Case Statement:
Client is in the healthcare industry; they make medical devices. They are based out of China but are looking for international expansion and want to consider India as an option. Advise them over the same.
C: Can I know about the types of medical devices our client manufactures?
I: Yes. They manufacture orthopedic devices. They have three main products:
Artificial joints: these are like the hip or knee joints that are used when the natural joints fail
Trauma implants: Trauma implants are like plates and screws used to treat broken bones
Spinal implants: Spinal implants are specific to the spine, to increase stability and reduce pain.
C: What does the value chain look like? Whom does the client sell the product to? Are they covered in insurance plans of customers?
I: Our client is the manufacturer, and they make only their own branded products (as opposed to being an outsourced manufacturing for another brand). Like any other product, there are third party distributors located in various countries. These devices are used only at the hospitals. Patients discuss the price range with the doctors, and it’s up to the doctors then to choose which brand within that price range they chose. Medical insurance penetration is very low, you can assume most people would be paying out of their pockets.
C: Does our client operate in all the price segments? How do our products vary within price segments?
I: Yes, we have the premium segment that offers state of the art tech, the value segment with cheap prices and lower quality, and also the mid-tier segment with 1-2 generation old premium devices.
C: Why does our client want to enter in Indian market? Are there any specific goals?
I: Client wants to expand internationally to grow business. India seems like an attractive market.
C: What product is our client targeting to launch?
I: We know that the market of artificial joints is same as that for trauma implants, which is double that of spinal imparts. We can start with artificial joints. Why don’t you start by estimating the market size?
C: Sure, I would start by considering the total population of India, performing an urban rural divide (due to awareness, access etc.), and then a division based on age group (since artificial joints are used mostly due to ageing). Post that I want to perform an income-group segmentation to account for affordability. Also, only certain percentage within the age group would have the need for such a device and a certain few will finally opt for surgical procedures for replacement. Do I consider any other parameters like market for each price segment?
I: We are limiting our findings to the total market size; hence we can ignore the market for different price segment products.
C: Sure. Refer structure on previous page. 40L is the total market size
1/20 do this every year on an average: 2L
I: Are you missing something? Let us assume each device needs a replacement after 10 years, Also, medical surgeries can be planned, and you can assume access to good hospitals will not be preventing people from seeking treatment.
C: Sure. [ calculations = 2L * 2 = 4L in urban. Rural need would be 1.5x based on population split. Hence total market at about 1M] At this point I would like to consider the competitive landscape for the three categories and even in that within the price segments in each product category.
What other parameters do you think would be relevant here?
C: Continuing with the competitive understanding, I would also like to compare the value proposition, profit margins, establishing value chain in India. There would be some regulations around importing medical devices. Lastly, risks around political tensions with China would also need to be factored in. (Suggestions in the chart)
I: Thanks a lot, we can end the case here.
Background Information:
Client: China based manufacturing, exporting to other markets.
Customer: Directly to hospitals
Competitor: 3-4 competitors in mid and premium segment, rest of the market is fragmented
Product: Only 3 medical devices. (Discussed in the first question)
Timeline and purpose: No specific timeline. India is a growing market thus the client wants to enter. No specific goal.
Case recommendations:
There were about 5 min of BQs at the start around why Bain and a little about shift to consult from tech (workex). Being prepared helps.
