Description Of The Market Entry Decision

Published Date: 02 Nov 2017

This case study is about multinational software product company (headquartered in US) that wants to enter Rural Indian market with its one of the health care software solution known as e-DOC. (Note – Name of the firm is not disclosed and name of product is changed for confidentiality purpose)

Description of the market entry decision- context

Indian health care industry has a tiered organization. Tertiary care refers to healthcare provided through specialty hospitals followed by secondary care that depends on medium-sized hospitals (~30 beds) and community health centers (dispensary). Primary care is offered through mostly Government run care centers that are much smaller in size (~4-5 beds) compared to the secondary care centers and are run by mostly a single doctor with support staff. Finally, there are rural sub-centers manned by one male and one female paramedic serving as the first point of contact for primary care. In India, there are approximately 142,000 rural sub-centers in India covering a population of more than half a billion.

However, the quality of care provided by the rural sub-centers is substandard mainly because they are mainly staffed with paramedics (a person trained to perform emergency medical procedures in the absence of a doctor), who are not fully trained to provide a broad range of medical care, as often called for by patients who come to these centers. As a result, when someone in a village falls sick, (s)he would have to travel either to the primary care or to the secondary care facilities, which could be located hundreds of kilometers away from the village. Given the poor transportation infrastructure in rural India, this could be quite time-consuming as well as expensive. Typically, one would spend approximately Rs. 200 each way for transport, Rs. 150 for eating out, Rs. 300 for seeing the doctor and Rs. 150 for diagnostic tests at a minimum resulting in out of pocket spending of Rs.1000, not to mention losing the day’s income. Also, unlike in developed nations, more than three-quarter of the population in India use out of pocket expense for healthcare rather than using insurance.

In terms of scale, there are approximately 650,000 villages in India with an aggregate population of close to 750 million (i.e. 75 crore people live in rural India).

Other problems that people face while utilizing government health services are also unsympathetic attitude of the staff providing health services, and shortage or non-availability of medicines locally. Most of the time it so happens that these centers providing health care services run out of medicines locally and take a lot of time to get them from pharmacy centers located quite far away.

From the care provider’s perspective, there is a big difference in the wages between public and private doctors in India. In fact, many of the private doctors are less qualified than their public counterparts. However, the public doctors, being on fixed wages from the Government, don’t have the right incentives to deliver care to the best of their ability. Furthermore, doctors with higher qualifications typically don’t like to go and work in villages. As a result, villagers end up going to the private doctors instead of to the public doctors even though the former are less qualified than the latter. This situation highlights the potential for enhancing the knowledge of the private doctors practicing in the rural areas so that they can provide quality healthcare to their patients.

One solution to the problem above is to produce more doctors and/or registered nurses to deal with the lack of trained personnel for providing healthcare. However, this approach is unlikely to work in India. The current population of India is approximately 1.2 billion (120+ crore) whereas the number of physicians is approximately 650,000. This translates to approximately 5.5 physicians per 10,000 people. The corresponding numbers for developed nations are: 26 (USA), 23 (UK), and 21 (Japan). World Health Organization (WHO) recommends 23 physicians per 10,000 people. Considering both physicians and nursing personnel, India has only 19 (6+13). The population of India is growing at 1.6% and the number of doctors graduating per year is 27,000. That implies 5.6 physicians (increases from 5.5 by 0.1) per 10,000 people after 1 year which is still far below the desired target. In addition, 71% of Indian’s population lives in rural areas while 75% of the physicians live in urban areas. Furthermore, the government healthcare centers are both ill-equipped and understaffed.

Thus there is a challenge for providing affordable and good quality healthcare easily accessible to the rural population so that they do not feel compelled to travel hundreds of kilometers to see a doctor.

To eliminate the need for travel, especially for the elderly population suffering from chronic diseases, developed nations use Tele-medicine which involves remote monitoring and treatment of patients by doctors leveraging high-speed network connection that enables two-way video communication between the patient and the doctor. Advanced form of Tele-medicine that depends on high quality video conferencing is unlikely to work in the remote rural areas of India because of multiple reasons: (1) Lack of network connection in every part of India, (2) Expensive cost of providing Tele-medicine, (3) Scale and (4) Challenge of communication between doctor and patient. The last point is very unique to India as there are 22 different official languages and hundreds of dialects and finding a doctor who speaks the same language as the patient (especially in the case of telemedicine) is extremely difficult if not impossible.

