How to find an international medtech distribution partner
The medtech market is highly dynamic: players are very innovative and compete with optimizations and new developments. This stimulates business and attracts new market players who further fuel the competition for even better products.
In short, the market for healthcare and medical technology products is growing rapidly.
For providers, growth is therefore not optional, but mandatory. Because if you stand still in a growing market, you will be overtaken and lose market share and sales.
Different approaches and strategies can generate growth:
- Inorganic: through the acquisition or takeover of horizontal or vertical diversification targets
- Organic: new markets, products, customers.
What would be optimal?
If resources permit: Ideally, all of these approaches.
In this article, however, I would like to focus on organic growth: by tapping into a foreign market. The key to this is optimizing all sales activities. In the case of medical devices, this means above all that you should work with a strong sales partner who is already operating in the target market.
How can you find a suitable partner? I would proceed as follows:
1. Develop a suitable sales strategy
The medtech business is generally a B2B business. The core problem of the industry is the following dilemma:
On the one hand, many products are subject to tendering and approval.
However, in order to win tenders or obtain approvals, you need a local branch - which hardly any manufacturer can afford, apart from the large multinational corporations, and even they often check whether they have to do everything themselves or can work more cost-effectively and efficiently through partners.
The solution is to work with a suitable distribution partner: in international business in particular, this type of collaboration is almost essential for most companies.
The classic distributor
One option is the classic distributor. With this option, you supply a distributor who can operate in the target market, who in turn resells your products.
The strategic partner
Another option is the strategic partner, who, unlike the classic distributor, acts as a one-stop store for the customer.
If your company manufactures equipment/devices/components for operating theatres, for example, then a possible strategic partner would be someone who supplies hospitals with everything they need.
Instead of dealing with 63 different manufacturers for operating room components, a hospital will prefer to deal with a single system integrator or key supplier that it asks to provide the other pieces of equipment as well.
This makes sense for everyone involved.
Hybrid strategy
Most of the time, it will come down to a hybrid form, where you want to attract both strategic partners and distributors. Other influencers such as consulting engineering firms or general contractors can also be important opinion leaders and therefore valuable partners, especially in the project business.
2. Identify potential sales partners
A sales partner must have certain characteristics and strengths depending on the industry. These include
- an adequate infrastructure, such as warehousing or Storage capacities (in emergencies, it must be possible to deliver immediately
- ),
- a showroom,
- a sales and service organization, that operates nationwide,
- an after-sales service that is available 24/7, responds quickly and is technically competent, as well as
- the right contacts in the target market.
How to find such partners
Research on your own
The first option is to do your own research, which is facilitated by the internet these days. Digitalization makes it possible.
However, you quickly reach your limits when it comes to countries where English only plays a minor role and websites are only available in the local language. That can be a challenge. Intercultural competence is helpful here.
Knowing the right search terms can also be a further challenge, as terms that are common here are not automatically common elsewhere.
Many cultures also design websites differently to ours, and accordingly, people may subjectively perceive such a website as amateurish and classify the company accordingly - which does not necessarily correspond to reality! A sample: the websites in Japan.
Working with the chambers of foreign trade
The next best way, which I can only recommend, is via the German chambers of foreign trade. They are very competent and offer a whole range of services such as searches, checks and initiations in the target market for an often more than fair fee.
The big advantage is that the chamber of commerce is well-known in the country and has a good reputation, so you almost always get a response from the target company, unlike individual approaches.
In addition, the experts at the Chamber of Foreign Trade know the market - and sometimes the market participants, depending on the sector - and can quickly and reliably identify potential partners or rule out unsuitable or fraudulent ones and, if necessary, offer further assistance on site, such as translations, legal checks, etc.
As a company based in Germany or Austria, you are automatically a compulsory member of the Chamber of Commerce and Industry and therefore have access to its services. However, the chambers in countries where you are not a member are also open to providing assistance for a fee, which is usually very fair, and they generally have even more market knowledge than the German chambers in the host country.
Benefiting from a consultant's personal network
Most Interim managers naturally have a huge network that they can draw on because they usually specialize in certain industries and have been working in them for many years.
