September 8, 2020 – Success in your home market does not guarantee success when entering the United States healthcare marketplace. The Technology Commercialization Group (TCG) has developed a simple, stepwise process to give medical device, digital health and health IT companies the best opportunity for successful market entry and product launch in the United States. Companies that apply this process to their commercial plans can help minimize mistakes that often lead to a failed product introduction or a missed revenue opportunity.
For more than 20 years, TCG has helped numerous international companies successfully introduce their products in the US by applying the principles outlined in this paper. One European client, for example, is a niche diagnostic company with a product that commanded an overwhelming market share in its home markets but would compete against a well-established competitor in the US. Our client’s product was not originally designed to easily meet US CLIA (Clinical Laboratory Improvement Amendments) quality control requirements for laboratories as required by the Centers for Medicare & Medicaid Services (CMS). Following our recommendations, the company modified three specific product attributes — their quality control process, overall product positioning against the established competitor, and tools for addressing the complex hospital purchase decision process — and had a successful US launch.
The Four Key Factors
The nuances of US market entry are often not self-evident. The challenge is to quickly and accurately identify the key market characteristics that need to be addressed to improve the chance for success in the US. With this information, the product — or the US marketing and sales process – can be developed or modified to maximize success.
To test if a product is ready for US market entry, our MedTechLaunch assessment tool examines at four key factors:
Regulatory and Reimbursement
The potential economic value created by a medical device depends on how effectively it improves clinical outcomes or reduces the costs of achieving a good outcome. These factors are strongly affected by the way the “business of medicine” is organized and the “practice of medicine” is conducted in a specific market. If the purchasing process for the medical device is straightforward (for example, the purchase decision can be made by one clinician, rather than by a committee of hospital clinicians or other non-clinical decision makers), the product is easier to sell and hence is more valuable to the marketer. The value will also be greater for products that address major diseases rather than orphan diseases. And, the value of the product can be captured more easily if there are fewer established competitors. With a greater product value, the marketing company has more options in its approach to the market. And, if the product is entering a crowded market, then selecting the optimal positioning strategy and identifying a key product differentiator will be important for establishing value and displacing competitors.
Regulatory and Reimbursement Issues
The ease of obtaining US regulatory clearance and the strength of the resulting claim are often mutually exclusive, but both are important in determining the value of the product and the manner in which the product can be marketed. The same can be said for US reimbursement coverage and payment, which is now often more difficult to achieve than regulatory approval. Clarifying the optimal pathway to regulatory clearance or approval and confirming the availability of attractive reimbursement are critical to determining the ease and speed of market entry, as well as product profitability.
The speed of US market adoption drives the timing, the cost and the profitability of entering a new market. Accelerating the rate of adoption at a reasonable cost is important. Five factors drive the speed and cost. Are clinical and business decision makers known and easily accessible? Are the product benefits accepted and valued by customers and supported by compelling clinical data or clear financial or workflow benefits? Can the product benefits be clearly and easily communicated? And, lastly, will the sales process be simple and straightforward, with relatively low cost for implementation?
The choice of the US business model has a strong impact on the timing, cost and profitability of market entry. The simplicity of the sales, marketing, and operational processes and business functions can drive costs lower, as can the efficiency of the supply chain. Distinct segments of the healthcare marketplace have different expectations for the level of both customer education and clinical support. The company’s ability to provide required levels of customer support at an acceptable cost will also determine market success and affect profitability, and US medical practice and clinical workflows often dictate a different business model than the one used in the home country or region. While local distributors may seem like an “easy” path to market, distributors do not often provide the level of market development, promotional activities and customer education needed for innovative, novel products. Finally, it is essential to determine if the projected profit margin is sufficiently large to pay for the business model, or if additional investment is required. These considerations will determine whether a company’s US market entry plan will deliver an acceptable financial return.
TCG’s Four Key Factors are covered in a straightforward 17-point assessment tool. By reviewing each point in the tool, TCG can quickly evaluate a product’s chance of success in the US market. As seen in the graphic below, the new product is rated in each criterion as “good” (denoted by a green color), “some issues” that will moderately impact success (yellow) and some “serious issues” to address (red) which, if not modified, may prevent success.
An example of applying this 17-point assessment for the previously mentioned company with the niche diagnostic product is shown below. By using the MedTechLaunch assessment tool the company was able to identify the four most critical problem areas which could impact the product launch and then adjust. Specifically, the tool identified the following four areas to be addressed prior to launch:
Our experienced consultants are ready to help you successfully enter the US market. We can economically and rapidly apply our MedTechLaunch 17-point analysis to your product and business model. After completing our analysis, we present you with a verbal and written report highlighting the key elements which could make or break your US product launch.
Contact us to learn more about how the TCG MedTech Launch Assessment Tool can help you successfully enter the US market.