Computed topography for the billions. GTM to penetrate the computed topography market in India

1. Computed Tomography (CT)
For The Billions
Submitted by-
Pragya Joshi | Pulkit Bohra | Pulkit Mathur| Tarun Gupta
Team Iguanas, IIM Ranchi
Composition:
Cover Slide - #1
Executive Summary - #2
Main Slides - #3-7
Appendix - #8

2. Executive Summary
Strategic
objectives
Insights
To identify market
potential for diagnost-
ic market in India
Industry Analysis Market/Competitor
Analysis
To determine the
market Drivers and
Constraints
Forecasted CT market
is growing steadily but
still not to its full
potential.
Disruptive innovation
needed to boost
growth
India will have 68 cities
with population of 1
million, up from curre-
nt 42 by 2030.
The Indian Tier 2 & 3
markets have 20,000
underserved private
diagnostic centres.
With large number
of alternatives Repla-
cement Market drives
sales
Increasing scope of
clinical applications
is boosting the sales of
CT machines
Demand for
Refurbished Machines
is lowering the sales
of new Equipment.
Lack of Medical
Insurance Coverage
hampers adoption rate
in tier 2 & 3 cities
Leverage on
synergy which can be
obtained from GE
Capital.
Synergy Analysis
To identify synergies
that can be leveraged
Leverage on the GE
wing to wing hospital
service infrastructure
and GE’s Healthcare
expertise.
Leverage on the GE’s
Established Service &
Maintenance
reputation.
Establish a hub &
spoke model with 1
central diagnostic
centre (tier 2) catering
to 3 satellite diagnostic
centres (tier 3).
Recommendations
Using a PPP (public
Private partnership)
model to open Block
Level Diagnostic
Centres with GE as
suppliers and operation
& maintenance
Organizing the CT Re-
furbishment Market
Tie up with vocational
training institutes to
train & develop
skilled CT machinery
operators
GE Healthcare can tie -
up with banks to
provide clients with
easy loans
Standardization
Initiative be launch-
ed by GE Healthcare
Associate with
government program
Like NRHM & National
Elderly Health
Mission Program.
Establish GE Diagno-
stic Labs with CT ma-
chines in Medical
Colleges Of Repute
Innovating a New
Diagnostic Scans
Insurance Policy
2

3. Scope Of Computed Tomography (CT) Market in India
Changing
Indian Customer
Segment Dynamics
590
TIER 1
population
>4 million
TIER 2
1-4 million
TIER 3 & 4
<1 million
340
93
52
195 331
104
155
9 9 13
33 29 55
~5000 ~4970 ~6000
4
26
conversion from rural villages ~1000
Indian Tier 1 & 2 cities come out as attractive target segments for CT market
Indian Diagnostic
Equipment Market
Forecast
CT market growing at CAGR of 13.88%
0
100
200
300
400
500
2011 2012 2013 2014 2015 2016 2017 2018
Revenueinmillion$
General X-ray CT MRI Ultrasound
CT
Ultrasound
Stifled growth forecast of Indian CT Market Market Dynamics - Insights
• Forecasted CT market
is growing steadily but
still not to its full
potential.
• Disruptive innovation
needed to boost
growth
• India will have 68
cities with population
of 1 million, up from
current 42 by 2030.
• The Indian Tier 2 & 3
markets have 20,000
underserved private
diagnostic centres.
1
2Movements of number of cities from one tier to another
Sources : Indian Urbanization Econometric Model, Census 2001; McKinsey Global Institute Analysis
YEAR 2008
Total Population in each tier (in millions)
. YEAR 2030 projected
Total Population in each tier (in millions)
3

4. Market Drivers for Indian CT Market; Competitors Analysis
Sources : Overview Of Diagnostic Equipment Market in India – Frost & Sullivan
Availability of
cheaper
Technology
Alternatives
offers threat to
CT market
share
CT
3%
MRI
2%
Ultraso
und
44%
General
X-ray
51%
Total
Units
(12,376)
CT market occupies only a meagre 3% market
share in 2011
Threat Of Technology Alternatives in Indian CT Market
Diagnostic Equipment Market
CT MRI Ultrasound X-ray
• Single slice
• 16-64 slice
• 128-320 slice
• Black & white
• Colour Doppler
• Hand held
• Analog
• CR / DR
• Mammo
Compromising on technology, clients prefer to buy low end equipment variety and
then REPLACE with higher end after experience
Market Drivers
Increasing scope of
clinical applications
is boosting the sales of
CT machines
2
With large number
of alternatives –
Replacement Market
drives sales
1
Demand for
Refurbished Machines
is lowering the sales of
new Equipment.
1
Lack of Medical
Insurance Coverage
hampers adoption rate in
tier 2 & 3 cities
2
Market Constraints
GE
Healthcare
29%
Siemens
35%
Trivitron-
Hitachi &
Blue Star
7%
Toshiba-
Erbis
Engineerin
g Co. Ltd.
10%
Philips
19%
Competition
from other
market players
TIER 1 Competitors:
Siemens, GE Healthcare
Captures 66% of market share. Current
Tier 1 market is stagnant.
TIER 2 Competitors:
Philips, Toshiba-Erbis, Trivitron-
Hitachi & Blue Star.
Tier 2 market shows strong growth
potentialIndian CT Market
in % Revenue, 2011
Market share captured in tier 1; Growth opportunity exists in tier 2&3 market
Total Revenue = $90.7 million
4

