Category — Innovation(RnD)

Covidien , Inc. a US-based manufacturer of medical devices and pharmaceuticals, and an Amritt client, has set up its first research and development center in Hyderabad, India. Business Line reported.

Randell Frazier inagurates Covidien India R&D Center, Rob Frechette, Anurag Asthana, Arjun Sarker in photo from left

“The Indian healthcare devices market is part of our focus on emerging markets. The Hyderabad center will enable us to improve product time to market and create valued-innovation,”  according to Robert Frechette, Vice-President (Engineering Services).

Stating that the company had over 14,000 patents worldwide, with another 12,000 patent applications pending, Frechette told the  Business Standard that  idea to set up an R&D center in India was primarily to support the company’s entire operations globally. Besides generating ideas from here, filing global patents from here was also on the cards, he said.

“We currently spend 5 per cent of our revenues on R&D, which we plan to increase to about 6 per cent starting this year,” he said, adding that the company had so far launched over 100 new products and expected to launch more than 50 products over the next two years.

Apart from designing products to suit local market needs, the R&D unit would utilise India’s huge talent pool to provide a range of engineering services for the company’s medical products business. The company plans to hire over 350 professionals for the centre over the next two years. Some 30 people are already working at the 40,000-square-foot facility.

Mr Arjun Sarker, Managing Director — Indian sub-continent, Covidien, said the business focus in India would be on surgical solutions and medical devices, though the company is strong in the pharmaceuticals business too.

The focus for captive R&D centers in India has gone up this year and expected to grow between 12-20 per cent in 2012 depending on the source of the estimate.

The country is an emerging destination for automotive R&D;  Renault- Nissan, Suzuki and , Honda have recently set up their engineering centers in India.   In R&D hiring, pharma and defence are the better -paying sectors.  R&D is witnessing large investments not only from foreign companies operating in India but but also from domestic players.  In domestic companies, pharma and automobile have realized that in their ambition to globalize their operations, they have no recourse but to spend on R&D, according to a report in Silicon India.

Meantime, India’s largest information technology (IT) services provider, said it had so far made campus offers to 43,600 engineering freshers for 2012-13, higher than the 37,800 offers made this year. The Business Standard said these numbers represented the offers made to only engineering students at Indian campuses and the final hiring target for 2012-13 would be announced by the end of March. The target will include hiring from foreign campuses and lateral (experienced) offers. The ratio of campus hiring to experienced staff was 70:30 in the  previous quarter.  In FY 2012 TCS will end up hiring around 66,000 employees.

What this means

Career prospects for young professionals look disproportionately bright. If I was an HR professional anywhere in the world, I would want to look at working in India, the experience of hiring more than 10,000 professional people in a year is not something that many companies can offer. In India there are over a dozen company hiring over 10,000 a year. These include TCS, Wipro, Infosys and some other large service providers but also in my estimation western entities such as IBM, Accenture, perhaps Oracle/SAP/HP.

With 46 percent of its $16 billion in annual revenue hailing from foreign shores, Medtronic, the world’s biggest medical devices company has an ambitious goal to develop new and cost-effective products such as pacemakers for the poor, while simultaneously selling its existing ones to the growing middle classes in emerging markets.

The company’s new CEO, 55-year-old Syed Omar Ishrak was raised in South Asia (Bangladesh) and  believes that Medtronic can expand its reach even more, particularly in the emerging markets of India, China and Latin America. “Huge opportunities,” he says. “Huge.” How exactly Ishrak’s globalization strategy will play out remains to be seen according to the Minneapolis Star Tribune last year.

Syed Omar Ishrak, CEO Medtronic

At the Davos World Economic Forum last month, Ishrak, who was recruited from General Electric and has a PhD from King’s College in London,  continued the theme, “One has to be realistic about affordability in the under-served segment,” he said adding that the new generation of simpler devices should be five to 10 times cheaper than current high-specification products.

“To accelerate healthcare access one has to think about disruptive methods — disruptive technology and disruptive delivery mechanisms,” he said. While the work is still at an early stage, Ishrak has already identified heart pacemakers as the most likely area for initial research and development.

“I’d like to challenge all our businesses to start thinking this way but the area where we are furthest ahead is perhaps pacemakers, where we’re thinking of real disruption in terms of cost and simplicity,” he said.

What this means

At my company, Amritt, we have been advising our clients to look at emerging markets such as India, in exactly this manner not only in medical devices but in many other sectors that affect consumers. I had the good fortune to get to know the late legendary Professory C.K. Prahalad of the University  (the man who first became famous for coining the term “core competence”).  “CK” as he was know to all friends and acquaintances later wrote the ground-breaking “Fortune at the Bottom of the Pyramid” where he pointed out dozens of examples of profitable business models that address wallet sizes different from the American middle class.

It is good to see that Medtronic has aspirations to address the needs of consumers  beyond the richest 1 billion global citizens. They are early in their journey, but doubtless the GE and Bangladesh heritage will carry Ishrak’s vision. We will watch this closely.

The Radiant Heat Warmer (RHW) 3000 series from Zeal Medical Pvt. Ltd. of Mumbai  provides an example of Indian ingenuity in cutting costs while preserving quality. Designed for the Indian marketplace, the open-bed radiant heat warmer for infants is 50% less expensive than other competing products in the market, according to the manufacturer.

Infant Warmer, Winner of 2011 Medical Design Excellence Awards

To obtain patent protection internationally it is necessary to file a patent application and and to prosecute the application to grant of a patent.

Many medical device companies are wary of the process, but with the help of an experienced patent agent/attorney, the process can be completed relatively smoothly. Here are a few of the key issues companies should consider when obtaining patent protection in the BRIC countries, according to attorney D’vorah Graeser, Graeser Associates International in Chicago as quoted in EMDT.

Budgeting for international patent costs can be challenging, given the differences between the patent systems. But India is an exception among the BRIC countries. Patent applications are filed and prosecuted in English. Furthermore, filing and prosecution costs in India are quite reasonable, lower than costs in Europe or the USA and lower than Brazil, Russia or China.

Apart from the requirement to pay regular (typically yearly) fees, some of the BRIC countries also have post-grant requirements that must be fulfilled to avoid cancellation of the granted patent. India, for example, requires filing of a yearly post-grant statement of working, describing the commercial exploitation in India of the invention disclosed in the patent. If commercial exploitation does not occur within three years of receiving the granted patent, a third party could request a compulsory licence of the patent. Selling the medical device in India, directly or through a licensee, may be sufficient to fulfill this requirement.