October 20, 2020

How to build internationalization strategy for HealthTech

Essential factors to consider when drafting an internationalization strategy for healthtech.

Internationalization Starts with a Strategy

Internationalization attempts usually fail due to a lack of thorough preparation and adherence to the chosen strategy.

When it comes to the medical industry – such as life sciences, healthcare technology, biomedical technology, and pharmaceuticals – an industry operating in a heavily regulated environment, any attempt to seek market growth through internationalization faces a multitude of specific considerations.

The most crucial step is ensuring international standardization and regulatory requirements, which are at the core of innovation design when strategizing for global market access for the medical industry. When done right, aligning regulatory strategy for many target countries is advantageous, especially for nìche medical products, which should not be overlooked at the R&D phase.

However, when analyzing the potential market, one of the essential aspects is understanding the local healthcare ecosystem and its advantages and disadvantages compared to the domestic market, which is often used for innovation validation.

In an ideal case, internationalization has been integrated into the R&D process because the target market may encompass cross-cultural and cross-national aspects that need consideration in the design phase. Cross-cultural and cross-national elements are critical for the safe-by-design process, defined by international Human Factors and Usability Engineering and Risk Management standards. The safe-by-design process requires the earliest possible identification of target countries, enabling the implementation of regulatory requirements into the R&D process by aligning them where applicable.

In most cases, nevertheless, companies opt for a localization approach that seems a more robust solution but could cause some design alterations specific to the target market afterward.

Whether the strategy is to build a global design targeting many countries simultaneously or localization where domestic design is localized target country-specific, it is crucial to know, understand, and research the target market when expanding to another country.

Once it is clear that the device, application, or product fits into the target market, it is time to assess if there is a demand for it and how attractive the market is considering the competition.

Legislations do Differ

Every country has its laws and regulations that must be adhered to, and preparing for the regulatory requirements is a must and best made with someone who understands the local legislation and business environment. To highlight a few essential stumbling blocks in the regulatory framework most Startups in the medical industry face once seeking growth internationally.

For some companies, it may come as a surprise that standards for Quality Management Systems are not necessarily harmonized and national guidelines apply in significant healthcare markets. The classification of medical devices differs as well; a medical product that might be classified as an in vitro diagnostic device in the EU could be a class I medical device in a non-EU country, for example. The need for clinical trials is quite specific, depending on the local legislation and applicable regulatory pathway(s). For reimbursement strategy, it is essential to understand how the local healthcare system works: 

  • How much is healthcare spending, and what is the role of the government and insurance companies? 
  • How much is paid by the government, and how much is covered by the insurance? 
  • How much is the compulsory insurance, and how much is paid out-of-pocket by the patient? 
  • Who decides on the treatment? The physicians or the insurance company who pays the bill? 

The reimbursement landscape is usually deemed complicated due to the fragmented healthcare system and medical device distribution, including invoicing.

The one thing that most companies need to pay more attention to is the IP protection strategy, which requires thorough planning with the local legal system in mind.

Business Models and Partnerships

When considering appropriate market entry strategies, adapting the business model to the environment is an iterative process where market fit, distribution, and partnerships are some of the factors to consider. Also, what skills and resources are needed for successful business operations, and is there a need to relocate workers or hire locally in critical positions? Modifying the business model may take considerable time as it involves many managerial questions, including R&D and Know-How against IPR infringements.

“Appropriate partnerships are the key” to successful internationalization, and it will also influence the business model, so taking time to research the critical players thoroughly will pay back subsequently when creating a supply chain management system. One of the most essential aspects of partnerships concerns distributors, with whom discussions also need considerable attention regarding the trust of business operations. It is worth noting that all of this will influence the import and export operations regarding manufacturing and financial issues.

Although building an appropriate strategy for the internationalization of healthcare technology depends on the device, application, or product as well as the target market, this outlines those aspects essential for building an effective strategy. Even if not all of the above applies to a specific case, they should be considered when drafting plans.

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