I myself can often help immediately with contacts from my network when it comes to potential future sales partners for medtech topics. After all, service is not just about doing things, but also about know-how and - the right contacts.
The way in which contacts are made and cooperation is established depends heavily on the respective culture. A top-down strategy is generally recommended, because nothing works without the managing director.
In Western cultures, a phone call can lead to the goal, elsewhere a letter or email to the management, but in the Middle East or Africa, for example, the personal approach and a personal conversation is almost always the only effective approach.
Many manufacturers have had to learn this during the pandemic: just because personal contacts and business trips have been replaced by MS Teams meetings in our country, it doesn't mean that management in other cultures see things the same way.
Risk assessment and expectations are simply different.
Without regular personal visits, little is possible in the Middle East and Africa - and also in Switzerland. Even during a pandemic.
Understanding which customers want to be approached where and how is one of the most important skills in international business development.
As a general rule:
The more difficult the target market, the more important the professional network.
In Russia or China, as well as in many countries in the Middle East or Africa, you cannot simply enter the country and go on a customer tour. You need an invitation from a local company just to apply for a visa.
Without the network of a chamber or an interim executive, it will be very difficult.
3. Strengthen the relationship with your sales partners
Your ideal sales partner can therefore operate in your target market, has a corresponding infrastructure and service department and has the right contacts.
The bad news is that experience shows that there are not many of these "good" distributors.
Even according to the Gaussian normal distribution, only a fifth of the available potential partners are in the perfect performance range, and depending on the country, even fewer, which is particularly true for emerging and third world markets, where there are not many companies that are economically able to make these investments and maintain this resource on a permanent basis.
For this reason, a fierce battle has emerged among manufacturers in almost all industries for the favor of the top importers.
This in turn has meant that the search for a suitable distribution partner has become a buyer's market, where distributors can pick and choose who and what they want to have in their portfolio in the future.
And even a successful contract with a partner is by no means a guarantee, because whether and to what extent the distribution partner will actually work for the manufacturer in the future also depends on many factors.
All salespeople in the world - including those who are employed by your distributor in Takatukaland - sell what is easiest. And the easiest is what is cheapest or easiest to explain.
Good relationship management not only with the managing directors of the partner companies, but also and especially with the sales staff is crucial here: A top onboarding program, intensive partner care and incentives for the partner's sales staff are a must and if another supplier does better than you, then the hard-won favor is quickly lost again!
4. Expand your network
Once in the country, your own ability to network is even more important, because in order to work efficiently, you often have to rely on recommendations or introductions.
The starting point can be the existing contacts of your sales partner.
But the chambers of foreign trade also play to their strengths here. The chambers often organize special industry events such as purchasing trips, road shows, procurement congresses or similar. You can get appointments with important buyers and other decision-makers that you would otherwise never get.
In my experience, you should therefore not only work with the chambers sporadically, but continuously and for years to come.
5. Switch your marketing to strategic marketing
In contrast to other industries, the healthcare industry is fortunately not very cyclical, the economic curve tends to be expressed in long-wave trends, which also has to do with the long-term development of innovations in this segment.
The good thing about this is that it facilitates long-term planning and a strategic approach.
You shouldn't be looking for quick profits with medical products - especially not when it comes to international business development. Here, staying power, clever foresight and cooperation with the strategic sales partner are called for.
Marketing must adapt to these circumstances.
The first step is to create awareness for the brand or the product. As it is difficult to bring large medical devices to customers, the industry is very interested in trade fairs. Whether Medica or Arab Health, whether local, specialized congresses or large regional showrooms: marketing must first of all succeed in bringing potential customers and products together.
The persuasion work, advice and sales follow later.
This costs time and money and you are well advised to think carefully beforehand about what you want to achieve and what you are prepared to invest.
Conclusion: A network is not everything. But...
By entering a foreign market, medical device manufacturers can expand their market share, but this usually requires cooperation with a strong distribution partner who is already active in the target market.
When contacting potential partners, an intermediary who knows the target market and enjoys the trust of key players in the market can be helpful. Depending on the market and culture, working with an intermediary may even be essential.
Contact me! I would be happy to support you with your plans.
