Designing Globally
Emerging markets offer medical device companies a wealth of opportunity, but there are local nuances that must be tackled and tamed before a new product is designed.
Large medical device manufacturers such as Medtronic Inc., Smith & Nephew plc and Boston Scientific Corp. all have recently announced corporate initiatives to ambitiously and aggressively expand beyond their traditional marketing territories.1 These three industry vanguards are not alone: Eight out of 10 medical device executives report that they are looking to target emerging markets.2
The primary catalyst driving this strategic shift in our industry is the dismal growth projections anticipated for Western economies. Customer discretionary and elective healthcare funds in the United States and Europe are being delayed, lowered or reallocated. To reduce premium costs, financially strapped governments, private insurance payers and consumers are downgrading their coverage to minimum, basic care. American regulatory registration requirements are growing more burdensome and are significantly extending new device launch schedules; one report suggests that the European Union application process for approved medical devices was 46.8 months faster than a similar process in the United States.3
In contrast to this doom and gloom, emerging markets have been heralded as global future economic engines, offering huge untapped potential for healthcare products and services. According to the global industry head for medical devices at Wipro Ltd. (a global information technology services company headquartered in Bangalore, India), Brazil, Russia, India and China—the BRIC countries— are estimated to bring 1 billion new patients to the world’s healthcare system in the next three to five years.4 Developing nations are experiencing greater economic stability, growing middle classes have more disposable income and are adopting less healthy lifestyles while the healthcare needs of the maturing elderly population have yet to be served.Rising prosperity has started to spur governments in these markets to slowly invest in their healthcare infrastructures by establishing clinics and laboratories, subsidizing medical training, and providing incentives for new medical device enterprises.
Entry into these evolving healthcare markets presents a significant upside for corporations that can successfully manage the many development risks, unique conditions and eclectic challenges. But caution must be advised as the process is not a simple step and repeat from existing U.S. and European product development parameters. The naiveté of predecessor companies attempting this expansion clearly demonstrates the importance of a considered approach.
Economic factors
A critical first step for medical device and combination product development planning is to assess the economic context of the emerging market under consideration. Answers to key questions should be sought, such as: How embedded and significant are existing competitors as a threat to market entry? An undeveloped market doesn’t mean a dearth of partial or complete solutions, established workarounds and existing vested interests. Government subsidies and loyalties to local manufacturers will have an impact on product pricing.
Other broad economic considerations include a new entrant’s ability to navigate through informal or opaque sales and distribution channels as well as establishing training, service maintenance and parts supply infrastructures. Sadly, the often good intentions of medical device donations are not valued by recipients in emerging markets because little consideration has gone into training new user groups with different clinical education backgrounds or how products in need of repair can adequately be serviced. According to the World Health Organization, up to 75 percent of all medical devices in the developing world do not function because of this lack of forethought.5
Understanding the available disposable income of the end purchaser also is essential for business plan modeling.In India for example, the typical middle class individual earns $4,500 per year and currently spends an estimated $6 of this annual income on medical devices—compared to $230 for the average American consumer. While India’s class system is enjoying a shift in individual wealth, 54 percent of Indians still live on 90,000 rupees a year (approximately a dollar per person per day).6 This financial reality requires very different product pricing configurations and potentially slimmer profit margin assumptions.
Contextual environmental challenges
Emerging markets have some very different and difficult operating use environments. Project resources must be dedicated to identifying the various functioning conditions and use dynamics in order to inform design development.
Rural, remote areas often are where the bulk of populations live in emerging markets—only 29 percent of Indians and 40 percent of Chinese live in cities today.6 Access to healthcare services can be nominal at best in developing markets. The number of healthcare workers per 1,000 capita is significantly lower than in the developed world. Tanzania represents an extreme example: An estimated 80 percent of Tanzanians will never see a doctor in their lifetime.7 Serving the population in the “last mile” rural regions has unique and pragmatic challenges. Many communities are considered lucky to be on the route of a traveling nurse clinic that provides rudimentary care. Such mobile clinics typically are staffed by female clinicians trained only in basic primary care procedures. They cover vast distances and rough terrain with devices and supplies that must be able to withstand transitory hot, humid, wet and dry conditions, be compact and also be highly portable. Of course, access to power, clean water, refrigeration, adequate lighting, sterile clinical conditions and standard cleaning supplies cannot be assumed.
In urban centers of BRIC countries where a burgeoning population strains dated healthcare infrastructures, space is extremely limited, clinical environments often are shared and reprocessing of devices is highly expedited. A flourishing example of streamlined urban medical efficiency is the award-winning network of Aravind Eye Care clinics in India that perform assembly line eye surgery using one doctor instead of the standard two for each surgery, with assistants standing by. These clinics manage to conduct 2,000 surgeries a year, compared to 400 in other Indian clinics. Costs are minimized by keeping surgical equipment in operation 24 hours a day.8 A medical device being used in such an environment with no downtime has to be robust and entail very few steps for cleaning between patients.
