practices for overseas markets
A very large majority of the companies approached for
understanding their overseas pricing policies (97 % of
respondents) confirmed that their companies go for
“volume slab-wise pricing” – higher the volume, lower
the price. The second choice in this pricing area model
is “Competition oriented pricing” (91.4% respondents).
Here, the seller checks the goingon price or
competitors’ price and then offers pricing in line with
that price.
The third choice was “penetration price”, where the
seller offers a really low price to get an entry. The
last choice was “cost-plus price” where a company
decides a margin and that margin is added to cost and
the final price (cost + margin) is the offer price for
an overseas buyer.
Discussion
As the readers know quite well, many of the medical
devices are going to the hospital users and tender
buyers. These two major segments are always least brand
oriented segments, where brand value is working at its
lowest. In such a situation, pricing models like
quantity-oriented price (slab-wise price) or
competition-oriented price will work well.
Distribution channels also affect pricing models. As
mentioned above, channels being adopted most frequently
are supply to hospitals or users, and supply through an
agent or a distributor. These channels also direct the
Indian sellers to adopt the pricing models which suit a
generic product. |
