As a champion of localisation to bring down the cost and modify medical equipment for local needs, GE Healthcare built up a 65 per cent share of radiology PPPs in India, with a pole position in the private sector as well. What will the 2019 spin out mean for the company’s India operations?
Viveka Roychowdhury/Mumbai
Home to its largest R&D centre outside of the US, GE’s John F Welch Technology Centre (JFWTC) in Bengaluru was innovating and making in India long before it became a catchy slogan. “India serves as a model for the rest of the developing world,” says Kieran Murphy, President and CEO, GE Healthcare (GEHC), during a recent trip to the JFWTC.
He believes that more precise diagnosis of disease is the fundamental way to reduce the cost of healthcare. Cautioning that the way healthcare is practiced in the developed world is unsustainable, he refers to India’s public health initiative, Ayushmaan Bharat (AB), indicating that if it can be successful, everyone could look at it for success stories.
GEHC has been one of the earliest participants in Public Private Partnerships (PPPs) in public health, testing out its first proof of concept from 2004-2008. This resulted in its first radiology PPPs set up in three medical colleges. A decade later, GEHC has the highest number of installed bases under PPPs in India, totalling more than 120+ projects, across 17 states in the country. It is reportedly the largest technology partner (80+ hospitals) for radiology PPPs in India. This translates into a 65 per cent share of the radiology PPPs in India, says Rajat Ghai, Business Head, Wipro GEHC’s government business and PPPs for Indian and South Asia. He declined to share corresponding revenue figures.
This thrust on PPPs as a way to expand market share as well as make diagnosis more affordable and accessible, is supported by investments like its latest MoU, through with JV with Wipro, with SAMEER (an R&D unit under Department of Electronics and Information Technology (DeitY), Govt of India) will collaborate on research, design and development of a MRI platform to include whole-body MRI, portable MRI and digital, to increase access to MRI technology in India. With a clear strategy to support AB and the government’s initiative to indigenously develop key medical technologies like MRI, GEHC is clearly on a strong wicket.
GEHC has a history of industry firsts in India, designed for the country’s needs and tapping into similar requirements across boundaries.
Designed for India, exported to the world
For instance, the RevolutionACT (RevACT), launched in mid-2015 and billed as the first ‘Made in India’ CT, has a 50 per cent smaller footprint, consumes 47 per cent less power, has a 28 per cent lower scanning time and cuts down radiation dose by 36 per cent. The compact size and lower power consumption make it ideal for smaller clinical settings in non-metros. Thus 75 per cent of orders are for non-metro, non-Tier 1 locations, with first time CT users making up 60 per cent of customers.
The RevACT may have been designed in India for India but is now approved to sell in 56 countries, primarily in Africa, ASEAN, APAC and LATAM markets. GEHC’ eCube design studio has delivered over 25 such new product designs across various sections of GEHC’s global product portfolio in the past five years, with over 35 patents filed.
But not all of India needs frugal innovations. At the other end of the spectrum, the design studio has designed a cath lab in Kolkata with a spa-like ambiance to put patients at ease. Paediatric radiology units have been designed around popular story book themes, where an MRI tunnel becomes a cave in an adventure story.
The India team also supports global projects. For instance, India provided the software for Senographe Pristina, the first US FDA approved self-compression mammography platform designed by a globally located all women team. Embarrassment, pain and discomfort are the biggest barriers to women taking breast examinations. This platform addresses all three of them, leading to better diagnosis, with the woman self adjusting the amount of compression pressure using a remote.Other innovations under development and clinical testing include a stethoscope incorporating an USG which allows the doctor to see as well as hear, and imaging devices integrated with 3D printers for patient-specific prostheses, bio-compatible implants etc.
In reset mode
According to GE’s 2017 integrated annual report, revenues of its healthcare segment grew revenue by 5 per cent, and margins by 70 basis points, with a nine per cent segment profit growth in the same year. GEHC comprising healthcare diagnostic imaging and clinical systems, life sciences products and services, and digital solutions, contributed revenues of $19.1 billion, and profit margins of 18 per cent in 2017.
While the numbers look positive for GEHC, GE is in reset mode, with 2018 set to be a year of reckoning. As part of a strategic review announced this April, GE will focus on three main areas (aviation, power and renewable energy) while GEHC will be hived off into a standalone company. GE expects to monetise 20 per cent and distribute remaining 80 per cent of GEHC to shareholders tax-free.
Steering the transition to a standalone unit is Murphy who joined GEHC in 2008 through GE’s takeover of Whatman, took over as President and CEO of the life sciences business in 2011 and as President and CEO of GEHC in June 2017. Murphy stressed that the spin off of GEHC would not be impacted by a transition in global CEOs (On October 1, John Flannery, with three decades in GE, made way for H Lawrence Culp, Jr who was previously head CEO of Danaher Corporation).
What will the 2019 spin out mean for the company’s India operations? Murphy indicated that India was one of the top five markets for GEHC and diagnostics imaging accounts for the biggest share of GEHC’s revenues. The government’s drive to bring down the cost of healthcare, including a rationalising of diagnostic testing, could drag revenues but this may be set off if GEHC manages to snag a lion’s share of the AB pie.
Thus besides the private healthcare sector, radiology PPPs will continue to be one of the major growth drivers, more so as AB rolls out. Thus the spin out could mean more focus on GEHC cementing its leadership position in key markets like India, where it is reportedly already has maximum market share in ultrasound and is the biggest player for molecular imaging/PET CT.
(The writer was at GE’s technology centre on the invitation of the company)
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