You’ve successfully established your business in its first market, and revenue generation is well underway. Now what? Overseas expansion is one compelling option. Entering a new market increases sales, diversifies your customer base to make your business more resilient, and creates economies of scale for lower costs and improved margins.
Of course, a foray into a new market isn’t as simple as just setting up an additional sales office. This is especially so in medtech, where barriers such as regulatory approvals must be cleared sequentially before a product can be marketed and sold. An organised approach is critical, so here’s a checklist of the most important considerations.
Market Research
Market research serves as the foundation for all the work that follows. For a start, desk research provides insights into the revenue potential of a country/region via estimates of its Serviceable Obtainable Market (SOM). At the same time, it offers a look into the incumbents for crucial competitor analyses of the target market’s existing solutions.
Deeper insights are also needed too. Cultural and technical specificities, for instance, will greatly affect any healthcare solution’s efficacy within a market. A product that’s well-received by doctors in an affluent, highly urbanised country, for example, may struggle to make any headway in rural areas with lower incomes. In the same vein, different healthcare systems will have different product-market fits due to operations and workflow norms. Demand verification is thus essential, ideally with actual feedback from end users and decision makers such as clinicians, hospital administrators, etc.
Regulatory Requirements
Regulatory approval is a crucial step, and the primary concern for any healthcare solution’s entry into a new market. Unfortunately, regulatory requirements vary by region, as do the frameworks for obtaining the necessary clearance and approval.
Working with the relevant experts in a target market can substantially speed this process up though. This is especially important given the time and financial outlays required for intermediate steps such as clinical trials – the right regulatory guidance ensures a smooth approval process.
By identifying relevant predicate devices that have already obtained regulatory approval, for instance, a much simpler (and shorter) clearance process can be taken under the FDA’s 501(k) route. Many other regulatory authorities have such pathways that offer expedited clearance for devices as well. In the same vein of things, prior approval in other markets can sometimes serve as a precedent for the new market’s regulatory body. Working with the right professionals to develop a suitable strategy for regulatory approval is crucial here.
Reimbursement
Regulatory approval is what allows a product to reach the market. Reimbursement, on the other hand, is the key to clinical adoption. In markets like South Korea, obtaining reimbursement is simply make-or-break for any new solution given the single-payer system organised through the country’s National Health Insurance Service. Doing so, however, is straightforward. In others, such as the United States, a labyrinth of reimbursement codes determines the coverage and payment for products and services, so a comprehensive reimbursement strategy is necessary for wider adoption. Understanding the reimbursement environment is an important component of market expansion – both in the planning and execution phases.
Sales and Distribution
Your sales and distribution channels are arguably the most important component of your go-to-market strategy. Broadly speaking, direct sales offer the potential for better margins, but also entail internalising costs associated with customer acquisition, logistics, and post-sales support. Working with a partner, on the other hand, can greatly amplify your market expansion efforts. An established distributor, for instance, will already have the expertise and experience to navigate the new market’s regulatory and legal requirements. You can also leverage their established relationships with key stakeholders and decision-makers in this target market, which will boost adoption rates of your new solution.
Post-sales support is an extension of the above. End user feedback, for one, should be collected and funnelled back to your product team for further product iteration. Continuous customer support is also necessary, whether in the form of further training and education, compliance support, recurring engagements, or something else entirely.
Marketing and Promotion
An effective strategy for marketing and promotion complements your distribution channels, to help drive adoption rate of your product. Hiring suitable medical affairs professionals will help immensely. They play a multifaceted role here, from supporting healthcare providers with training and education, to engaging with key opinion leaders who can influence adoption and acceptance of your device. Elsewhere, they can also support post-launch data collection and analysis for your product, in areas including health economics, cost-effectiveness, and clinical efficacy.
Financial Planning
Financial planning accounts for the financial operations needed to support your business expansion. Costing, budgeting, revenue projections, and cash flow management are some basic considerations that relate to most business activities. An expansion into a new market will require attention in other matters, including exchange rate risks, tax and tariff structures, repatriation of profits, as well as transfer pricing. Of course, a new market will have its own financial regulations, accounting standards, and reporting requirements. These challenges are best tackled with input from finance and legal professionals with experience in your new market, to ensure that there are no blind spots in your planning and workflow.
Entering A New Market: Last Words
It's challenging to enter any new market given the coordinated effort required across various business functions. In our experience at VentureBlick, the most common hurdle for companies is figuring out where to even begin. The areas of work are interrelated, after all, and it’s often not immediately clear which ones a firm should prioritise. Occasionally, compounding factors also come into play: a revenue generating startup, for example, may still find its war chest too small to finance an overseas expansion, and hence require fundraising support first.
When a client comes to us with market expansion plans, our immediate priority is to analyse their needs and available resources, then identify the gaps in their expertise and network before proposing a course of action. Sometimes, the most pressing concern is an easy one to address – a validation project, for instance, can be completed in just 2 weeks with inputs from up to 10 medical professionals and industry experts. In other cases, we have proposed projects with much longer timelines, and involved our partners including CDMOs and distributors. The constant in our advisory process for such situations is a tailored approach for each client.
With our in-house team of healthcare industry veterans anchoring each consulting project, and a worldwide network of over 2,300 medical practitioners and industry advisors to provide glocalised perspectives, we can support your plans – whether they involve market expansion or something else entirely.
Speak to us to find out how we can help.