The Internationalization Challenge of Medical Technology

July 23, 2020

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Satu Peltonen

Beijing sky scraper & cctv tower

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.