Last week I visited the Medica show in Dusseldorf, Germany, the world’s biggest medical devices trade fair. 120,000 professional visitors from over 130 different countries met with more than 5,000 companies.
I spend four days meeting with European MedTech companies that didn’t have a presence in the US market. I wanted to know why they had not explored growth in the world’s largest medical device market. Why are they not interested in competing in the world’s most innovative market?
I didn’t need four days to learn about the hurdles facing European MedTech companies wanting to enter the US Medical Device market. After meeting with less than 20 such companies a picture started to form.
US Medical Device Market Hurdle 1: The FDA approval process
Several companies had heard testimony about the difficulty getting products through the FDA approval process. And they had been told about the FDA would sending out inspection teams to check out their quality processes. Sometimes several times a year, and sometimes unannounced. But we also spoke to other companies who had obtained FDA approval and who told us they had rather easily “navigated” through the process.
Our conversations reminded me of the coming EU MDR (Medical Device Regulations) which will make obtaining the CE mark potentially a lot more difficult than obtaining FDA approval. Not in the least because claiming equivalence to an existing device will become much more difficult under the new regulations. Already under MEDDEV 2.7/1 revision 4, proving equivalence and producing an appropriate Clinical Evaluation report has become less straightforward. For many products, it may soon become easier to get FDA 510(k) than a CE mark.
US Medical Device Market Hurdle 2: Heightened liability risks
Companies also mentioned a heightened liability risks in the US. More than a few companies told us about one or another company that had sold medical devices on the US market, had been sued, and subsequently filed for bankruptcy.
The medical device industry faces significant risks that need to be actively managed. Doing so requires resources. To enter the US market, risk management becomes even more crucial. Any company entering the US Medical Device Market has to prepare to invest in the resources necessary to mitigate these risks. And the International Business Development Plan must include the associated costs. Only then can a company decide whether the market opportunity is large enough to outweigh the expected risks and costs.
US Medical Device Market Hurdle 3: Method of Entry
Several of the manufacturers I spoke to had decided to manufacture products in OEM or license their technology – probably in hopes of avoiding the liability issue. A few had chosen to set up their own subsidiary.
But a third hurdle mentioned by quite a few companies was the difficulty finding a good distributor. These were companies that had either had a previous bad experience with a US distributor, or they were waiting for a US company to contact them to discuss the commercialization of their products.
It is our experience that finding good distributors is not necessarily difficult. What is much more difficult is providing the proper support to the channel. The exporting company must plan continuous supporting activities to motivate the channel and keep promoting the company’s products.
US Medical Device Market Opportunity
There exist many growth opportunities for European medical device companies in the US, the largest such market in the world. Gaining access to these opportunities requires a deliberate strategy. very Only careful planning can overcome the hurdles facing European MedTech companies entering the US Medical Device Market.