GENICON: A SURGICAL STRIKE INTO

EMERGING MARKETS
INTERNATIONAL MARKETING | PROFESSOR BERK TALAY

BY: RYAN TOPP

1. Please evaluate the market potential of each of the four countries using comparable
metrics. Which country makes the most sense from a purely quantitative perspective?
Which variables are most important in your decision?
 Genicon: A Surgical Strike Into Emerging Markets 2

Below are my evaluations for the market potential of each country using
quantitative information and comparable metrics and which country I believe makes most
sense to enter using this data.
Indias market potential is growing along with their population; by the year 2050
India is expected to succeed Chinas population, making them the worlds most populated
country. Population means only one thing for foreign companies, the demand for their
product increases, because bigger the population means greater the demand and bigger
the market for their product in that country. In addition to the growth going on, Indias
importation of medical devices is expected to top $365 million and rise by 23% as the
years continue. According to the Business Monitor International (BMI), they are
forecasting Indias medical device market to grow around 11.3%. This is great news for
foreign companies who want to important their devices, making India a marketable place
to sell their products. (Kupetz, A. H., Tindall, A., & Haberland, G., 2010).
China in my opinion would be the best market potential for Genicon to enter in
regards to a quantitative perspective. China currently has, and has had for a very long
time, one of the fastest growing economies in the world; their GDP is valued at $2,969.
Their medical device sector was expected to pass double-digit growth, which is
outstanding given their medical device sector was already valued at a whopping $12.6
billion. Chinas sector was expected to grow so much due to their aging population and
booming economy, which helped play a big role. The single-most important piece of
information that grabbed my eye about the medical device industry in China, is that the
industry in China is already worth $20.6 billion dollars, which is 8.2% of the overall
health market. This is huge, and very important information for Genicon and other firms
that are looking at expanding into China. China surely has the market potential and with a
booming economy, growth in medical devices, and the population size, Genicon should
highly consider entering Chinas market given the quantitative information. (Kupetz, A.
H., Tindall, A., & Haberland, G., 2010).
Brazils quantitative perspective was neck and neck with that of Chinas, but
overall couldnt defeat Chinas outstanding medical device market or their economy
growth. However, dont be fooled, Brazil is South Americas biggest economy and most
rapidly growing economy as well. Their medical device market was valued over $3
billion, and was expected to grow heavily within the next few years. The reason behind
their market growth was the result of the Brazilian government passing a law stating that
10% of the countries GDP would now be spent to increase the countries healthcare (prior
to the law being passed, their spending was only around 7%). Because 10% of the GDP
would now be spent on healthcare this is big news for firms who were hesitant on
entering Brazils market potential. (Kupetz, A. H., Tindall, A., & Haberland, G., 2010).
Russia in regards to quantitative perspective was what I believe the worst in
comparison to the other three countries listed above. They hold the lowest market value
for medical devices with only a $2.88 billion market for them. Also for the longest time
the country has had horrific currency devaluation. But, however, they have the greatest
healthcare expenditures that stood at a staggering $39.4 billion, this dollar figure sounds
great, but the medical devices are expected to have a big setback and huge delay because
of the economic slowdown. Economic slowdown and only having a $2.88 billion dollar
 Genicon: A Surgical Strike Into Emerging Markets 3

market potential, compared to other countries isnt too great, so as a result I would
suggest finding a different market to enter. (Kupetz, A. H., Tindall, A., & Haberland, G.,
2010).

2. Please evaluate the market potential of each of the four countries using non-numeric data,
such as ease of doing business, corruption, and culture. Which country makes the most
sense from less empirical data?
Below are my evaluations for the market potential of each country using non-
numeric data and my opinion of which country makes the most sense from less empirical
data.
India I believe should undoubtedly be the country that Genicon enters when solely
analyzing the country using non-numeric data. India as a whole has little to no political
and/or government corruption and the ease of doing business in this country make them
very appealing as a possible market potential. India currently has an emerging middle-
class, which will continually drive the demand for new goods and services being
purchased and imported into India. In addition to India having an emerging middle-class
that means India is starting to have a much wealthier society. I also believe the biggest
and the exclusively biggest reason why India makes the most sense to enter in is their key
trends that are currently taking place. Currently India has a great reduction in levies and
is having an influx of foreign firms entering their market due to the minimum regulations
in place. In conclusion, I believe by the examples provided, India would make the most
sense to enter given their ease of doing business and the fact that they have little to no
corruption taking place, India would make a good choice for Genicon. (Kupetz, A. H.,
Tindall, A., & Haberland, G., 2010).
China was a close second in market potential for Genicon to enter. Chinas
growing commodization of healthcare was booming at rapid rates, which resulted in the
demand for medical devices. In addition, China opened their doors to outside firms to
continue and improve their healthcare reform after the SARS virus had an outbreak back
in 2003; China was in need of a healthcare centralization. A few major negatives of
Chinas market potential was the fact that it took over 12 months to approve a new piece
of equipment, and that their government restrictions were absolutely crazy. Chinas
government restrictions on everything being imported into the country makes it very hard
for foreign firms to enter into Chinas market. (Kupetz, A. H., Tindall, A., & Haberland,
G., 2010).
Brazil I believe was one of the worst countries talked about in the Genicon case
study to do business in as far as non-numeric data goes. The Brazilian government
restrictions and laws are tough to maneuver and can be very costly to firms. The National
Health Surveillance Agency (ANVISA), requires any firms that want to enter the
Brazilian market to establish a local office, manufacturing plant, or local distributor in
Brazil before they can even touch the market. In addition to that requirement, the
government also has a costly device registration requirement as well. Firms are required
to register their devices, which ranges from $1,200 to $11,900 and is based off of how
 Genicon: A Surgical Strike Into Emerging Markets 4

much the firm makes each year in revenue. These two government requirements listed
above can be very costly to a lot of firms who want to enter the Brazil market. In
addition, their medical device distribution sector was deeply fragmented, so even if you
did find a local distributor like what the government has required, it would be bad news
for anyone trying to bring in their firms products for distribution. On a positive note
however, the Brazil government does have low import tariffs, along with no import
duties, or value-added taxes on up to 42 medical devices. (Kupetz, A. H., Tindall, A., &
Haberland, G., 2010).
Russia once again, I found to be the worst when comparing them to other countries using
non-numerical data for entering the market. With Russia being containing over 10,000
hospitals and the Russian middle-class steadily growing, the potential and ease of
business is certainly there for the country and would be a great market potential but the
government corruption is out of control. Many foreign investors and companies who look
at Russias marketing potential are scared away due to too many high-levels of business
and government corruption happening. There are high levels of political risk and word of
future changes to the registration of foreign healthcare devices. These types of risks are
best avoided when entering a foreign market and not getting involved with them is
heavily suggested. Russia, in my opinion, is certainly not advised to enter considering the
high political risk and corruption within the government itself. (Kupetz, A. H., Tindall,
A., & Haberland, G., 2010).
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References:
Kupetz, A. H., Tindall, A., & Haberland, G. (2010). GENICON: A Surgical Strike Into
Emerging Markets. Retrieved February 16, 2017, from
https://hbr.org/product/genicon-a-surgical-strike-into-emerging-
markets/an/910M41-PDF-ENG