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Panel Discussion: The Global Market's Impact on Medical Devices
Panel Moderator: Peter Lawyer, Moderator, Managing Director, Boston Consulting Group
Panelists:
Steve Murray, President, Craniomaxillofacial Division, Synthes
Shane Gleason, Abbott Vascular, Director, Marketing
Flavia Pease, Finance Director, Johnson & Johnson Medical Brazil
David Fischell, CEO, Angel Medical Systems
Medical device companies are increasingly considering the world outside the US in their growth strategies. From research and development to new patient markets, the international market is providing tremendous opportunities and challenges. This panel addressed the issues device companies must consider as they weigh the potential benefits and limitations inherent in entering evolving international markets.
How companies evaluate and prioritize global market opportunities
There is significant opportunity for medical device companies to grow across the globe. Companies evaluate opportunities to enter new markets based on several criteria. Financial payback opportunity is key, but so too is the clinical opportunity. This is because the required infrastructure (e.g. trained physicians and modern hospitals) needs to be in place for the devices to be sold and used effectively. The technology won’t sell and won’t work without the correct infrastructure.
Issues of the broader business environment such as IP, regulation, distribution channels and local customs also need to be considered. If the environment is not suitable, it can be very difficult to compete with local companies. It is competition with these local players, not other global corporations, that represents the most significant challenge, as they are often produce cheaper devices and are looked on more favorably by local governments.
Specific challenges and opportunities companies may face
IP is a key issue, as in some countries there is no suitable protection. If a firm enters a country without IP protection, local companies will see that company’s technology, replicate it and sell it more cheaply than a US or European firm possibly can.
Regulation can be another key challenge, especially where local companies are treated more favorably than foreign companies. One way around this problem is to partner with a local company, so that the product appears to be ‘local’. This has the additional advantage of also helping to lower costs. Further advantage can be gained by actually conducting initial clinical trials of a product in a country where it may be launched at a later date. This is because foreign governments often require trials to be carried out in their country prior to launch, whereas the US government actively encourages trials to be carried out outside the US.
Cheap, low quality local products represent a significant barrier to entry in some countries. Global medical device companies do not want to compromise their ethics and standards by, for example, producing lower quality products themselves. Local physicians can be a crucial ally here as they can let their government know about the advantages of higher quality devices, including lives saved and the associated long-run cost savings. The latter point is a crucial battle ground, as many foreign governments are focused purely on short-term costs of health care. Production differentiation is part of this story and this can only be done by really trying to understand what it is that is needed in a certain country by analyzing current treatments and the current infrastructure, and catering to that.
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