Indian medical devices market to grow over 10% annually, says BD CEO
Medication errors are one of the leading causes of death... We want to make the process more efficient and more safer, says Vincent A. Forlenza
Becton, Dickinson & Co., one of the largest medical device makers in the world, is increasing its focus on emerging markets such as India and China. The company was in the news recently for the acquisition of CareFusion in a $12.2 billion deal and is expecting revenue growth in the neighbourhood of 5% every year. In an exclusive interview, BD’s president and CEO Vincent A. Forlenza spoke about the company’s future roadmap and its plans for an aggressive foray into genomics. Edited excerpts:
Where do you see India in the global growth roadmap of Becton Dickinson?
India is about less than 2% of our global sales, but we see it as a market with a lot of opportunity and a market that we are excited about. A market where we will continue to invest. We believe that the Indian market place is going to grow in double digits, greater than 10% over the next five years. This is because of a number of factors. One is the investment that the private sector is making in hospital infrastructure. Second is the growth of the insurance market place. It is private insurance that is driving that. Of course, the continued growth of the middle class in India and their ability to pay for healthcare is an added advantage. Putting all this together, India becomes an attractive market place for BD and for other multinational companies. India will be a bigger contributor to BD’s growth than it was in the past.
We have a plant here (Bawal, Haryana) and we are looking at expanding it. We make over a billion medical devices from here. We export from India to Europe, Middle East and Korea and we expect that to continue.
BD has a debt-ridden balance sheet, with the overall debt mounting to about $12.8 billion. Will the plans to sell non-core businesses like surgical instruments and respiratory business help you in reducing this huge debt burden?
What we did was we took out debt for CareFusion acquisition of about $7 billion. We had told that we would get down to a three times debt equity ratio in 24 months. Once we get there, then we have the opportunity to do more acquisitions or do share buybacks. So, the first priority is to pay down the debt. In the past year, we paid down about $1 billion of debt.
We are not selling our surgical business. On the other hand, we are doing a market check on our respiratory business, but we have not made a decision on whether to sell it or not. We are evaluating on what to do with the respiratory business.
What would be the key growth drivers for your company in the coming years?
We expect to grow in the range of 5% per year. We would like to build the medication management solution globally. We are planning to take CareFusion products (CareFusion’s presence is only 25% outside the US) to other geographies around the world. We would like to build an informatics capability that would enable total solutions for our customer base. That would enable them to optimize two key processes: laboratory productivity and medication management.
You will also see us entering into genomics (Genomics is an area within genetics that concerns the sequencing and analysis of an organism’s genome. The genome is the entire DNA content that is present within one cell of an organism) market place, which we haven’t talked about at all.
How aggressive are you looking at genomics?
At the same time, while we have been talking about medication management, we made an acquisition that moved us into genomics. The company is GenCell Biosystems (an Irish biotech company), which works on the preparation of DNA to go in for next-generation sequencing. This provides an excellent platform to get into the genomics space.
We want to build a capability that makes genomics a routine and easier-to-perform model. We have world-leading capabilities in the sector to enable researchers to acquire the exact type of cell they want to analyze. In addition to this, we have made something called flow cytometers, which are used to identify certain cells. We can search 10,000 blood cells a second. What it does is the researcher will have a pure sample to analyze.
You completed the acquisition of CareFusion earlier this year. What does this mean for BD in the longer run?
We are very excited about how the two companies have come together. What we are doing is building a global leader in medication management. It is a $20 billion industry. The size of the company now will be $12 billion. We are in complementary parts of medication management and we are building an end-to-end solution in the sector for acute care customers. The plan is to help our customers optimize medication management within their organizations. Medication errors are one of the leading causes of death, fourth in the US, and it’s similar in the developed world also. It will be a significant problem in emerging markets as well. We want to make the process more efficient and more safer.
In every step, you can have an error. It could be the wrong drug, the wrong patient, the wrong dose. What we are doing is tying together the entire system so that information is passed across the system.
After the $12.2 billion CareFusion deal, you have become one of the five largest medical device companies in the world. Keeping this in mind, where do you see the industry growth by 2020?
If I start with BD, we expect a topline (revenue) growth be in the neighbourhood of 5%, taking out the effects of buying CareFusion. The medical devices industry is being generally growing about 2-3% in the developed world and closer to about 10% in emerging markets. That’s probably what you are going to see in the longer run.
With all the expansion projects lined up, what is the sort of investment that BD is going to have in the next five years?
That is really a continuation of what we have been doing over the last five years. In the last five years, we have invested over $125 million in emerging markets. So, we have an infrastructure around the globe. A lot of CareFusion products can fit into our existing infrastructure. We will add new sales force to sell those products.
How important will research and development activities and innovation be in BD’s menu?
We have been investing in improving our innovation system in the last five years. We spend about 6% of sales revenue in R&D. We will continue to build our capability not just in the US, but in Asia also, especially Singapore, India and China. We partnered with HCL Technologies in India and we do a lot of engineering work with them and we expect it to grow further. Part of our informatics capability is also here in Chennai.
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Business NewsCompaniesIndian medical devices market to grow over 10% annually, says BD CEO
First Published:14 Dec 2015, 04:57 PM IST
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