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How Astute Analytica assisted an investor to decide on new...

How Astute Analytica assisted an investor to decide on new investment

Sep 15, 2021

Background

A medical device is essentially an appratus that helps prevent, diagnose detect, restore, or treat diseases. It is considered the future of the healthcare industry, existing at the intersection of biology and technology. The top 10 global medical device players are from US, Japan, and Europe. The key growth areas are Invitro diagnostics, cardiovascular and orthopedic. A company from India wanted to diversify and build niche lines apart from existing highly successful coronary stent system.

Agenda for examination

  • The client wanted to have an idea of size, segmentwise, of the market
  • It wanted to scout for talent from outside India (but where?) since there was nonavailability of high-skilled and experienced R&D personnel
  • It wanted to have an indepth understanding of latest innovations in the field, technology partners available
  • It wanted to undertake a SWOT analysis:
    • What could be possible opportunities internally and externally (outside India)
    • What are the likely oncoming roadblocks and hurdles
    • What are the competences that the company has and further needs to acquire
    • What are the intracompany weaknesses and can these be overcome
  • It wanted an assessment of threats and challenges from competitors’ presence.

Execution of Assignment

The assignment needed both desk and onfield exploration. We had to conduct primary and secondary, quantitative research. For secondary research we rummaged through database in public domain, news about the industry information about operative companies plus inquisitive searches on the Net. For qualitative perspective we focused on patients who had already undergone the procedure, those who had such ailments and would have undergone the procedure in near future, doctors with cardiac specialization, vendors of the device, and other manufacturers, The focus was on mainly to seek answer to following queries:

  • Scope of the marker (size) in aggregate and segmentwise
  • Latest innovations and technologies available, and best partner for securing them.
  • Competitor’s presence, internally and externally; their size, strengths, and marketing strategies
  • Environmental factors:  Regulatory, technological, legal, etc.
  • Consumer behavior: Drivers and inhibitors

Outcome of the Exercise

Our market mapping, including intelligence about demand and supply side of the market, coupled with competitor intelligence, and assessment of customer readiness enabled us to suggest to the client the following:

  • The company stent prices were regulated but bioabsorbable stents were outside the purview of this regulation 
  • Bioabsorbable stents were a niche area but highly profitable segment
  • There was an acute shortage of highly skilled and experienced R&D personnel which would hamper the prospect to diversify faster to reach out dream of becoming a global medical device player
  • Ireland was an important medical device hub which could be tapped for technology partnership
  • Initial imports followed by indigenous manufacture would be a better strategy for Indian market
  • Domestic players from the Indian medical device industry were at their nascent stage and still trying to have a foothold in the domestic as well as international market.

Company Response:

 When the company realized that (a) the stent market was growing at a CAGR of 4.7% and was expected to reach $ 7.7 billion in 2019; (b) the global medical device market was growing at nearly 4.1% annually and could reach estimated figure of $ 477.5 billion in 2020; (c) Indian medical device market was valued at $ 3.5 billion in 2015 and could expand to about $ 4.8 billion in 2019; (d) and, finally, the bioabsorbable stents market was growing at a CAGR of 5.6%, and was expected to be worth $ 284 million in 2019 and $ 310 million in 2027, it decided to locate in Ireland ( a potential investment destination identified through research) since it had (a) investor friendly tax structure, (b) availability of qualified professionals and workforce, and (c) a doorway to markets worldwide.

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