Elevating Medtech Growth in Evolving Markets: A Strategic Approach

In recent years, the landscape of the Medtech distribution market has undergone a profound transformation, becoming more crowded and fiercely competitive than ever before. In both emerging and mature markets, we've witnessed the emergence of smaller, nimble partners specializing in specific sectors or market segments, from endoscopy to optical lenses.

An article in The Economist underscored that "few industries have whipsawed in the COVID-19 recession as violently as medical device makers." The pandemic brought into sharp focus the pivotal roles and responsibilities of channel partners in their respective markets, thrusting them to the forefront of medtech's success across diverse geographies. While the pace of recovery from the pandemic remains uncertain, there's a unanimous expectation of a global medtech industry improvement in 2021. The key question on every board's mind is: "How can we capitalize on this?"

Considering that the majority of sales growth is projected to occur overseas, it's evident that having a well-optimized indirect sales strategy is crucial for delivering results. Often, venturing into international markets through a channel partner is the most efficient route. Evaluating what can be realistically expected from channel partners abroad is a primary concern for export managers. Usual metrics for assessing their performance include annual turnover in value and volume, gross and net margins, and inventory levels by product line, country, and partner. While these metrics are essential, they represent just the initial step.

The Three Levels of Channel Partner Relationships

To gain a more nuanced understanding and effectively manage your partners, it's valuable to categorize your relationships into three distinct levels:

1. Agent or Importer: This is the lightest form of collaboration, often leading to occasional sales. Contracts are minimal, and the engagement is typically limited.

2. Distributor: In this case, business relationships are more frequent, and contracts are more comprehensive, encompassing various aspects like marketing, logistics, finance, and servicing. Distributors often have a more significant presence in larger markets and may work with sub-distributors or agents.

3. Hybrid Distributor: This emerging model combines the strengths of both partners, with significant investments of time, resources, and alignment at different organizational levels. It fosters a sense of ownership and common goals, particularly in achieving sales targets, without the establishment of a joint legal structure like a joint venture. Want to know more? Contact Us NOW!

These distinctions help clarify what can be expected from each partner type. For instance, while relying on agents for regulatory processes might be risky, expecting valuable marketing insights from strategic or hybrid distributors is realistic.

The Seven Pillars for Assessing Partner Capabilities

In parallel with categorizing your international partners, it's essential to assess them on seven specific topics:

1. Financial Stability

2. Organizational Skills

3. Marketing and Digital Expertise

4. Sales Capabilities

5. Logistics

6. Service

7. Regulatory, Quality, and Environmental Compliance

For instance, when evaluating marketing, consider factors like the level of engagement, time dedicated to your product line or brand, the presence of a dedicated brand manager, and the representation of your brand on their platforms and at events. At TechMedPro, we specialize in aligning you with partners that most closely match your business goals.

Best Practices for Alignment with International Partners

To complete the assessment process and maximize efficiency, take a step back to review your current international practices. Evaluate the tools available to your channel partners, the resources accessible to your strategic partners, and whether these resources are sufficient to achieve your goals in your top distribution countries. This step requires distinguishing between market potential and partner capability evaluations, a process that involves three steps:

1. Examine Each Partner: Define your expectations from each partner for the current year and the next three years.

2. Understand Partner Trajectory: Gain insight into their strategic vision and trajectory.

3. Assess Markets and Segments: Evaluate your current market position, where you aim to be in three to five years, and which market segments to target.

This thorough analysis helps identify gaps and opportunities for improvement. It may lead to the redefinition of partner missions, focusing them on specific market niches, and aligning your strategies accordingly. Additionally, look for skills that your partners have developed beyond your capabilities. Sharing best practices is a mutual process, and learning from your partners can be immensely beneficial.

Call to Action: Refining Your Export Strategy

Balancing short-term demands with a long-term analysis of market opportunities is a significant challenge for export managers and international sales directors. In a period of uncertainty across many medtech segments, it's essential to scrutinize your international expansion practices and make necessary adjustments. By refining your analysis and distinguishing between channel partner types, you'll uncover fresh insights and best practices that will not only accelerate sales when markets recover but also lead to a more precise allocation of resources and a more astute sales and marketing strategy.

If you're interested in exploring how TechMedPro can help your business with a pipeline of high-quality leads tailored to your target market, feel free to reach out today.