Wipro in talks to develop medical devices for 2 US companies

Wipro, the country’s third-largest IT company, is in talks with two US medical device manufacturers for providing engineering services to help them make products for the Indian market, Jyotirmay Datta, head, medical devices & services verticals, healthcare & services business unit, Wipro, said.

He said his company sees an opportunity in helping mid-sized US companies develop products for the growing $5 billion Indian medical devices market.

“Wipro is not new to this market. We have a strong healthcare and medical devices team and we know the local market well. We have the capacity and the expertise to help companies set up a market here,” he said.

Many mid-sized companies in the US, which are facing sluggish growth back home, want a share of the Indian market, he said.  

“The companies in the US have no option but to look at markets like China, India, Russia and Brazil. There is a vast opportunity here considering rural India is still untouched,” Datta said.
Until 2009 most companies in the developed market enjoyed higher operating margins, but things are no longer the same, he said.

“With the present economic conditions, multinational companies are fast realising the importance of looking at emerging markets where scope of growth is much higher. Also, because of cost pressure hospitals in the US are trying to extend the warranty of the medical devices,” Datta said.

However, the price points in the emerging markets need to be much lower compared to the western markets, he said, adding that the established practices of those countries will not be effective here.

According to a study an average Indian spends $6 per year on medical devices against $220 for the US.

“So, manufacturers have to bring down costs. Until recently small and mid-sized hospitals used to avoid buying medical equipment from international original equipment manufacturers because of costs. However, these companies have started establishing and acquiring manufacturing facilities in India. This helps in curtailing the manufacturing cost of equipment as much as 70%,” he
said.

Multinational companies, including Philips, Siemens and GE, have taken leads and have started to manufacture medical equipment from the country to gain the cost advantage.

Philips, for instance, is trying to come up with a cardio cath lab, which costs less than a crore from the current Rs4-5 crore.
Consultant Ankur Bharti of Technopak said since the market in India is growing at 16-17% year on year, there is definitely an interest to capture it.

“I am not too sure how successful these mid-sized companies will be as bigger players have already done their homework and set up their manufacturing plants here. But definitely India is the place to be in for medical equipment manufacturers,” he
said.  

As far as Wipro is concerned, an analyst said it is yet to be seen whether it would be able to help the smaller companies of the US.  
He said though Wipro has all the technical know-how that is needed, the smaller companies may find it tough to grow here as the bigger ones have already lowered their  cost.