Cepheid is based in Sunnyvale, California. "Cepheid is an on-demand molecular diagnostics company that develops, manufactures, and markets fully-integrated systems and tests for genetic analysis in the clinical, industrial and biothreat markets. The Company's systems enable rapid, sophisticated genetic testing for organisms and genetic-based diseases by automating otherwise complex manual laboratory. The Company is focusing on those applications where rapid molecular testing is particularly important, such as identifying infectious disease in the clinical market; food, agricultural, and environmental testing in the industrial market; and identifying bio-terrorism agents in the biothreat market" (http://www.cepheid.com, April 2010).
According to Cepheid's 2009 Annual Report, Cepheid intend to expand international sales and marketing activities and have engaged Cashion Consulting to develop an international marketing plan to assist the company to access the feasibility of entry into the Indian healthcare market. Cashion Consulting has conducted both primary and secondary research into Cepheid and the Indian Healthcare System and has identified significant advantages and risks for entry into this market.
The company is currently positioned to expand operations into India because of its product offering for TB and its target market. India has a high prevalence of TB which has been increasing. Resistant TB is also emerging and the Cepheid product also has the ability to detect this resistance in 2 hours. The World Health Organisation (WHO) is providing and supporting programs to control and diagnose this contagious disease. Cepheid has a unique product to offer for the diagnosis of TB in India and Cashion Consulting recommends that Cepheid expand sales and marketing into the Indian healthcare system. This report provides the rationale, background and environmental analysis of the expansion of Cepheid sales and marketing for the detection of Tuberculosis into India
Background
Cepheid brings the precision, speed, and ease of molecular testing to the front lines of health care. As a broad-based molecular diagnostics company, Cepheid give laboratorians, doctors, nurses, public health officials and first responders the immediate answers they need to make better decisions about treatment and Infection Control. (http://www.cepheid.com, April 2010).
Cepheid currently markets In-Vitro Diagnostic (IVD) tests for use in the detection of Tuberculosis (TB) in Europe, USA and parts of Asia. TB is a contagious disease. Much like the common cold, it spreads through the air. Only people who have active TB in their lungs are infectious. When infectious people cough, sneeze, talk or spit, they propel TB germs, known as bacilli, into the air. A person needs only to inhale a small number of these to be infected (http://www.who.int/mediacentre/factsheets/fs104/en/, April 2010).
Left untreated, each person with active TB disease will infect on average between 10 and 15 people every year (http://www.who.int/mediacentre/factsheets/fs104/en/, April 2010).
India has a population of almost 1.2 billion living in 30 states and 5 union territories. The country continues to be burdened with high morbidity and mortality due to tuberculosis, India contributes one-fifth of the global TB cases and 331268 died due to TB in 2006 (Vissandjee & Pai, 2007).
Recent data at country level (unpublished) shows that about 4%-5% of TB patients are HIV-positive. Implementation of the revised "National framework of joint TB/HIV collaborative activities" began in early 2008 and which now cover the entire country. An "intensified TB/HIV package" is being rolled out in nine states and in a few additional districts classified as high HIV prevalence settings, covering a population of over 320 million (http://www.whoindia.org/en/section3/section123.htm, April 2010).
Tuberculosis (TB) is a major public health problem in India. India accounts for one-fifth of the global TB incident cases. Every year nearly 2 million people in India develop TB. It is estimated that annually around 330,000 Indians die due to TB (Vissandjee & Pai, 2007).
The majority of funding for TB is from the Government of India sources which includes a World Bank credit. The program is also supported with funds from donor agencies Global Fund and USAID (http://www.whoindia.org/en/section3/section123.htm, April 2010)
The diagnostic healthcare market for the testing of Tb is highly reliant on funding. Funding for public health can be varied so this risk would have to be assessed and monitored on a regular basis. Although, TB is on the increase in India so is attracting world wide funding for prevention, diagnosis and treatment.
