Emerging countries are home to ninety percent of the world’s infectious disease burden, while changing habits are increasing the incidence of chronic and lifestyle-related illnesses in these markets. In sectors such as energy, telecom, infrastructure, and consumer products, large companies are significant players in emerging economies. However, according to the Boston Consulting Group, only two percent of the revenues generated by the top 200 medical device companies arise from these emerging markets.
For medtech to achieve greater success, our view is that legacy approaches that led to success in serving the billion richest patients in the world may not translate in these markets, and we address four strategies that can help global medical device companies gain a stronger footing in these new and exciting markets
Understand Local Acceptability
The majority of patients, providers, and payers in rich countries recognize therapies, devices, and protocols based on western science and regulated by agencies such as the U.S. Food & Drug Administration. However, “allopathy,” as western medicine is called in emerging countries, is only one of many forms of treatment respected in these emerging countries. Chinese traditional medicine, homeopathy, Ayurveda, Unani, naturopathy, and other systems are respected by providers and patients alike in emerging markets. Western companies may disagree with these approaches, but dismissing them as “quackery” only creates mutual distrust. When some of those patients have an absolute need for western medical devices or therapies, it is helpful if their primary providers are aware of the choices available to their patient. Therefore, it makes sense for some multinational device companies to educate the entire ecosystem, and not just the physicians and hospitals who offer their products according to western practices.
Empower Local Management
Cummins, a maker of power-generation products, including engines and generators has been successful in India. Its former CEO for India business, Ravi Venkatesan, writes in Conquering the Chaos: Win in India, Win Everywhere, that “to succeed in big emerging markets like China, and India, companies need to be willing to find a good balance between standardization and local responsiveness.” Venkatesan states that corporate leaders at many western multinational corporations treat each country the same, with little regard for nuances and variations across markets and cultures.
Provide Value-Based Healthcare
Here are a couple of ways to provide better value:
- Patients in emerging economies may take three decades or more to have incomes that equal the rich countries. Examine the true current cost structures of legacy products that have been sources of income for the company, and may be ready to be replaced by a newer generation in rich markets. Strip any overhead burden and other non-incremental costs, and offer the products to certain markets at a lower price point.
- Re-engineer the product and solution from scratch to address the needs of target customers. You may take inspiration from the hotel business, which is greatly threatened by the rise of Airbnb. Nevertheless, London-based Yotel is growing by offering an experience targeted to the modern smartphone-equipped international traveler.
Leverage Local Talent
Business models for sales, operations, service, and support assume a relatively high personnel cost in legacy markets. Yet, labor and talent are abundant in emerging economies, such as China, India, and Indonesia.
Many western medical technology companies are dependent primarily on local distributors to sell into emerging countries, many of whom are thinly capitalized; these distributors may be good at accepting orders and service clients but are unable to invest in demand creation.
To achieve broader coverage, if companies provide in-house training in emerging markets to make the local staff effective, the returns can be substantial.
You can read the complete article from where I have reproduced this summary, here: Four Ways MedTech Can Thrive In Emerging Markets.
