Emerging Medtech Markets: One Strategy Does Not Fit All

Although the United States accounts for approximately 40% of the global medical device market, a variety of factors, including U.S. healthcare reform, European austerity measures, stringent FDA regulation, and a variety of cost issues, have significantly slowed growth in traditional, established medtech markets to a rate of only 5 to 7%. In contrast, emerging markets such as Brazil, China, India, and Mexico are growing at a rate of roughly 15 to 20%, Venkat Rajan, industry manager, medical devices, at Frost & Sullivan, noted in a recent keynote address, "The New Medical Device Landscape: Adapt or Fade Away." And while these emerging markets offer a wealth of opportunity to medical device manufacturers, they also come with their own distinct challenges, needs, and cultures that must be carefully considered in order to achieve success.

As medical device manufacturers have honed in on these emerging markets in recent years, it has become increasingly clear that the old strategy of simply repurposing medical devices approved for use in traditional markets is not a winning one, especially in terms of the long term. Companies will likely benefit most from evaluating each target market and responding to individual needs, according to Rajan. "An all-encompassing emerging market strategy or even an all-encompassing China or India strategy can quickly run into a number of roadblocks," he said. "A number of companies have realized this and have shifted their focus toward better capturing these marketplaces."

Several companies have already realized the potential advantage of leveraging a presence in the local markets to better understand the needs of the local population as well as to bolster their position in the region. GE Healthcare, for example, sought to truly leverage its position in India and released the first high-end imaging system in the country in 2010. The company laid out plans to adapt the product and others, over time, to address the specific needs of Indian patients and cut costs by stripping the designs of features that were deemed unnecessary or unsuitable for the local population. And, of course, the idea is to manufacture locally as much as possible.

"Our engineering and marketing teams now interact closely with the customers here to understand their requirements," Ashish Shah, general manager, global technology at GE Healthcare, told the University of Pennsylvania in 2010. "We look at their work flow, their environmental limitations, their profitability issues, and other factors, and we then price, design, and manufacture the products accordingly."

Likewise, Royal Philips Electronics announced a similar strategy just a few weeks ago. The company commenced operations at a development and manufacturing center in India dedicated to locally developing and producing effective medical technologies optimized for the specific market. "India and other growth geographies have unique needs," Krishna Kumar, president, Philips Healthcare India, stated in a press release. "We must meet the criteria that healthcare professionals demand in these growing markets, such as durability, dealing with interrupted power supplies, limited radiology technician time per patient, fast and easy-to-read diagnostic output, and affordability. Our 'Designed and Made' in India products tick all these boxes."

As Philips Healthcare notes, emerging markets often require vastly different design considerations for medical devices to best serve patients and clinicians alike. In his keynote address, Rajan of Frost & Sullivan identified seven, in particular:

"Companies have started to realize that competition is not from the guy next door; it's coming from other manufacturers in these emerging regions," Rajan observed. "So, if you're not building a device that has these functionalities in terms of cost, portability, or ease of operation, there may be a local manufacturer that does develop it and then captures the market. In China, for example, there are a number of market segments where there's a significantly larger portion of the market that's weighted toward local manufacturers as opposed to the international conglomerate brands that most people are familiar with in other regions."

Focusing on these design factors, evaluating local needs, and addressing unique regional challenges can ultimately help medical device manufacturers get a strong foothold in emerging markets, paving the way for long-term growth while improving patient outcomes. --Shana Leonard