As your company contemplates expanding its market into foreign countries, sometimes regulatory restrictions play an important role. Think about a company selling supplements, or mechanical components for the aerospace industry. In such an environment, investing in a Strategic International Business Development Plan may mean the difference between certain failure and success.

Regulatory Restrictions

It may very well be that US law restricts the export of specific components, as in parts that have dual use -a civilian and a defense use-. In such cases, each such export needs to be properly documented and approved by the US Bureau of Industry and Security or by the State Department if the specific products fall under the International Traffic in Arms Regulations.
Equally common is the situation whereby the use of your products is restricted in the countries you want to market into. Take cosmetics, or dietary supplements, foods or pharmaceuticals.

The example of Medical Devices

Let’s take a market that has traditionally looked towards Europe as an easy gateway to market. Medical devices must be approved for use as safety of the device needs to be assured. Different countries use different methods to ensure the safety of the devices they allow into the market. Some of these processes are more difficult to comply with than others.
Up till recently, the European CE process for obtaining market approval was much easier than the US FDA process. This drove US device manufacturers to apply for EU CE approval before they would apply for FDA approval. Being faster to market, allowed these companies to start monetizing their inventions faster, which in the medical device market, where investments are very sizable, is a major advantage to the manufacturer.

In case of medical devices however, getting approval for to market the device in any of the EU countries was only one step towards monetizing the invention. The next issue was the issue of reimbursement. In Europe, healthcare is typically “administered” by the government. Each government has its own way of apportioning healthcare to its constituents and there is not a single reimbursement scheme that applies to more than one country. To obtain reimbursement, a manufacturer must obtain approval from the healthcare system in each of the countries it wants to enter and negotiate the level of reimbursement. It may well be that a particular medical device is approved for reimbursement in one country and not in another. Furthermore, a medical device can be reimbursed at one rate in one country and a different rate in another.

As a result,a medical device manufacturer must consider the size of the target market in any given country, the expected chance of obtaining reimbursement approval, the expected level of reimbursement, the approval process, the documentation requirements, and the expected time elapsed between requesting reimbursement approval and being listed as a reimbursable device. Only after understanding all these different factors can the device manufacturer make an educated decision and build a strategic market entry plan.

As it is possible to sell medical devices in Germany as soon as the EU has given approval, some medical device manufacturers have chosen to enter the German market first. In Germany a public and private insurance market works side by side – even though only a small percentage of people has private insurance -. The manufacturers hope an individual patient’s private insurance will pay for the device or procedure, long before the German public healthcare system has agreed on a negotiated reimbursement for the device.

Invest in a Strategic International Business Development Plan for Your Market

While your situation may be much less complex, it is important to consider that you must research how you can bring your products to market, that you study market size, price levels an methods of entry. Only after careful examination will you be able to put together a Strategic International Business Development Plan that takes full advantage of your limited resources.

Consider the investment associated with the developing such a plan insurance towards selecting the path with least resistance, lowest risk and highest reward. Chances that going in blind leads to the most optimal, least risky situation are very small. Even if you get lucky, think about what you could have achieved with some forethought…?

PS: The European regulations regarding Medical Devices have recently been updated and made more stringent. To the point that some are considering the FDA process will soon become the easier path. Time for medical device companies to re-evaluate their Strategic International Business Development Plan.