The barriers of language in emerging markets also are not insignificant—there are 23 official languages in India alone and the Chinese languages (13 regional dialects that are, according to Wikipedia, “mutually unintelligible”) involve familiarity with 3,000 characters compared to the 26-letter English alphabet. Combine this with widely varying educational levels and adult literacy rates, usage instructions, screen prompts and product labeling must be very carefully developed.
Familiarity with universal computer software interfaces, the QWERTY keyboard and common symbol icons also should not be assumed. Compared to the 77 percent of Americans who have access to the Internet, just 7 percent of India’s population and 32 percent of Chinese are connected to the Web.9 However, with the rapid deployment in emerging markets of modern telecommunication networks and the growing penetration of mobile phones (53 percent of adults living in rural areas of sub-Saharan African countries have one10) with their single touch and voice command interactions, mobile access to healthcare has the potential to be a key enabler. “Telehealth,” or the capability of delivering remote diagnosis, monitoring and sometimes treatment, possibly has more prospective value in emerging markets than may be realized for both clinical and consumer users in developed nations. Devices that are able to incorporate the ability to sync, analyze and transmit data at low cost, high speed and few steps will have tremendous adoption advantages.
Cultural nuances
An important aspect of developing a medical device for a new market is being able to appropriately translate to and align with cultural customs and norms.Despite globalization, definitions of health and attitudes toward exercise, diet and nutrition still differ fundamentally across emerging markets such as China, India and Brazil. In Tanzania, the popular greeting, ‘Umenenepa!’ (translation: You have become fat), demonstrates the aspirations of a region where food is scarce, disease is prevalent and poorly paid heavy manual labor is ubiquitous.11 Spiritual healers and herbal medicines remain prominent institutional influences in some cultures despite the influx and adoption of modern medical practices.
In Confucian-led Asian societies, women are perceived as less important than men and are not strong healthcare catalysts and gatekeepers for the family unit. This dynamic may impede the growth of needed healthcare distribution networks that are likely to rely on women advocates in order to flourish.
Other social beliefs and customs (such as the widespread use of communal baths in Korea or the need for an Arabic man to escort an Arabic woman to appointments or the belief in China that a physical disability stems from a flaw in character) both have subtle and profound implications for how a new medical device might successfully integrate and win adoption into an emerging market.
Color is another simple and overt example of how cultural influences can sway adoption and use. To an American, a red square symbol is widely interpreted as stop or danger. In China, red communicates good luck and celebration. To Indians, red means purity. In South Africa, the same color symbolizes mourning. Understanding these differences and intelligently applying the implications to product design is unquestionably a multi-faceted, intricate endeavor.
Institutional and Regulatory Policy
The regulatory landscape in most emerging markets currently is in a high state of flux and therefore difficult or impossible to predict, which confounds well-laid product development launch plans. Many countries are actively beginning to build regulatory authorities and devise new policy guidelines for medical devices. Ascontext, before 2005, India had no regulatory framework at all for approving a new medical device. It is hoped that these reorganized institutions will adopt clearer standards after years of opaque, informal and bureaucratic systems that often relied on personal relationships, onerous paperwork, random fees and bribes.
A critical question facing medical device manufacturers is whether countries such as Brazil, China and Russia will choose to adopt open innovation regulatory platforms or more closed, protective policies that favor their own national enterprises. To date, Russian regulators make in-country product testing a mandatory component of a submission approval. China also requires exact and costly clinical trials but new onerous legislation is anticipated next year—a total of 96 new industry standards are said to be slated for 2012.
Some governments also stipulate fixed price ceilings. In 2006, with concerns about medical device price inflation, China’s National Development and Reform Commission announced mandatory price ceilings, significantly dampening foreign investment interests. In 2008, the Indian government followed suit and started pursuing compulsory price negotiation guidelines to ensure devices are reasonably priced.12
Another final factor to navigate is each country’s approach to intellectual property rights. The Chinese government is notorious for encouraging imitation and this gives many Western companies significant pause before embarking on new product development for its market.
Seizing Opportunity
User-centered product development principles lie at the heart of a successful market entry program. Time must be spent to identify the user groups, examine their needs and abilities and become thoroughly immersed in their use environments. This is best done through ethnography and observation by putting feet on the ground, meeting and talking to actual users in the context of use without preconceived solutions, witnessing the steps and tasks, listening to frustrations, watching workarounds and understanding the opportunities and parameters. In comparison to the United States, emerging markets can be conducive for such exploratory research. Access to clinicians and their clinical environments can be accomplished more rapidly at less expense, when managed well.With the help of a good translator, individual users are very receptive to sharing their experiences and ideas.
For maximum advantage, design and engineering activities should be centered where the collective skill set and equipment resources uncompromisingly are the strongest, where comfort levels are at ease with the messy, non-linear process of innovation. This skill set is not often readily available in the intended launch market. What is critical for successful medical device design is that the development team is able to fully internalize the user experience and can repeatedly access the user for feedback during the iteration and refinement phases. In today’s world of high-quality telecommunications and around-the-world, next-day delivery, remote teams are able to communicate and collaborate easily through video conferencing, exchanging, trialing and evaluating concepts and rapid prototypes and quickly messaging revisions. Regulatory planning including risk assessment work should occur in parallel starting early in the development process.
