market entry strategies in apac

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Market entry strategies in APAC

Jose Sitjes, Regional Business Development Director MD&D DKSH Healthcare

Zurich, September 27, 2016 Opportunities and challenges for Medical Devices Companies expanding to Asia Third Cicor Innovation Insights Symposium

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Text

A continent united by diversity

Asia’s many faces

A collection of diverse markets with unique characteristics

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Population per market

Source: 2012 World Bank data

ASEAN: the world’s third largest market

Japan 128 m

USA 314 m

EU 508 m

India 1,237 m

China 1,350 m

ASEAN 608 m

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Disparity in healthcare spending

Myanmar 14

Vietnam 111

Thailand 264

Taiwan 2,479 m

Singapore 2,507

Annual healthcare spending per capita (USD)

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69% of the world’s ‘megacities’ (population >10 mln) are in APAC

1Income greater than USD 3,600 per annum; 2Measured as disability-adjusted life years (DALYs) lost to COPD, asthma and lung cancer Source :IHS Economics (2015); World Bank; McKinsey Insights

Growing demand for healthcare in Asia Pacific

Large population

More than 50% of the population, nearly 3.7 billion people, live in APAC

Urbanization Aging society

Baby boom Affordability Morbidity

By 2025, APAC will have 1.1 billion people older than 50 years

Each year 65 million babies are born in APAC

By 2015, more than 50% of APAC, or 2 billion people, will be in the consuming class1

APAC accounts for nearly two-thirds of the global disease burden from major chronic respiratory diseases

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ASEAN healthcare market: united by differences

• Low GDP

• Poor healthcare infrastructure

• Key healthcare concerns - basic

public health

• High GDP growth

• Moderate and fast growing

healthcare infrastructure

• Key healthcare concerns –

capabilities and infrastructure

• High GDP

• Well developed and mature

healthcare infrastructure

• Key healthcare concerns – cost

effectiveness and outcomes

MM LA

KH

SG MY TH

ID

PH VN

Emerging High growth Developed

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Source : Business Monitor International; GlobalData (Oct 2015); Health Research International 2015; McKinsey analysis

APAC will outgrow the EU to be the second largest market for medical device by 2020

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Realities facing MedTech industry in Apac

Frugal Spending Average Healthcare spend per capita

APAC 376 $ -EU 4, 018 $

USA 9,145 $

Intense

competition

10+ Local competitors with revenues $ 1 b +

Regulatory complexity &

under capacity China’s regulatory staff

workload 20X relative to US

Inadequate infrastructure

India will take 85 years to achieve OECD physician density

Multi–segment markets

80% of emerging Apac population can not afford MedTech solutions designed for developed markets

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Evolving Emerging Markets

Market entry SME ‘s view

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My personal market entry … into Myanmar

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EXCLUSIVE

DISTRIBUTOR

MULTIPLE

DISTRIBUTORS

Determining your ambition for each country Le

vel o

f inv

estm

ent

Level of direct control

HYBRID MODEL

( 4PL)

DIRECT MODEL

Time

Market entry options

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Our experience goes far beyond distribution

DKSH has helped companies

enter new markets for 150 years

DKSH registered 700 new

healthcare products in Asia in 2014

DKSH has more than 160 MD&D

client accounts

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Präsentationsnotizen

Why are we from DKSH in position To talk about market entry strategies? [read] On average We support 30 healthcare companies To enter new markets Every single year

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Many ways to partner for market entry…

Distribution and logistics

Sales • Dedicated team • Shared team

3PL


Credit & collection

4PL ( Hybrid model)

Contract Sales Organization (CSO)


Credit collection

Sales • Dedicated team • Shared team

Marketing

Full Agency

Partner buys products Service fee: sales margin


Credit & collection

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Since we play in the field of distribution and commercial partnership Give you some more background on the business models that are most demanded But I want to highlight that I’m not here to sell or promote them over other strategies 3PL: outsource importation, product storage, order processing and delivery to customers (pharmacies, hospitals) 4PL: … Outsourcing your sales force & contracting a dedicated team of reps through a partner or buying share of voice in an existing shared team. Is one form of commercial partnering that is popular for OTC companies throughout Asia This so called “CSO” model is often combined with a 4PL but it can be a stand-alone Marketing still in-house In a Full Agency or Full Services partnership distribution & commercial services are being outsourced. This arrangement goes a long with a transfer of product owner ship DKSH buys the products at an agreed transfer price And allocate A&P expenditures independently

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New to Asia Expanding in Asia Established in Asia

Who SME not yet present in Asia

SME or MNC present in 1-2 Asian markets

MNC present in most or all Asian markets with established sales and marketing teams

SME: Small and medium-sized enterprises MNC: Multinational corporations

Your existing Asia footprint matters

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Now that I’ve introduced different entry strategies and partnering models I want to share some insights on which strategy is applied by whom Looking at the existing presence in Asia has proven to be a fruitful differentiator We differentiate between

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Most common entry strategies

New to Asia

Expanding in Asia

Established in Asia

Current presence in Asia

Outsourcing level

3PL 4PL 4PL + CSO Full Agency

Brand building & demand creation being outsourced

Go alone “light”

Go alone Mature brand

outsourcing

Portfolio optimization

Brand building & demand creation being outsourced

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New to Asia: Lack of local knowledge typically outsource a broad portfolio of services when entering a new market Expanding in Asia: Leverage insights from other Asia markets Setting up an own rep office with regulatory function Outsourcing sales activities in one of the channels (typically: trade channel – dispersed) Established Market entry more often -> launching new brands. Existing resources can be leveraged while outsourcing distribution & collection Due to cost pressures we see more and more companies outsourcing Trade channel sales teams nationwide or rural areas while focusing on key cities & hospital themselves Mature brand outsourcing to focus own resources on new / blockbuster products Optionality: flexibility over time Start as FA, after 3 years change sto

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Market assessment

Regulatory feasibility

Competitive analysis

Target setting,

resource allocation

Customer selection

Go to market plan

Steps to consider when entering a market

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Summarize findings from previous steps and build a launch plan

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To summarize…

You have options

Existing Asia presence matters

What’s your priority?

Fit with regional / global strategy

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Highlight that you have options … Regardless of which strategy you choose you should consider certain steps when entering a new market Let’s look at some of them now

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Key success factors for market entries

1 Right team with local market knowledge

2 Be aware that regulatory road blocks can have a big impact

3 Base your decisions on real first hand insights

4 Take channel economics into account

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…able to identify the right target customer to drive the initial sell in 4. what drives independent pharmacist recommendation? … pharmacists are business men too. If your product generates a lower margin for the pharmacist than competitor brands … don’t be surprised if they recommend these products instead

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Thank you for your attention

Jose Sitjes Regional Business Development Director Medical Device Business Unit Healthcare DKSH Management (Thailand) Limited 16th Floor Fantree 3 Building, 2106 Sukhumvit Road, Bangchak, Phrakhanong, Bangkok 10260, Thailand [email protected] www.dksh.com

http://www.dksh.com/

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Disclaimer

Due care has been used in preparation of this presentation and DKSH makes every effort to provide accurate and up-to-date information. Nevertheless, this presentation may be subject to technical inaccuracies, information that is not up-to-date or typographical errors DKSH does not assume liability for relevance, accuracy and completeness of the information provided. DKSH reserves the right to change, supplement, or delete some or all of the information on this presentation without notice The layout, graphics and other contents in this presentation are protected by copyright law and should not be reproduced or used without DKSH’s written permission

market entry strategies in apac

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