Any medtech company that wants to distribute its products in Europe has up to 28 markets to choose from, yet most opt for the same three key players: Germany, France and the UK. But with competition in these markets at an all-time high, could you be more successful by exploring medical device distribution possibilities in less popular countries? Lauretta Ihonor investigates
Germany, France and the UK have long held the lion’s share of the European medical technology market. The latest figures from MedTech Europe indicate that the three hold a combined 56 per cent of the market: Germany (28 per cent), France (16 per cent) and the UK (12 per cent). Smaller European markets, such as Switzerland, Sweden and Austria, may be lagging behind, with each having just 2 to 3 per cent of the European market, but that doesn’t mean they aren’t worth targeting. And with Brexit now altering the landscape for everyone, it might be the right time to reassess your medical device distribution strategy.
Edgar Kasteel, distributions division manager at global medical device consultants Emergo, believes that medtech companies with novel products, in particular, may be best served by considering less popular markets as a starting point. He explains: ‘Distributors in bigger markets are more traditional and often want a device they know can sell well in Europe. It’s good to test riskier novel devices in less competitive markets, like Scandinavia and Switzerland, so by the time you approach distributors in countries such as the UK and Germany, you’ve got figures to show you’re already selling elsewhere on the European continent.’
While focusing on less popular countries provides an opportunity to avoid the fierce competition seen in, for example, Germany and the UK, the figures don’t lie. According to Eucomed, Germany, France and the UK currently remain among the top five importers of medical devices in Europe (Belgium and the Netherlands are the remaining two). And as markets with clear demand for medtech imports and established pathways to market, it seems that product distribution within these countries may be the most lucrative end goal – even for companies who choose to start in less competitive markets.
‘At the end of the day, the return on your investment is always bigger in an established market. If a distributor is only selling a few units of a product because demand isn’t high – due to the size of the market – the return on the investment made by both the product manufacturer and the distributor just isn’t worthwhile,’ says Kasteel.
Yves Verboven, MedTech Europe’s Director of Market Access and Economic Policies, believes that focusing on market size is a flawed approach in general. He agrees that a manufacturer’s ultimate goal should be to enter the market with the greatest potential for a product; however, he says that while this often correlates with size, this isn’t always the case. ‘I think the main focus should be on how clear the access pathway for a device is. You should aim for a predictable market with systems that work well and a tried-and- tested route to market.
‘If you select a market based only on size, you overlook the real indicators of whether it’s one in which you can succeed,’ he explains. But with reimbursement and procurement pathways growing more complex by the day, the regulatory landscape currently in the midst of upheaval, and healthcare budgetary constraints in place across the continent, gaining access to markets appears harder than ever before. And that’s without considering the ongoing changes that Brexit will necessitate for the UK and those who deal with the country.
2016 health statistics from the Organisation for Economic Co-operation and Development (OECD) show that despite being considered ‘smaller-tier’, markets like those in the Netherlands, Switzerland and Sweden actually have a higher healthcare spend per capita than the UK, France and Germany.
So does this provide another case for looking toward some of the less competitive European medtech markets? Kasteel believes so. He attributes the high levels of healthcare expenditure in these countries to the well-structured healthcare systems they have in place.
‘The Netherlands, Belgium and Scandinavia are particularly good smaller markets to watch and aim for. Their structured healthcare systems makes the distribution process that much smoother and often translates to higher healthcare spend per capita,’ he says.
Healthcare expenditure is indeed an indicator of a potentially lucrative market that’s not necessarily related to its size, but it isn’t the only one worth investigating. A country’s reimbursement system is another size-independent factor that reflects how easy or difficult market access will be.
In Europe, every country has its own distinct reimbursement system. Some, like the UK, use a nationalised approach, while others, for example, Italy, have a highly fragmented system that varies between different regions.
And it is this difference in reimbursement systems that can make a smaller-tier country a better option than a big player for some companies. Because, as Kasteel highlights: ‘A smaller country with a favourable reimbursement system is likely to deliver faster and less cumbersome market access than a bigger country with a terrible reimbursement system.’
With product type, procurement and reimbursement systems, and healthcare expenditure among the multitude of factors that influence market success, and your medical device distribution strategy, one thing is clear: the decision to launch in any European market can’t be influenced by the popularity of a market alone.
If you are struggling to secure distribution in the competitive markets, start in smaller-tier countries to prove that your model works.
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