A New Form of R&D

Sarah Hine co-founded and served as CEO of PharmaSecure, a social enterprise focused on stopping sales of counterfeit medicines. Sarah continues employing her development experiences as a mentor for the Yale Entrepreneurial Institute and as an advisor to other social enterprises. Sarah and her husband, John, reside in St. Louis, Missouri.

A recent special report in The Economist titled Business in India got me thinking about my own experience launching a start up in India. After moving to India, I teamed up with a couple business partners and began PharmaSecure. My company introduced a disruptive text message-based medicine authentication system to the market. Though we spent a lot of time on traditional R&D of our technology, we encountered an entirely new form of R&D in the Indian market: Rip off and Duplicate.

Understanding the Indian marketplace is key to understanding why we faced fierce competition in the form of copycat technologists. Large family business houses, operating in nearly every industry imaginable, form the backbone of Indian big business. Power is concentrated within the hands of these few powerful and established companies, forming an oligarchy. Reminiscent of their theatrical Indian peers of Bollywood fame, ambitious Bollygarchs waste no time entering new markets wherein they sense opportunity. Because start-up capital is not a concern for these large companies and because their widely recognized brand names serve them well in the marketplace, the barriers to entry are few.

This presents challenges to start-ups that often struggle to find start-up capital and to establish brand recognition. In PharmaSecure's case, we pioneered a technology that large family firms could R&D in the 'Rip-off and Duplicate' sense of the term. For example, a large business house active in the mobile sector could innovate their own text message-based verification system that disintermediated a third party provider like PharmaSecure. This would enable them to utilize their own telecomm infrastructure to minimize the cost of text messages for consumers, hence increasing overall usage. Such an established family business did not need PharmaSecure. If Darwin's theory may be applied to business in India, the fittest is often synonymous with the biggest.

One year after moving back Stateside, I have a bit more perspective on this R&D challenge. India's ecosystem can support amazing entrepreneurial growth. I say can because it is possible but I would like to see India's marketplace increase support for enterprising individuals, setting standards of trade that support small business. For entrepreneurs looking towards India with expansionary hopes, know your business and your competitive landscape well before testing the waters of the subcontinent. Invite others who have also traveled this road to help you get to market quickly. Start-ups in India must leverage their nimbleness in order to raise capital, get to market, and quickly establish market share ahead of the large, established competition.

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