With emerging markets set to account for a third of the industry’s global revenue by 2022*, the growth opportunity for medical OEMs is enormous. Increased GDP and greater income per capita in developing countries means patients are becoming more proactive about their health. As a result, they can afford higher quality treatment plans and devices.
In my opinion, however, medical device manufacturers can sometimes fail to fully realize this commercial opportunity. That’s because, rather than developing and tailoring products to meet the individual needs of each local market, medical OEMs have instead focused on importing technologies developed for existing markets.
And while this approach may offer some initial “quick wins” in emerging economies, it may come at the expense of long-term success.
Don’t overlook regional dynamics
Transferring existing technologies directly into emerging markets tends to overlook regional dynamics such as local regulatory requirements, physician training, and municipal infrastructure.
Through my experience of working with medical device manufacturers, it’s apparent that emerging markets respond better to smaller incremental technological advances. For example, any technology will be more applicable if the associated physician training doesn’t involve a steep learning curve relative to existing practice.
That’s why I think this approach can be far more successful than introducing step changes in technology that are only of use to a limited audience.
Minimizing risk and cost ultimately inhibits growth
Not that I don’t appreciate why introducing existing products and technologies provides an attractive route to market – new product development can necessitate significant capital. However, although this tactic minimizes risk for OEMs in terms of cost, I feel it ultimately provides a less than perfect solution to local requirements.
In practice, introducing forward-thinking products may prompt the local network to respond, but for the most part, this will only be in those communities that have already seen significant investment. Where the infrastructure, technologies and resources are in place to absorb and embrace the product, it may succeed. But its impact will likely be limited to a small subset of the total population, thereby inhibiting OEM growth.
Prioritize custom product development
Instead of transplanting existing technologies into new markets, I believe that medical OEMs may do better to adopt a strategy of localized product development, focusing entirely on the needs of the emerging market.
After all, this mirrors the innovation pathway that OEMs follow in developed markets – a need is identified, and products are developed according to the regulatory, reimbursement, and pricing environment. Why should our approach in emerging markets be any different?
Invest in the supply chain
Yet, just as in developed economies, localized product development is not a strategy that OEMs can pursue in isolation. Working closely with regional component suppliers can provide significant advantages by establishing a secure, localized cost base. Personally, I’m not sure OEMs can fully explore developing market opportunities unless they are prepared to invest time and effort in the supply chain.
For those who do, however, the results are worthwhile. Not only will they have the satisfaction of providing discrete solutions, explicitly tailored to local needs, they are also much more likely to achieve long term success and market growth.
*Source: BMI MedTech, Evaluate MedTech, BCG analysis