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Covidien eyes buyouts in Indian market

Thomas K Thomas
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Mr Arjun Sarker, Managing
Director – Indian Sub-
Continent, Covidien.
Mr Arjun Sarker, Managing Director – Indian Sub- Continent, Covidien.

Irish medical device-maker Covidien is looking to acquire local companies as part of its expansion plans in India. The $11 billion company is also investing in setting of clinical training institutes and acquiring manufacturing capabilities in the country in addition to ramping up its distribution channel in a bid to expand its reach to tier 2 cities

Speaking to Business Line, Mr Arjun Sarker, Managing Director – Indian Sub- Continent, Covidien said, “We are looking at dramatically increasing our investments into three areas including training and education, mergers and acquisition and hiring best talent. India is a key focus area for Covidien globally.”

Medical devices market in India is growing at 12 per cent a year and Covidien is hoping to grow 2-3 times of that, for which it is putting in place a multi-pronged strategy. Elaborating on the acquisition plan Mr Sarker said, “We are constantly looking for opportunities but we are bound by confidentially agreements. We are looking at entities that will better our product portfolio or gives us cost benefits in terms of duty tariffs.”

The company has 50 manufacturing units globally but none of them are in India. According to Mr Sarker this could change. “We may invest in a company that gives us a right mix in terms of product portfolio and also comes in with a manufacturing unit.”

The company, currently catering to high end market, is now looking to move into tier-2 markets. For this, it is looking to ramp up its distribution partners. “We have moved away from multilayered distributor network to single layer or direct selling to customers. This allows us to give customers affordability. So our volumes have grown this way. We grew from 30 to 200 partners covering defined territories. This is not enough and as we look at covering more territory we will ramp this up,” he said.

Covidien gets $1 billion from emerging markets and is now looking to double the revenues to $ 2 billion. “Emerging markets is one of the five growth pillars for Covidien and India is a key part of this,” said Mr Sarker.

On training and education, the company is looking at multiple options including setting up clinical institutes and labs to give medical staff hand on experience on using latest devices. The company has already partnered with 50 senior doctors to train lesser experienced physicians. The device-maker hopes to train at least 2,500 medical practitioners every year through such programmes. Covidien makes devices used for various surgical application including laparoscopy, stapling, soft tissue repair and respiratory and monitoring/sensors solutions.

tkt@thehindu.co.in

(This article was published on January 5, 2012)
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