Three key partnerships need to be established at the local level to help navigate the market’s unique regulatory, clinical and customs processes.Assuming corporate responsibility for a product’s regulatory strategy with limited understanding of the local dynamics will make for a lengthy and frustrating journey. Careful consideration should be made when identifying and forming consultative partnerships. Some companies have made the mistake of working with a resident commercial distributor who claims the ability to socially network through the relevant regulatory authorities but in doing so, unknowingly skips important steps in the process for the sake of expediting approvals. This approach can backfire later. A more successful partnership will be one with a specialty authorized representative who has demonstrated consulting experience with local market product approvals.
Forming consulting relationships with key opinion leader (KOL) clinicians also is invaluable; they are the ones who will credibly champion design and help facilitate the necessary clinical trial preparations and data collection. Finding a KOL in the specific emerging market does not have to be a daunting undertaking. Established KOL consultants in the United States and Europe often are well-connected to international peers and can provide referrals. Local professional medical societies and national medical publications are good sources for contacts and specialty recommendations. It should be noted that clinician advocates should not be assumed as surrogates for an appropriate regulatory advisor, even if they have strong connections with the guidance authorities. Their own vested interests in expediting market approval may present conflicts down the line.
The third in-country partner that is recommended is an import/export affiliate with direct familiarity and experience dealing with the local trade customs policies and officials. Emerging markets can require different documentation paperwork, often involving layers of country-specific forms that need to be presented and packaged in a particular way. Not understanding the idiosyncratic requirements of a customs office may mean a product shipment is held up in a warehouse for weeks. To keep a product shipment and launch delivery logistics running on schedule, the investment made to streamline the documentation process so that it satisfies local requirements will be beneficial in those last few weeks before market pilot or launch.
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Despite the many hurdles, a significant upside awaits the intrepid. Many Western device manufacturers see the future and believe the biggest risk lies in standing still while competitors seize the opportunity. Medtronic’s new CEO believes that targeting the growing middle class in China, India and other emerging countries could potentially be less risky than creating new products for the flat U.S. market. “The biggest long term opportunity will be to meet the needs of billions of people who have no access to healthcare at all. The population in emerging markets is tenfold that of developed countries ... reaching the global middle class opens up opportunities to us beyond anything we’ve ever seen before,” according to Omar Ishrak.13 Drawing from the lessons learned of predecessors and the expertise of professional product development consultants will help minimize the risk and optimize the process.
Aidan Petrie, is chief innovation officer and co-founder of Providence, R.I.-based Ximedica. In his role as chief innovation officer, Aidan maintains hands-on involvement in overseeing client programs, staying at the forefront of Lean product development. He has been involved with hundreds of development programs and product launches throughout the company’s history, and applies that experience to each new challenge. Aidan holds a degree in Product Engineering from Central St. Martins School of London and a master’s degree in Industrial Design from the Rhode Island School of Design. Jessica Willing-Pichs is principal, Research and Product Strategy, for Ximedica. Jessica designs, leads and reports on a wide range of quantitative and qualitative research studies, secondary and competitive analysis. Her insights help identify contextual, unmet user needs and preferences as well as usability and other human factors considerations that guide the development process for both medical devices and consumer healthcare products. Prior to joining Ximedica in 2005, she worked for more than 10 years in advertising research and strategy, building the brands of Fortune 500 companies. She received her law degree from University College in London, England.
References:
1. “Will BRIC Bubble Still Be There for Med Tech?” Mass Device, Sept. 1, 2011.
2. “Launching Medical Devices for Emerging Markets,” A Global Medical Devices Industry Study, HCL Technologies, 2009.
3. “A Defibrillator for American Jobs,” The Daily Caller, Sept. 8, 2011.
4. “Emerging Markets are Changing How Medical Device Firms Do Business,” Outsourcing Center, Feb. 15, 2011.
5. “Could Donkey Ambulances Save Lives in Poor Countries?”The Guardian’s Poverty Matters Blog, Sept. 9, 2011.
6. “Tracking the Growth of India’s Middle Class,” McKinseyQuarterly, 2007 Number 3.
7. “Three Practical Steps to Better Health for Africans,” McKinsey Quarterly, June 2010.
8. “Aravind Eye Care’s Vision For India,” Forbes Asia, March15, 2010.
9. “Can India Lead the Mobile Internet Revolution?” McKinsey Quarterly, February 2011.
10. “Mobile Phone Access Varies Widely in Sub-Saharan Africa,” Gallup, Sept. 16, 2011.
11. “We Have Become Fat,” Iconoculture, Sept. 13, 2011.
12. “Government Asks NPPA To Collect Data on Price of Medical Devices,” The Economic Times, Aug. 25, 2008.
13. “Medtronic CEO: Emerging Markets Could Be Safer Bet Than Developing Products For U.S.,” Mass Device, Aug. 25, 2011)