If you resign the contract, it will require compensation for at least the following 12 months. Selling devices direct requires some bureaucratic paperwork, an office and perhaps one employee. Medical device companies need their own warehouse or a third-party logistics provider. However, hospitals do not invest in instruments and implants. They purchase based on consignment, and the best service for free. Hospitals will store instruments and implants (e.g. endoprosthesis, plates, nails, screws) in consignment and pay on what they have used in the patient. The device companies have to invest for this. Your customer in Germany won’t be a stocking customer. Your customer could do it, but won’t.
Because of these business practices, distributors are no longer willing to work as stocking distributors, not even for a short timeframe. Whoever will act as the supplier for the hospital or private practice has to rely on ROI before starting the business.
At times, disposable medical devices can be sold to hospitals or private practices, providing an opportunity to prevent consignment. Don’t forget, Germany is not the easiest market for medical devices. However, it’s the largest market in Europe, and the speaking market (Germany, Austria and Switzerland) represents approximately 100 million people.
The most challenging issues for the medical device industry in the 21st century seem to be an increasing life expectancy and high activity rate, superannuation of the population, deeply indebted national budgets and empty pension funds.
The business development and market approach of today is totally different compared to the past. Visionary ideas and market- adjusted strategy are essential to survive the first three years in order to become a successful and reliable partner. Intercultural respect and understanding, as well as an ear to the experts who are familiar with the German healthcare system, will be an asset for device companies working in Germany. There is an opportunity to learn from the mistakes of others. A pre-launch to evaluate and test your product in the market, while profiling your potential customers, would give you a deeper knowledge on how to adapt your strategy. Come up with a budget and timeframe that gives you prospects for successful execution to conquer the German medical device market.
What are the trends, and what could they mean for the industry? Design innovations that are classified as “me too” products? Invest in real innovations that are not reimbursed by the healthcare system? The medical device industry should try to solve the problems of the surgeons and hospitals. Listen to the orthopaedic industry. Listen to internal teams. The number of product recalls and lawsuits are increasing each year. Consider that the financial piece isn’t all that is impacted in this new world order.
There are always poor business climates and opportunities to blame health insurance companies and the bureaucratic process regarding uncertainty of the future benefit assessment of medical devices. Before entering a new market, define the company’s goal: Profit or market shares? Pay to stay or merger? Germany is a $376 billion healthcare market. When medical device companies start competing and fighting in Germany’s healthcare market, they must have a strategy that is fitted to all of these peculiarities. Don’t forget it!
For more on our Spotlight on Europe:
The Basics: A Look at France’s Medical Device Market
Three Reasons Ireland’s Orthopaedic Sector Attracts Foreign Investments