Why market assessment is critical to launching products overseas
Why market assessment is critical to launching products overseas’ is a guest blog post written by Maria Shepherd, President of Medi-Vantage.
Don’t underestimate the impact regulatory requirements have on the executive strategy of a medtech company! Markets can be huge, and the regulatory hurdles mind-boggling (and expensive!). This is why it is important to align medtech product development projects with their marketing and regulatory teams from the beginning.
This gives them the chance to fully assess the market opportunity and the cost to achieve regulatory approval in every country under consideration. An incomplete assessment could result in lower-than-projected sales, excessive costs, preventable delays, or failure to obtain approval. Armed with a country-by-country assessment from their marketing team, medtech executive management teams can choose which targets have the greatest potential for success.
One company (that shall remain nameless!) entered a nightmare situation in getting a product approved in Russia. They knew the economic burden of cardiovascular disease in Russia is high. This meant that the product, a new stent design, would be a good fit in Russian cardiac care. What they didn’t know was that regulatory approval in Russia is a daunting task.
Medical devices in Russia are regulated by Roszdravnadzor (RZN) under Resolution 1416. RZN requires in-country testing and clinical data to approve medical devices, even if the device is already sold in the EU or US. In retrospect, this company wished their team had identified hurdles with the Russian healthcare and regulatory infrastructure, to fully understand the cost of doing business before committing to that choice.
When choosing a region, consider these three factors to identify the best strategic fit between global markets and regulatory strategy:
1. Is the continuum of care different from US and European markets?
A country analysis should include an understanding of the health delivery infrastructure and clinical workflow by region and/or county. Perform market research to understand delivery of care differences. Do the targeted devices fit well with the continuum of care of this country?
2. What are the local country barriers to entry?
The analysis of market drivers and barriers allows the executive team to identify the countries with the best fit and opportunity for the device or technology. The marketing team works with other functions within the company, such as legal and regulatory to identify issues, barriers, and mitigation strategies.
3. What is the regulatory process in the target countries?
Typically, regulatory processes are one of the greatest obstacles to entry in any new country. The regulatory team must determine if the product is regulated as a medical device, its regulatory classification, clinical studies needed for approval, device labeling, etc. A full understanding of the regulatory process in the region guides the product launch team (marketing, regulatory, legal and others) so that the company is in full compliance with all regulations and laws.
When there are several countries under your consideration, executive management may need to be selective. After you’ve considered the above factors, make sure you have answers to the following questions, then you’ll be well on your way to selecting a country for product development:
- What is the total addressable market (TAM) opportunity by country or region?
- What is the served addressable market (SAM) opportunity that can actually be reached based on the healthcare infrastructure?
- How many patients have geographic access to hospitals that will be targeted with the device or technology?
- Does the care delivery system in each region fit well with the selected device?
- Do the hospital infrastructure, procedure rates, and credentials/skills of the medical community (nurses, MDs, etc.) support the use of the targeted device?
- Has reimbursement for devices been matched with the market opportunity?
- If not, can reimbursement be applied for, what is the process and how long does it take?
- What is the market size of the population that can pay for the selected devices, if the technology is not currently reimbursed?
- How large is the segment of the population that has private insurance?
Based on the answers you receive to the questions above, you may have follow up questions that are relevant to your specific business. For example; what do the sales forecasts look like and has an ROI and a PEST analysis (political, economic, social and technological) been performed? What value does the device bring to this region, and what is the expected price that can be commanded? Answers to these questions will help you determine if the opportunity is sustainable or guide you towards changes to make it so.
Once executive management has finished assessing the regions with the greatest market opportunity and the lowest regulatory barriers to entry, commercialization plans can be created. Most importantly, ensure that medical device market research and due diligence have been performed to be certain that the addressable market is large and that the product meets the unmet needs of physicians and patients. Once the clinical need is established, you can pinpoint economic incentives for the healthcare system and be sure the hospital administrator buys into the value proposition.
Considering the above example of product approval in Russia, good regulatory strategy (and knowing your way around the RZN) could have helped this company overcome the hurdles of Russian medical device commercialization. This had a temporary impact on the company’s profitability and ROI. At the end of the process, the stent was approved, and the Russian population is benefiting from improved cardiovascular care. But, let that be a lesson learned! Medical device companies must systematically examine global markets from a regulatory and marketing perspective, to make correct and accurate choices for launching products worldwide.
Maria Shepherd is President of Medi-Vantage, a medtech, diagnostics and digital healthcare marketing, business, and product development strategy research company. Medi-Vantage works with leading-edge medical device companies to develop new and innovative technologies and help our clients create value by improving patient outcomes and reducing the cost of healthcare.