The Indian In-Vitro Diagnostic (IVD) industry has been on a robust growth trajectory, expanding at an average rate of 15% annually over the past 30 years. By 2025, the market size for IVD products in India is projected to reach USD 1.5 billion. This vibrant market is home to over a hundred IVD companies, from global giants like Roche, Abbott, and Siemens to prominent Indian manufacturers such as Transasia Bio-Medicals, Agappe, and J Mitra. The competitive landscape is diverse, making it essential for international companies to carefully evaluate their strategies for success.
This article explores the strategic decisions of four European IVD companies—Diasys Diagnostic Systems, Human Diagnostics, Spinreact, and Menarini Diagnostics—and examines how these decisions have shaped their performance in the Indian market.
Diasys Diagnostic Systems: A Model of Success
Diasys, a German company with over 30 years of expertise in high-quality diagnostic instruments and reagents, operates in more than 90 countries globally.
Strategic Entry into India
Diasys entered the Indian market in the late 1990s through a partnership with Zydus Ltd, a major Indian pharmaceutical and diagnostic player. When Zydus discontinued its diagnostics business, Diasys pivoted by forming a joint venture (JV) with an Indian partner. This move ensured their continued presence.
In 2005, Piramal Enterprises Ltd (formerly Nicholas Piramal India Ltd) acquired the Diasys business following Roche’s exit from its partnership with Nicholas Piramal. This partnership proved to be vital for solidifying Diasys’ position in India.
In 2013, Diasys made an important decision to establish a wholly owned subsidiary in India, which granted full control over its operations, staffing, and infrastructure. This move has paid off, with Diasys India business now contributing about 40% of the company’s global turnover. The Indian arm boasts an annual revenue of USD 20 million and a remarkable growth rate of 17-20%. Today, Diasys India employs 180 professionals, becoming a model for other European IVD companies looking to succeed in India.
Key Takeaway
Diasys’ decision to establish a wholly owned subsidiary in India was a key factor in its success story. By controlling local operations, the company has built a strong brand presence and achieved consistent growth. Its strategy of avoiding co-branding and OEM arrangements further reinforced its distinct market position.
Human Diagnostics: A Case of Hesitation
Human Diagnostics, a German company with over 50 years in the IVD sector, operates in over 160 countries. Despite its extensive global reach, its journey in India has been so far less inspirational.
Strategic Challenges in India
Human Diagnostics first entered India in the 1980s through its association with companies like Span Diagnostics and Dr Reddy’s for bulk reagent imports. For a brief period, the diagnostic divisions of Ranbaxy and Lupin had OEM/white-label agreements with Human. Subsequently, Human formed a partnership with Cadila Pharmaceuticals to market its products, but this alliance faltered when Cadila closed its diagnostics division.
Rather than establishing the direct presence in India, Human Diagnostics continued relying on Distribution arrangements. While the present partnership with Medsource Ozone, Star Biomed Pvt Ltd and Anand Brothers has enabled some growth, the company’s brand penetration remains limited, with an estimated turnover of just USD 6-7 million which is way below its potential. Human has entered into an agreement with Medsource Ozone to manufacture some of their products in India including the Auto-Immune and Biochemistry range which indeed is a positive step.
Key Takeaway
Human Diagnostics’ hesitancy to set up direct presence in India and their reliance on distributors has hindered its market potential. A more proactive approach, including a stronger local presence and consistent brand building efforts could have enhanced its visibility and growth in the Indian market.
Spinreact: Missed Branding and Market Penetration
Spinreact, a Spanish company with over 45 years of experience in clinical diagnostic reagents, entered the Indian market in the early 2000s.
Strategic Focus on OEM Relationships
Instead of focusing on brand-building, Spinreact concentrated on establishing OEM relationships with Indian diagnostic companies like Agappe Diagnostics and Peerless Diagnostics. While this approach generated short-term business, it limited Spinreact’s long-term growth potential in India. By supplying bulk reagents at aggressive prices, Spinreact ended up competing with itself, weakening its brand presence.
The company’s distributor in India, Ark Diagnostics, continues to sell Spinreact products, but it has not pursued aggressive growth strategies, further restricting Spinreact’s visibility in the market.
Key Takeaway
Spinreact’s reliance on OEM agreements, rather than investing in brand marketing and direct operations, has severely restricted its market growth. This highlights the importance of establishing a strong local presence to thrive in competitive markets like India.
Menarini Diagnostics: A Case of Withdrawal
Menarini Diagnostics, part of the Menarini Group, a global leader in pharmaceuticals and diagnostics, is known for advanced diagnostics solutions such as Circulating Tumor Cell diagnostics and HPLC systems.
Exit from India
Menarini Diagnostics made its attempt to be present in India, but it lasted only for a brief period. While its pharmaceutical division remains active in India, the diagnostics division has not returned. The reasons behind Menarini’s exit remain unclear, but in hindsight, it appears to have missed a significant opportunity in a high-growth market, especially as India’s IVD sector has expanded rapidly in the past two decades.
Key Takeaway
Despite having advanced products, the lack of a local presence has hindered the company’s ability to capitalize on India’s IVD boom. If Menarini has the right intent, there is still huge market opportunity awaiting them in India.
Conclusion: The Power of Strategy in Determining Market Success
The journey of these four European companies —Diasys, Human, Spinreact, and Menarini—shows how strategic decisions shape the outcomes in the Indian market:
- Diasys stands out as a success story, demonstrating the importance of direct market engagement, strong brand-building, and local control through a wholly owned subsidiary.
- Human and Spinreact have faced challenges due to delayed decisions and reliance on third-party distributors instead of establishing a direct presence.
- Menarini’s exit left a gap in the market, which could have been filled by their advanced diagnostic offerings.
Key Learnings for a new entrant :
- Focus on Brand-Building: Building a strong, independent brand offers long-term benefits and ensures a lasting presence in India’s competitive IVD market.
- Choosing the Right Partner: Establishing the right local partnership is crucial. A deeper understanding of an Indian partner’s business style is crucial to form a lasting association and ensure win-win.
- Direct Presence or Partnership? Deciding whether to enter India via a wholly owned subsidiary or through a local partnership depends on the brand’s market opportunities, strategic goals, and go-to-market approach.
As the Indian IVD market continues its rapid growth, international companies must be proactive in their strategies—whether through direct engagement or strong partnerships. In this dynamic landscape, strategic choices will ultimately determine success.
About the Author.
Sangeeth Kini is the Founder of Sanstrat, a strategic advisory firm focussed on the Diagnostic segment. He has about 28 years of experience in the IVD sector in India.