Last but not the least, the environment in which the healthcare service needs to be provided to the rural population is very different from that of the developed nations. First, as mentioned earlier, network connections are not available everywhere – some villages may have connectivity through the cellular networks, some may not. There may be bigger towns in the vicinity of a village where slightly higher-speed network connectivity may be available through landline (DSL) connections. Electricity is also not available in a continuous manner – usually, there are rolling blackouts lasting for hours at a stretch. Computers and smart phones are non-existent with the rural population. Transportation infrastructure is poor, which could make trips to care centers in larger towns (hundreds of kilometers away) a nightmare.

Given the socio-economic challenges discussed above, a remote healthcare solution that would work in a sustainable manner in rural areas of India needs to have unique features and a novel delivery method unlike those tried before on a large scale.

The business of the firm, trigger for internationalization/market entry

Company leads in innovative health care solutions. It has business strategy as differentiator through innovation and plays on economies of scale to achieve cost advantage. Although company makes multiple products, yet e-Doc is the product under this study. Company wants to enter Indian market with e-Doc product that targets most of the challenges described in previous section.

About e-Doc Product

The foundation of e-DOC solution is to leverage mobile technologies to bring affordable and good quality health care to where people are, i.e., rural India, so that they do not have to travel hundreds of kilometers to see a doctor.

e-Doc is a flexible and extensible system which can operate in several modes:

Basic: In this mode, the system does not require network connectivity. Using a mobile decision support system, the solution offers on-the-spot diagnosis and recommendation of remedial actions. An outreach worker is expected to interact with the villagers, ask questions about general health, and enter their answers electronically on his hand-held device (tablet). Based on the availability of prior medical information (history) about the patient, the availability of medical support system (determined based on the location), and based on the answers provided by the patient, the e-Doc system provides a diagnosis and treatment. For example, one of the following things may be the recommendation of the analysis:

Give patient basic advice that he can follow on his own

Provide appropriate medication as part of the recommended treatment

Send patient to a lab for further pathology tests

Send patient to a specialist.

If the patient has a low cost cell phone supporting only basic text SMS, e-Doc application can be configured to send reminders in form of SMS text about treatment to the patient in his language.

Enhanced: In this mode, the outreach worker, in addition to asking questions to the patient, will put on medical devices on the patient to collect physiological data, such as, blood pressure, oxygen content in blood, blood sugar, ECG data, weight, etc. as well. Furthermore, cameras can be used to take photos of rash, skin color, abrasions etc. This information can be used for more detailed analysis and comprehensive treatment. Network connectivity will help to leverage more comprehensive backend diagnostics systems but that is not a requirement.

Comprehensive: In this mode, the system requires network connectivity. Additional value provided by e-Doc over and above the enhanced system is the real-time consultation facility with a doctor present in an urban area hospital. The key feature is being able to pick the appropriate specialist based on the Region (language spoken is different in different parts of India), specific problem at hand and the availability/presence of the specialist, and bring him/her online for a video consultation with the outreach worker and the patent.

Company has previously launched this product successfully in Maxico, Brazil, Russia. China and made profits hence it wants to now launch this product to India as it touches many pain areas identified above and company perceives advantage of market entry described in section below.

Perceived advantages of market entry

Company wants to leverage its innovation and wants to enter in a market like India where it sees huge potential because of following reasons.

Product is suitable for India having rural population of approximately 75 crore people. It is described extensively in previous sections.

Indian government has allowed FDI in telecommunication sector and it is growing very fast in India. This basic mode solution requires only a simple mobile phone that is reaching very fast to Indian rural areas. Company is optimist that its enhanced and comprehensive versions will also soon gain popularity at least in villages near metros where development is happening very fast.

Mobile phones, smart phones, hand held tablets etc becoming affordable and reaching to rural population with a fast pace.

Hospitals and other healthcare institutions of urban areas wants to expand and targeting to deliver rural healthcare services. They want efficient and effective solutions like e-Doc to support their expansion plan.

India has low cost talent pool and young population.

India has seen increased earnings of households and a steady economic growth.

Indian government is showing interest in foreign investments and coming up with business friendly policies.

Indian government is investing in infrastructure, education etc that will certainly help e-Doc solution.

India is world’s second most populated country and ranked 11th in GDP. Projections suggests that India will be ranked 5th by 2020.

