Samsung diagnoses the need for speed in healthcare

Samsung, the South Korean giant, forayed into the healthcare equipment sector with an acquisition. The market leader in consumer electronic segments such as mobile handsets and television in India, it acquired NeuroLogica in January. By June, it had already launched digital radiology and in-vitro diagnostic equipment, five months after acquiring the CT (or computed-tomography) scanners-maker, branding all its equipment as GEO.

Durables to medical
Samsung's latest diversification follows a trajectory similar to the established players in medical equipment - General Electric (GE), Philips and Siemens. All were major consumer electronics companies and later shifted focus to medical equipment and other industrial products. Samsung has chosen the inorganic route to expand, having acquired Medison, a Korean ultrasound monitors-maker in 2010. While most of the other players shifted to the lucrative business as their consumer durables arms took a backseat (the Netherlands-based Philips is still present in consumer lighting and audio), Samsung has chosen to make an entry when it is still the dominant durables player in many markets, including India.

However, despite Samsung's strong consumer connect and distribution, it would not be easy for the chaebol to make quick headways. It will have to fight stalwarts such as GE, which has made strides with its customised equipment for India such as low-cost, portable ECG machines, that are relevant in rural markets too.

Direct customer connect
Samsung intends to tackle it with its consumer durables flair, by establishing a direct consumer connect. Apart from replacement sales and those to upcoming hospitals, diagnostic centres even in tier-II and III towns, it will also tap physicians, who had not been addressed till now, Samsung claims.

"This is a long-term game. We want to keep the direct consumer approach in the healthcare equipment business too. Like consumer electronics and gadgets, healthcare equipment will also be backed by innovative technologies and integrated holistic solutions," says Dinesh Lodha, vice-president, health and medical equipment business, Samsung India. For example, all its divisions may work together to upgrade diagnostic centres by providing the required electronic products.

For tier II and III towns, it has lined up 50 channel partners, while corporate clients in metros will be catered by its own sales team. Its inorganic entry with NeuroLogica has given it access to about 2,000 ultrasound installations. "These are loyal customers. We have the scope to service them when they need to replace the existing machines," Lodha says. Typically, ultrasound machines have a lifecycle of four-five years.

Late to the party
Samsung has entered late in equipment market that is estimated at $1.5 billion (approx Rs 980 crore) at present, and is growing at about 15 per cent annually. At present, GE is the market leader in healthcare and hospital equipment, followed by Siemens and Philips.

According to a report by the United Nations Economic and Social Commission for Asia and the Pacific, the number of elderly people (above 60 years) in the Asia-Pacific region would triple to 1.2 billion by 2050. Experts point out that this makes for a huge scope and Samsung might still be in time.

Lodha says that the company would try to market faster, smarter and more accurate diagnostic equipment to create a fast diagnosis environment for the aging population. For example, Lodha claims its ultrasound machines are faster than the standard machines, enabling more scanning in a shorter period of time, which in turn increases the number of patients a diagnostic centre can accommodate per day.

Faster is better
With such specific claims, Samsung is hoping to boost sales. It claims its X-ray machines need the lowest possible dose of radiation while a patient is being X-rayed. "Once consumers realise this, they would surely opt for this, and not the existing ones. This would then create demand from the consumers and the centres will upgrade," adds Lodha. With a Samsung machine, all basic blood tests are possible within seven minutes at a doctor's chamber, the company claims.

After being trumped by Asian rivals in durables and gadgetry, Philips and Siemens are counting on this segment for their future. Samsung will price its products competitvely between Rs 1.2 lakh (its bold analysers) and Rs 50 lakh, even though it is not manufacturing any in India yet. Globally, Samsung aims to become one of the top entities in the healthcare and hospital equipment business and "so is the target in India" Lodha says.