5. Go-To-Market Strategy : Reaching the Masses
REACH VISIBILITY
TWO CHALLENGES FOR GE HEALTHCARE
When expanding CT Market to Tier 2&3 Cities
Solution 1 Solution 2
Improving
Availability
Leverage on the GE wing
to wing hospital service
infrastructure
and GE’s Healthcare
expertise.
Use a PPP (public private partnership)
model to open Block Level Diagnostic
Centres with GE as suppliers and
operation & maintenance
This model will improve availability in
tier 2&3 cities.
GE should tie up with vocational
training institutes to train & develop
skilled CT machinery operators
By this GE can overcome the biggest
deterrent of skilled labour for its CT
clients. Thus improving the CT adoption
rate.
Improving
Affordability
Leverage on the GE’s
Established Service &
Maintenance Reputation. Also
leverage on synergy which can
be obtained from GE capital
GE should Organize the CT
Refurbishment Market
Through this method GE can engage the
clients not willing to put in heavy capital
and can offer them GE’s reputed
maintenance services.
GE Healthcare can tie up with banks
to provide clients with easy loans
This will overcome the current industry
challenge of lack of product knowledge
with bank & hence lack of loan sanctions.
GE Capital can offer seed money
for setting up GE certified Diagnostic labs
with CT scanners for big clients.
GE CT Technology
“delivering to masses”
A A
B
B
C
5

6. Go-To-Market Strategy : Improving The Adoption Rate
Solution 3
amongst
Patients
amongst
Doctors
REACH
TWO CHALLENGES FOR GE HEALTHCARE
When expanding CT Market to Tier 2&3 Cities
VISIBILITY
Solution 4
Overcome Low adoption rate
by the patients for
comparatively expensive CT
Technology by following means:
Innovate a New Diagnostic Scans
Insurance Policy
Patients will be able to afford expensive
CT scans(INR 2000/scan) at GE certified
diagnostic centres.
Associate with government programs
Like NRHM & National Elderly Health
Mission Program.
Standardization Initiative be
launched by GE Healthcare
This would indicate to the patients that
the dosage is being monitored and CT
technique is safe.
Leverage on the high
performance of GE CT
technology
by showcasing the same
to potential clients –
Doctors in medical school
Establish GE Diagnostic Labs with
CT machines in Medical Colleges Of Repute
1. The future Doctors training in these colleges
will have an exposure to the increasing clinical
applications of CT machines. This would make
them conversant with GE technology and will
create potential clients for GE.
1. Also GE would have a short term gain in terms
of the service & maintenance fee from the
college.
1. GE certified labs should provide details of
exposure to patient and use this to market
their superior technology to conscious
patients/doctors.
A
B
C
A
6

7. Proposed Advanced Centre & Associated Satellite Centre Model
Central Advanced
Diagnostic Center
• In Tier 2 Cities
• Nearby Hospitals with
service lacking
• Outpatient specialists in
vicinity
Satellite Diagnostic
Centers
• In Associated Tier III Cities
• Well Populated, self
contained neighborhoods
GE Distribution Model
For Targeting Tier 2 & 3 Cities
Setup Cost
Premise
Renovation
$2,500
Equipment $14,00,000
UPS/Generator $80,000
Rental Deposits $20,000
Legal $10,000
Advertising $20,000
6 month Operating
Expense
$2,52,000
Total $17,84,500
Year CT MR X-ray Ultrasound Mamography Revenue Cost Net Income
1 $3,15,000 $1,50,000 $45,000 $36,000 $16,800 $5,62,800 $5,04,000 $38,220
2 $3,62,250 $1,72,500 $51,750 $41,400 $19,320 $6,47,220 $5,54,400 $60,333
3 $4,16,588 $1,98,375 $59,513 $47,610 $22,218 $7,44,303 $6,09,840 $87,401
4 $4,79,076 $2,28,131 $68,439 $54,752 $25,551 $8,55,948 $6,70,824 $1,20,331
5 $5,50,937 $2,62,351 $78,705 $62,964 $29,383 $9,84,341 $7,37,906 $1,60,182
Proposed Model:
Establish a hub & spoke model with 1 central diagnostic
centre (tier 2) catering to 3 satellite diagnostic centres (tier
3). Using this model & the Go-To-Market Strategies
discussed in slide 5/6, GE can create a strong eco-system in
tier 2&3 cities for CT market.
How it Works:
Tie-ups with private diagnostic centres giving them status of
registered GE Diagnostic Centres in tier 2&3 cities. These
centres will act as the diagnostic hubs for GE. GE will
maintain a operations & service contract with them.
Feasibility study:
• GE Capital / Unique bank tie-ups will offset the huge
initial setup cost at a centre.
• Net Income from this setup justifies the feasibility of
this model.
Sources : Data from Appendix (Exhibit 1); A modern Diagnostic Centre Chain – Metupalle ; The total monthly fixed cost is taken as $42,000 based on employees salary, maintenance and misc expenses.
Satellite 1 Satellite 2
Satellite 3
…
Central
Diagnostic
Centre
Tier 3
Tier 2
Initial Setup Cost For A Centre
5 year revenue-cost projections
7

8. Zonography
Prototype CT
scanner
Spiral CT
scanner
Mass
Adoption of
CT
Tie up with vocational
training institutes
PPP (public
Private partnership)
model to open Block
Level Diagnostic
Centres
GE Diagnostic Labs
with CT machines
in Medical Colleges
Of Repute
Association with
government
program
AdoptionofCT
Time
Normal Evolution
Disruptive Evolution
Laminography
1960sPre 1950s 1970s 2013 2015 2018
Establish a hub
& spoke model
…
Type Price volume/month
Mean CT Scan $70 375
Mean MR Scan $50 250
X-ray $5 750
Mean U/S Scan $10 300
Mean Mammo $7 200
Exhibit 1
Appendix: Disruptive evolution by GE Healthcare will quicken mass adoption of CT and position GE as a leader in the respective
industry
8