GE Healthcare in India

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UVA-E-0337Oct. 14, 2008

GE HEALTHCARE IN INDIA: AN (ULTRA)SOUND STRATEGY?

“Raising a daughter is like watering your neighbor’s garden.” —Punjabi proverb

V. Raja, president and CEO of GE Healthcare India, left the 2005–06 annual meeting with a sense of achievement. The fiscal year had been excellent both for the company and for Raja himself. GE Healthcare India, a joint venture between General Electric (GE) and the Indian multinational Wipro Ltd., had ended the year as the market leader in the $77 million ultrasound machine market, outpacing its competitors, which included Toshiba, Siemens, Philips, and Mindray International Medical, a Chinese company.

GE Healthcare India’s sales were up by a significant 10% in 2006. For the year 2007, global headquarters had set an even higher target growth rate of 20% for the India operations. Given the market potential and GE’s successful lowcost operations and deep market penetration, Raja looked forward to 2007 with cautious confidence in his firm’s products and salespeople.

Later that morning, as Raja sipped a cup of tea while looking at the 2007 projections, his secretary, looking concerned, handed him several newspaper articles. One glance at the headlines, which described several Indian government officials’ crackdown on ultrasound machines, and Raja’s post–annual meeting elation disappeared.

The first article Raja read described how government officials in Hyderabad, the capital city of the Indian state of Andra Pradesh, had been confiscating ultrasound machines that they suspected were being used illegally to determine the sex of unborn children. In one photograph, showing a district health officer wrapping up a clinic’s ultrasound machine to take it away, a poster/advertisement for GE ultrasound machines—featuring a pregnant belly and the company’s slogan “We bring good things to life”—was prominently displayed on the wall.

The clinic, according to the article, was one of many where doctors and nurses had violated India’s Prenatal Diagnostic Techniques Act of 1994, and its subsequent 2003 amendment, that banned the use of technology such as ultrasound and sonogram for the purpose of sex determination. (See Exhibit This case was prepared by Mayank Jain (MBA ’08), Jenny Mead, Olsson Center Senior Ethics Research Associate, and Jared D. Harris, Assistant Professor of Business Administration. It was written as a basis for class discussion rather than to illustrate effective or ineffective handling of an administrative situation. Copyright © 2008 by the University of Virginia Darden School Foundation, Charlottesville, VA.

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1 for background on clinic investigations and closures in Hyderabad.) The government had tried, unsuccessfully, to get the clinics with ultrasound machines to comply with the laws. The result: 102 clinics had their registrations suspended, police seized 112 ultrasound machines, and—most alarming to Raja—three suppliers, including Wipro GE Healthcare, had been accused of supplying machines to clinics without registering them with the government. This was simply the latest—albeit fairly drastic—event in the growing controversy surrounding ultrasound in India. Raja was aware that ultrasound was used for prenatal sex determination and that GE Healthcare had taken many measures to prevent such use, but wondered if there was more that the company could do.

GE HealthcareGE Healthcare was a $14 billion unit of GE, a multinational American technology and services corporation founded by Thomas Edison in 1890. By the early 21st century, GE manufactured products as diverse as airplanes and light bulbs and owned six businesses: GE Commercial Finance, GE Healthcare, GE Industrial, GE Infrastructure, GE Money, and NBC Universal. Headquartered in the United Kingdom, GE Healthcare had manufacturing, research and development, and administrative offices in 11 countries, including India, and sales and marketing operations in more than 100 countries.

The company had 46,000 employees worldwide, 2005 revenues of $15.2 billion, and 2006 revenues of $16.6 billion. GE Healthcare comprised six units, including diagnostic imaging, surgery, clinical systems, life sciences, medical diagnostics, and integrated IT solutions. Its stated mission and vision was to help healthcare providers predict, diagnose, inform, and treat disease earlier so that every individual can live life to the fullest. Our vision for the future is to enable a new “early health” model of care focused on earlier diagnosis, presymptomatic disease detection and disease prevention.1 GE in India

GE had first entered India in the late 1980s, when its famous CEO Jack Welch visited the country to establish a business relationship. Indeed, “early investments by GE in India gave their technology and business-service sectors crucial credibility and cash when other companies still viewed the country as a risky backwater.”2 Many credited Welch, and GE’s presence there, with fueling the economic boom that would come in the 1990s. India had proved to be a key market not only for GE but for GE Healthcare. Wipro GE Healthcare,3 part of GE Healthcare South 1

GE Healthcare Web site, http://www.gehealthcare.com/usen/about/ge__factsheet.html (accessed February 15, 2008).2Jay Solomon, “In India’s Outsourcing Boom, GE Played a Starring Role,” WallStreet Journal, March 23, 2005, A1.3Wipro GE Healthcare was alternately known as Wipro GE Medical Systems Private Ltd. GE Healthcare had a 51% stake in the joint venture, Wipro 49%.