The Cepheid Xpert MTB/RIF assay is intended for rapid detection of Mycobacterium tuberculosis complex and rifampicin resistance in adult patients in respiratory specimens with clinical suspicion of tuberculosis. This technology is very simple to use and provides fast and highly accurate results so that the doctor can treat the patient fast and with the correct treatment. Fast and accurate treatment will result in lower morbidity, mortality and transmission. Significant healthcare costs are reduced by accurate and rapid detection. Savings are made by reduced hospitalization, faster recovery and reduced transmission. There is a market in India for such a diagnostic assay. (http://www.cepheid.com, April 2010).
Environmental Analysis
Economic and Trade Environment
The Indian economy has become the second fastest growing economy of the world in the year with the GDP growth averaging 8%. India has recorded one of the highest growth rates in the 1990s and continues to be strong (Bagchi, 2007).
"The fundamentals of the Indian economy have become strong and stable. The macro-economic indicators are at present the best in the history of independent India with high growth, healthy foreign exchange reserves, and foreign investment and robust increase in exports and low inflation and interest rates. The largest feature of Indian economy has been high growth with stability. The Indian economy has proved its strength and resilience when there have been crisis in other parts of the world". (Bagchi, 2007)
In terms of revenue and employment, healthcare is one of India's largest sectors. The healthcare sector is expanding rapidly. Indian healthcare grew at a compound annual rate of 16% in the 1990's. Today the total value of the sector is greater than $34 billion. This translates to $34 per capita, or roughly 6% of GDP. India's healthcare sector is projected to grow to nearly $40 billion by 2012. "One driver of growth in the healthcare sector is India's booming population, currently 1.1 billion and increasing at a 2% annual rate. By 2030, India is expected to surpass China as the world's most populous nation. By 2050, the population is projected to reach 1.6 billion" (Bagchi, 2007).
Another factor driving the growth of India's healthcare sector is a rise in both infectious and chronic degenerative diseases. Diseases such as poliomyelitis and leprosy will soon be eliminated, some communicable diseases once thought to be under control, such as dengue fever, viral hepatitis, tuberculosis, malaria, and pneumonia, having returned in force and some have developed a resistance to drugs. This potentially lethal trend can be attributed in part to substandard housing, polluted water, sewage and waste management systems, a crumbling public health system and increased air travel (Bagchi, 2007)
In recent years, there has been an overhaul of the Indian healthcare sector to allow for a much-needed private insurance market to emerge. India has a growing middle class with increased spending power. There has also been an increase in the number of insurance policies issued in the country. By 2003-4, the number of policies issued had increased by 37%, to 10.3 million. The Insurance Regulatory and Development Authority (IRDA) eliminated tariffs on general insurance as of January 1, 2007, and this move is expected to drive additional growth of private insurance products. Health insurance is projected to grow to $5.75 billion by 2010, according to a study by the New Delhi-based PHD Chamber of Commerce and Industry. The IRDA believes that eliminating tariffs will encourage scientific trading and adoption of better risk management practices. This is likely to lead to independent pricing for each line of business, so that premiums will be based on actual risks and costs. (Bagchi, 2007). Funding for the prevention of TB by private health insurance could be realistic in the future. This would make it more feasible to introduce new and more expensive diagnostic testing.
A foreign company can commence operations in India by incorporating a company under the Companies Act,1956 through
Joint Ventures; or
Wholly Owned Subsidiaries
Foreign equity in Indian companies can be up to 100% depending on the requirements of the investor. This is subject to equity caps in respect of the area of activities under the Foreign Direct Investment (FDI) policy (http://www.cgijeddah.com/ April 2010).
Political and Legal Environment
The government of India is classified as a federal socialist constitutional republic and styles itself in after British parliamentary system. Constitution of India sets forth India as a Union of States comprised of 28 states and details the division of powers between state and federal governments. However, the constitution gives the federal government the ability to amended or alter state powers and state borders. Further the constitution divides the federal government into a legislative, judicial and executive branch and provides for a division of powers among those branches.
