“Today’s unit share leaders will be tomorrow’s revenue winners—ignore them at your peril.” The margins in the US and Europe may be 3 times what they are in the rest of the world, but the volume of the rest of the world may be 5 times greater. McKinsey's first of five crucibles pits price, volume, and value, and warns against vying simply for high margins at the expense of the immense volume of “emerging markets.” Volume and low margins today will be volume and high margins tomorrow.
As a co-founder of a medical device start up that has created a device that can diagnose stroke, one of the costliest diseases in the world, before the patient even gets to the hospital, globalization will play a tremendous role in our company development and, in the end, the amount and distribution of value we can create.
The largest urban migration in history is a game-changer for everything in infrastructure—from expanded and improved roads to urbanized healthcare and the mobile healthcare units (ambulances) that operate on those roads. India has purchased nearly 30,000 ambulances in the last decade, and estimates from China put their fleet of ambulances at over 45,000. Many new markets, though, have new challenges for entrepreneurs—diverse systems of control and delivery mean that we can’t just be agile in adapting to different systems of operations, we must seek to understand what has emerged and what is emerging, and we must seek to accurately predict what shape a (prehospital) health system will take in each new potential national market.
Price points are a concrete example of strategic decisions in which emerging markets come into play. The price of a piece of ambulance equipment will vary greatly depending on the customer’s system. If the ambulance system in an urban area is centralized and municipal, like in Sao Paolo, a city of nearly 20 million residents, the price may be lower because of volume (or government ownership) compared to a city like Cali, Colombia where numerous small companies are jockeying for market share. And the interplay between hospitals and ambulances clouds the situation even further depending on how each party is reimbursed.
Though the tapestry of development is diverse, patterns of development may be discernible. There are countries currently christening their first ambulances and health systems and those that are entering a more mature phase. Understanding these systems, and more importantly how they have developed from infancy to adolescence, could provide us key insights into predicting the growth and eventual maturity of prehospital healthcare systems in other markets that are currently still in embryo. We will not ignore—we will do the opposite: we will study, learn, and use what we learn to shape strategy for each emerging economy.