How to Build an Internationalization Strategy for HealthTech

How to Build an Internationalization Strategy for HealthTech

How to Build an Internationalization Strategy for HealthTech

October 13, 2020

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Satu Peltonen

Internationalization in a nutshell.

Internationalization Starts with a Strategy

It is a known fact that most internationalization attempts fail due to lack of thorough preparation and adhering to the chosen strategy.

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

In an ideal case, the internationalization has been integrated right into the R&D process, because the target market may encompass cross-cultural and cross-national aspects that need consideration in the design phase.

In most cases, companies opt to localization approach that seems more robust solution but could cause some design alterations afterwards.
Another reason to choose your target market as early on as possible is to implement regulatory requirements into the R&D process by aligning them where applicable.

In other words, it underscores the fact that knowing, understanding and researching the target market is the key-step 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.

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Localization to specific markets is essential in internationalization.

One of the essential aspects when analyzing the potential market is to understand the external environment or business operations and those advantages and disadvantages it has compared to home-market. After all, this is the most substantial deviation of operations so far.

Legislations do Differ

Every country has its laws and regulations that need to be adhered to and preparing for the regulatory requirements is a must and best made with someone who understands the local legislation and human factors process. The need for clinical trials should be taken into consideration when navigating through the regulatory process. The one thing that some companies do not pay enough attention is the IP protection strategy that needs thorough planning with the local legal system in mind.

For reimbursement strategy, it is essential to understand how the 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? In some countries, the reimbursement landscape can be very complicated due to the fragmented healthcare system and medical device distribution, including invoicing.

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 are the required skills and resources 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” for successful internationalization, and it will also influence the business model, so taking time to do a thorough research of the key-players will pay back subsequently when creating a supply chain management system. One of the most important aspects of partnerships concerns distributors, with whom discussions also need considerable attention in terms of the trust of business operations. It is worth noting that all of this will influence the import and export operations in terms of manufacturing and financial issues.

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

The Internationalization Challenge of Medical Technology

The Internationalization Challenge of Medical Technology

The Internationalization Challenge of Medical Technology

July 23, 2020

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Satu Peltonen

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Finding appropriate partners is a key-challenge in the internationalization of life sciences and medical technology in a complex endeavour full of challenges and possibilities.

The umbrella term ‘life sciences’ is often used to refer specifically to medical technology, biotechnology and pharmaceuticals.

Life Sciences Among High-Technology Industries

The life science industry distinguishes itself from other high-technology industries with such fundamental dimensions as applying scientific knowledge to provide technological solutions aiming to improve health care and quality of life in a highly regulated environment. At the same time, usually purchasing decisions are not made by end-consumers, but their physicians or such third party as an insurance company, for example.

Early internationalization is facilitated by simultaneous forces both empowering and constraining operations: To recover their investments and to increase turnover, life science companies and medical technology companies, especially, are facing a strong push towards an international outlook with a high technology that has a competitive advantage at an early stage but is not culture-specific.

Forces enabling and constraining internationalization

Bringing largely unchanged medical technology to international markets is typically due to the demand to meet local regulations, but also because the manufacturers assume that users will adapt to new technology through training. However, training is often ineffective when faced with ingrained customs and user expectations in individual countries, which can be seen during the transition phase in the increased use error rate when operating new technology.

Hence, device features should be designed keeping in mind the cross-cultural and cross-national requirements, especially as failure to meet these requirements could easily violate the international risk management (ISO 14971:2019) and usability (IEC 62366-1:2015) standard compliance.

As mentioned, the life science industry is highly regulated, which means that companies need to comply with local demands in their international business activities. Logically, adhering to compliance with a single country’s requirements can result in a design that is likely to induce use errors in another country with different user needs and expectations or use-shaping factors.

Reimbursement strategy is another factor that most companies do not plan early enough when planning internationalization; “who pays for your product?” is a very relevant question as it dictates who will be financing the life science industry across nations. For example, in the Nordics healthcare is mostly funded through social security system (or taxes from the U.S point of view), whereas in the U.S and Germany – example-wise – health insurance is the most preferred financial model.

Nonetheless, there is a strong push to expand from smaller home markets across borders that comes from the need to amortize high research and development (R&D) costs. Even when most companies have limited financial and managerial resources and the key-challenge identified by many life science companies operating in an international healthcare market is to find appropriate partners for ventures. Apart from complying regulatory demands and financing R&D process, organizing clinical trials, including difficulties in getting access to hospitals and doctors, as well as scaling up marketing and sales are among challenges making an international product launch a complex endeavour.