In 1988 Prevention of Corruption Act was passed. This specialized law was set in place to curb corruption in India. To make it a criminal act in the public and private sector pertaining to active and passive bribery, extortion, bribery of foreign official, abuse of office and money laundering. In 2002 the Prevention of Money Laundering Act and the Amendment in 2005 were passed. Right for Information has also been a huge factor in fighting against corruption (Goyal & Goyal, 2009)
Implementing a business in India can take an average of 35 days. Obtaining a business license and closing a business can be very difficult. All businesses must contend with extensive federal and state regulation as well as a difficult slow bureaucracy (Goyal & Goyal, 2009)
The government is encouraging the growth of the healthcare market, through policies such as a reduction in import duties on medical equipment, higher depreciation on life-saving medical equipment (40%, up from 25%), and a number of other tax incentives. Technology that provides healthcare savings are also encouraged (Goyal & Goyal, 2009).
Socio-Cultural Environment
Religion is an integral component of any cultural system. This is because it reinforces social norms and values and also promotes social solidarity. Thus religion is a common value system.
The religion in India is 80% Hinduism. Islam, around 13% of all Indians. Sikhism, Jainism and especially Buddhism are influential not only in India but across the world. "Christianity, Zoroastrianism, Judaism and the BaháHYPERLINK "http://en.wikipedia.org/wiki/Bahá'í_Faith"'HYPERLINK "http://en.wikipedia.org/wiki/Bahá'í_Faith"í Faith are also influential but their numbers are smaller" (Goyal & Goyal, 2009).
Hinduism in India has a tradition of the caste system. This has created a culture that emphasizes established hierarchical relationships. Indians are very conscious of social order. Usually the father, is considered the head of the family. The boss is the source of ultimate responsibility in business. Every relationship has a clear defined hierarchy. (http: //www.kwintessential.co.uk/resources/global-etiquette/india-country-profile.html, April 2010)
Rather than defining their social status as individuals Indian people will typically define themselves by the groups to which they belong. Individuals deemed to be affiliated to a specific state, region, city, family, career path, religion, etc (Goyal & Goyal, 2009)
In many cultures the social stigma of tuberculosis contributes to abandonment of treatment and seeking professional help. This is the case in India also (Rubel & Garro, 1992). Social dimensions such as gender, level of income and education level all become factors that influence testing and treatment for the disease (Rubel & Garro, 1992)
Awareness programs have been active in India for several years and has now has moved to the movie cinema. According to the Indian express dated 27 March 2010, TB awareness films will be screened at PVR cinemas. The Population Services International (PSI) and the United States Agency for International Development (USAID) also support and provide awareness programs.
It is hoped that with awareness and education these programs will help with the cultural stigma attached to the disease and encourage more people to be tested and treated for TB.
Conclusion
Cepheid are well positioned to supply a solution to a continued health problem in India. Tuberculosis infects over 2 million people per year in India and it has significant social and economic burden on the healthcare system. There is a need for a rapid and sensitive diagnostic assay for the detection of TB particularly due to the fact that the TB bacteria have become resistant to traditional TB medication.
Healthcare is one of India's largest sectors, in terms of revenue and employment, and the sector is expanding rapidly. By 2012 it is projected to grow to $40 billion. The Indian government is encouraging the growth of the healthcare market by providing a number of tax incentives. Indian laboratories usually employ highly qualified scientists. However one of the advantages of the Cepheid technology is that it is very simple and only requires basic laboratory skills. The Cepheid technology has been placed in wards, clinics and even prisons around the word. This would also provide access to diagnostic testing in remote communities.
There is a socio-culture stigma around TB in India as it is seen as a disease of the poor and un-clean. As a result many people will not be tested or treated for the disease. This results in increased mobility and mortality. The Indian government and international agencies such as World Health Organisation (WHO), Center for Disease Control (CDC) and USAID are providing awareness programs and education to the general public. This is likely to result in increased diagnostic testing.
The TB program in India is heavily reliant on local and international funding and proposes a risk for entry into the Indian healthcare market. This would need to be monitored on a regular basis. It is expected that funding will be increased or at least sustained in the future due to the increase of the disease in India and around the world (<http://www.whoindia.org/en/section3 /section123.htm>, April 2010).
Cepheid's strategy to expand sales and marketing to India for the detection of TB is not only achievable but it is much needed for the control of the disease. Rapid and accurate testing of TB will result in better outcomes and reduce the burden of the disease in India and ultimately the rest of the world
Cashion Consulting would highly recommend that Cepheid further develop this marketing strategy with in depth analysis of the healthcare market, entry strategy and competition required.
