How to Leverage Engineering & R&D From India and China in the Med Tech Business

© Amritt Ventures, 2010

PROPRIETARY & CONFIDENTIAL 1

Case Studies & Learning

How to Leverage Engineering & R&D

From India and China

in the Med Tech Business February 13, 2014, Anaheim, California

Gunjan Bagla

Amritt, Inc.

Medical Technology Practice


Engineers in India help Western

device companies

• “Captive” Engineering Centers for GE, Siemens,

Philips, Covidien, etc.

>> GE Lullaby Baby Warmer, a good example

>> Designed in and for India, sold in Europe as well

External “Engineering Service Providers”

>> For Product design, testing, sustaining engg.

• Clinical Trials of Devices in India

>> Can accelerate time to market in West

IP and patents in cases above are owned by Western companies


Lullaby Baby Warmer


Amritt’s Medical Technology Practice

We help V.P.s of R&D, CTOs, CSOs:

• Create, develop and improve offshore R&D centers

• Select and manage outsource R&D partners

• Scout for technologies, partners, and I.P.

• Access new markets and new business models

• Provide top personnel selection & executive

training oriented toward global R&D

3


Amritt: Helping Medical Device Companies to

leverage Emerging Economies

• Working with corporate and business unit leaders at

large and emerging device companies in America and

Europe

>> Helping them to engage with India/China etc.

• Engage directly with markets or via partners.

• Access technologies, products, tech skills.

• Directly or via partnerships.

• Amritt Clients include large and small medical

technology companies globally



Improve Engineering Productivity by 10%


Client

Ask #1

Amritt

Strategy

Client

Solution

• New CEO directed significant increase in R&D

budget but challenged his four CTOs to improve

ROI at the same time

• Build focused captive engineering centers in both

China and India.

• Choose 2 engineering outsourcers in India for high

volume work.

• Train executives on cross-cultural expertise.

• Productivity gain is about 12% in year 3 after

accounting for transition costs. US/EU staff

strength grew about 3%; added over 500 head

count in Asia


Outsourcer provides turnkey design


Client

Ask #2

Amritt

Strategy

Client

Solution

• Design complete new diagnostic product using

consumables cartridge from legacy line.

• Value Engineering and Innovation Packaging were

key determinants

• Qualified 3 outsourcers with electro-optical, systems

and prototyping skills. Only one had medical device

legacy.

• Supplier with no med tech heritage won the bid.

Recruited seasoned med tech experts from

GE/Philips captive center. Design cost is over 40%

lower. Product is still in test.


Create third-party innovation cluster


Client

Ask #3

Amritt

Strategy

Client

Solution

• U.S. client expanding into Latin America, could not

justify US-based new product development to

serve Latin America market

• Create a network of small innovative product

developers and prototype shops in India to develop

products for Latin America market

• Client provided deep and wide voice of customer.

By Year 2, two complete products developed and

3 others modified to meet Latin American needs.


Challenges facing today’s

med-tech R&D managers

• Increase the product development pipeline and

reduce time-to-market within tightening R&D budgets

• Develop products that resonate with large, new

emerging markets (the next 2 billion medical

consumers)

• Ensure that the company’s core IP portfolio and

technical talent is protected and enhanced

• Trends driving innovation in medical device sector:

• Data flow between devices and to ERP systems, big data, smart

phones

• Diseases: cancer, cardiovascular, diabetes, obesity, degenerative

conditions

• Manage costs and budgets more tightly

8


Balancing the Med. Device R&D Center:

Size and Access to Local Innovation

Investment in Time & Cost

Staffing base can be much smaller

9

Collaborative

R&D relationship

with a domain

expert

Contractual

development

with CRO

Service

agreement

with provider

Harn

essin

g L

ocal In

no

vati

on

“Captive”

R&D

Center


• Captive Engineering/R&D Center An offshore R&D location staffed by your employees

(Including expats, local hires, or third country transplants)

• Joint Venture Typically with a local company in-market

• Outsource partner External service provider, with staff in China/India

• Collaboration

• Including Open Innovation

• Supplier contract From current supplier (“free” R&D)

Amritt evaluates trade-offs among these.

10

Alternatives for harnessing R&D

resources


“Captive” versus “Outsource” R&D

11

Captive Outsourced

Perception Permanence (both home & remote teams)

May seem temporary

Ownership / Loyalty

To the U.S. company To hiring company (service supplier)

Flexibility Can do many different things Can ramp up or down easily

Initial setup Requires planning and commitment

Shorter, less painful

Operational More control but more responsibility

Less control, potentially less access to tech staff

Costs Potentially lower, if done well Low enough?

Indicated for Permanence, critical mass, corporate stamina

Not as strategic. Needs well-defined projects, flexibility for exit, intermediate stage

11


Selecting the portion of the development

lifecycle you can offshore or outsource

Many companies start with offshoring or outsourcing design

verification or analytical testing to India/China

Over time they move upstream in the product

development process lifecycle

Project A B C D E

Phases

Investigation

Concept

Design

Develop

Test & Verify

12


14

Proactive Globalization Amritt PRNDL model

Upside:

lower costs

Downside:

Workforce

reduction?

Lose talent

in U.S./E.U.

Upside: Capacity increase

w/o capital

Convert fixed costs to variable

Develop a 2nd source

Downside:

Follow competition

Upside: New skills & talent

Refocus US resource on higher value

Footprint in new market

Type 1

TACTICALLY

REACTIVE

Type 2

STRATEGICALLY

REACTIVE

Type 3

TACTICALLY

PROACTIVE

Type 4

STRATEGICALLY

PROACTIVE

Upside: Transform

Value Chain

Deep best- of-class

supplier & partner

relationships

Enable selective in- sourcing in transformed eco-system

Valu

e

1 2

3

4

14


Typical Amritt Advisory Process

15

Assess the need

Initiate the

Investigation

Present Interim

Results

Final Discussion

& Report

Facilitate

Meetings

Reach agreement

with 3rd party

Make hosted

Visits

Agree upon a

detailed

Plan & Schedule

Get

Feedback


Thank you!

• Research reports available to attendees free

for a limited time, normally priced at $195

• Serving the Next 3 Billion Patients

• The Medical Device Business in India

• Contact us

• Gunjan Bagla

• Amritt, Inc., Medical Device Practice, Cerritos, CA

• [email protected] (562) 402 4435 • http://www.amritt.com/industries/medical-device-india

• http://www.amritt.com/services/global-product-innovation-strategy/

• http://www.amritt.com/services/global-technology-scouting/


http://www.amritt.com/industries/medical-device-india






http://www.amritt.com/services/global-product-innovation-strategy/









http://www.amritt.com/services/global-technology-scouting/






How to Leverage Engineering & R&D From India and China in the Med Tech Business

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