Consdering facts above company is looking forward to enter Indian market with positive mind set and to gain competitive advantage by gaining early market share.

Why the location is superior to comparable locations

Perceived advantages are listed in section above. Company has already introduced this product in other BRIC nations (BRIC - Brazil, Russia, India and China) and Mexico. No big and developing economy remains other than developed economies and for developed countries company has different products suitable to them.

e-Doc product requires certain level of technology implementations and vast population to be successful. Currently India is most suitable among remaining developing countries because of reasons described in sections above.

Local competitive environment in the new market

Indian local IT companies have now become globally renowned IT giants and are strong competitors of e-Doc solution. E.g Wipro, an India based IT Company has recently launched similar product named as NextGen Care Management Solution. Similarly other IT companies are also working in this field. However no one has captured the market yet and all are in very initial stage of product development or launch.

e-Doc product is a proven and successful product in other countries. Also company was among first one’s to implement this kind of solution hence clearly have advantages of early market entry and having expertise to customize and scale product as per India’s need. They are planning to launch product at affordable price, with a aggressive marketing campaign to give their local competitors a tight fight that are still evolving and having no market base for similar product.

Entry conditions- mode of entry selected

Indian government is now open for FDI in multiple sectors with some policies in place. Government also started investing in infrastructure and simple policies to attract foreign businesses. India has also special zones where duty free imports/exports are possible, also there are business favorable policies on sales tax, excise tax and service tax.

However there are many issues like high degree of corruption, demanding and price sensitive consumer, difficult to find good local supplier, difficult to attract and retain talented people, huge cultural, religious and family influences on people’s decision, Low GDP per capita, low education level and currently bad infrastructure. Current political scenario, unemployment, crime rate and inflation are not much favorable however India’s prospects are bright and listed in previous sections hence company decided to enter in Indian market.

India has predominance of family owned businesses. Company wants to enter using a joint venture partnership with India’s well established business group who can provide helping them in identifying target areas and can reach to rural India in no time. This will help company to handle issues described above.

Implementation plan for entry

As discussed above company wants to go for a joint venture in Indian scenario. Now with the help of partner, company will work with healthcare providers, government departments and technology providers and may be with micro-finance institutions, to ensure widespread adoption of the e-Doc solution. One aspect of this collaboration will be a pilot program focused on a specific healthcare challenge: e.g. providing rural expectant mothers with regular checkups.

By piloting e-Doc in a specialty hospital focused on providing healthcare to the poor, Company hoped to achieve several goals: measure the impact of e-Doc on a busy hospital’s maternal health care process, validate maternal health rules and guidelines used by the e-DOC handheld device, and identify any opportunities to improve the system’s performance.

The identified hospital should provide fertile ground on which to make these discoveries. Hospital should be handling approximately multiple deliveries hopefully more than 30+ every day; the facility should match primarily poor, rural patients to match e-Doc’s intended population. The hospital should also stand to improve its health care processes considerably, they should be ready to adapt for computer based system to handle most of their operations.

Company is planning to launch a three-phase program to help the hospital address issues while testing e-Doc in India’s context. During the first phase, company’s professionals will work closely with the hospital to prepare for the e-Doc implementation, identifying the doctors and nurses who would use the system, providing training, and performing site preparation and logistics set-ups.

Next, the team will put e-Doc in place at the hospital, using a private WiFi network, Android-based handheld devices, and a server running on a laptop.

During this second phase, company will measure a range of quantitative and qualitative data.

Finally, company will collect user feedback on the system and perform a systematic review against performance indicators. The results will be analyzed to find if

Medical practitioners find it easy to use the system and

Patients understand the guidance generated by e-docs related to birth plans, immunization schedules, expected delivery dates, and upcoming visits.

What is the effectiveness of SMS alerts generated by e-Doc

The pilot will also reveal some opportunities to further tailor e-Doc to physician needs.

Conclusion

E-Doc is an expert-system and can be used by the trained outreach workers. It deals with the rural healthcare problem. It brings quality primary care to people in rural areas by empowering field health workers with tablet or smart phone based decision-support system that contains latest WHO guidelines, clinical protocols and best practices. It supports location-aware data capturing, remote diagnostics, and context-sensitive treatment capabilities. It is a useful solution and cater to Indian conditions hence its entry should be successful considering factors described in this study.