Coming To America? 8 Steps For Successful U.S. Medtech Market Entry

By Susie Faries, CEO, SciMed Partners, Inc.

Several times a month, I’m approached by companies from abroad investigating an American market entry. As most med device folks know, the U.S. constitutes the world’s single largest and most lucrative medical device market — $156 billion in 2017 and expected to grow to $208 billion by 2023¹ — offering new opportunities for companies from other countries. Here's the catch: Despite viable technologies and products, many of those "coming to America" are often unprepared or find themselves awash in decisions that they did not imagine confronting. After seeing dozens of these situations, I have compiled a list of risk mitigation factors that help contribute to market entry success.

1. Prioritize Market Focus Over Engineering

I always reiterate the importance of understanding market forces and factors versus engineering and product factors for success. It's essential to have a well-engineered, viable product; however, it is even more critical to understand the market a company is entering. The ability to see beyond the "dollar signs" of the market opportunity to the nuances, segments, and moving parts is critical to market success.

If you’re out for investment, yes, it's essential to showcase the product and engineering and avoid business plans. However, market focus and realistic revenue projections will help you avoid potential retreats to smaller, less financially attractive environments.

2. Study The Competitive Space

Analyze the competitive landscape, setting aside preconceived ideas. Immigrating companies should do their homework, including an intellectual property analysis and a comprehensive product analysis, to gain a real sense of competitive space. Consider the degree of complexity in the competitive arena. Certain market advantages you believe you have may disappear under this scrutiny. For example, consider the proliferation of similar, closely aligned competitors, or even product substitutions, which are sometimes even more significant than direct competitors. One recent client developed a highly effective but expensive solution for monitoring post-surgery patients. However, they failed to discover a competitor with a much simpler and less-costly solution U.S. surgeons found just as effective.

3. Don’t Underestimate The Complex Healthcare System

Most immigrating companies I see come from socialized or more flat healthcare system environments. They often assume that what "worked at home will work in the U.S." It won't — especially now, after the Patient Protection and Affordable Care Act of 2010 and the coronavirus pandemic. Shifts in distribution channels and entry point, changes in product evaluation, new purchasing patterns, and many other factors call for nimble strategies and approaches. Some companies naively believe reimbursement is the only factor they need to consider, but health economics, quality, and patient outcomes are just as important.

4. Understand Capitalization Requirements

Estimate capitalization requirements realistically is critical to U.S. market success. Most immigrating companies I work with are under-capitalized for a full market entry, which could set them up for failure. Companies who want a share of the U.S. market must plan to spend allocate the financial expenditures required to commercialize successfully.

5. Consider A Gradual Market Rollout

There is also value to a gradual market rollout, including allowing for market testing, product tweaks, and marketing adjustments. I frequently see companies immigrating from smaller European settings planning market entry but with little ability to scale successfully. One company from a country of about 20 million people believed it could achieve full entry into the U.S. marketplace of nearly 350 million people. They were woefully unprepared to ramp production and supply chains — or even provide minimum back office support. They believed they could manage customer support and replacement inventory from a distance and that their products "were so incredibly reliable and flawless"  they would have few issues. “Welcome to America: We’re always on, and we expect flawless support.”

6. Limit Product Lines

I recommend carefully evaluating product lines before attempting a U.S. launch. Unless companies are sufficiently capitalized and well-prepared with all fundamental operations activities, they may want to limit the product lines they introduce into the U.S. market. In a smaller market, multiple product lines may be necessary for revenue purposes, but in the U.S., it may be wiser to limit the number of products until gaining market traction. A focus on ramping dovetails with a more measured rollout and ability to scale mentioned above. It also becomes a way to mitigate risk as companies grow revenue.

7. Work With — Not Around — The FDA

Some foreign companies have an unrealistic and unfounded fear of the FDA. Consequently, they try to circumvent regulatory requirements, which will eventually catch up with them. I often recommend regulatory and clinical assessments that help set realistic expectations for market entry. I recently previewed a company whose technology, it claimed, could cure everything from heart failure to wounds. In addition to lack of data, lack of clinical confirmation, and lack of focus, the technology was entirely different from what they touted. Ignoring the obvious regulatory risk, they hired a reimbursement consultant and are proceeding with market entry. The only one who will likely profit in this scenario is the consultant, when they collect their fee.

8. Realize That “Let’s Go See What The Americans Are Up To” Is Not A Strategy

More often than not, immigrating companies perform short reconnaissance visits to the U.S., returning to their home countries without being here long enough to truly understand the landscape, do adequate networking, and perform the needed groundwork. Or, they make a single person (or two) from the home country responsible for commercializing their products in the world's largest med device market. In either scenario, unfamiliarity with the U.S. market, combined with few U.S. contacts or connections, often causes these small operations to fold or withdraw. A better approach would be to hire American-based support with established networks, connections, and understanding of the landscape.

Conclusion

U.S. market entry is possible for immigrating firms, and it can be financially profitable. However, companies who want to commercialize successfully in the U.S. should consider the above recommendations, enabling them to take calculated risks rather than reckless risks — the meaning of risk mitigation.

References:

1. https://www.selectusa.gov/medical-technology-industry-united-states

About The Author:

Susie Faries is CEO of SciMed Partners, Inc., a Silicon Valley-based consulting firm in healthcare, medical devices, healthcare tech, mobile/digital health, and diagnostics. Previously, she was a co-founder and CEO of InnovaMedix, Inc., a wireless medical device start-up in emergency medicine, trauma, and sports/fitness.  Faries has experience on the provider-side (hospitals, health systems, emergency services, ambulatory surgery) and the supplier-side in devices and healthcare tech. She holds an MBA in market strategy from Regis University and a BA from Roanoke College, and has additional advanced work at the Wharton School and Stanford University. You can contact her at sfaries@scimedpartners.com.