Going global: Taking your health product to international markets

Going global: Taking your health product to international markets

US medical device and molecular diagnostics (MDx) developers are often laser-focused on establishing and growing their businesses stateside, with little to no attention paid to some important international healthcare markets. For example, the medical device market was expected to reach $150 billion in 2017 in the US alone—certainly a sizable market. However, when looking outside of the US, the global medical device market was set to reach close to $400 billion. The key to successful international growth is understanding which markets are truly accessible to you and mapping out a go-to-market strategy for each region.

Over the last 15 years, I have helped several startups expand their businesses to more than 30 markets globally. It has been a hugely rewarding (but mostly humbling!) experience. In joining the MDisrupt team, I now feel I can help so many more companies cross borders with their technology in a strategic, risk-mitigated way. I can help you ask the right questions and make the right risk calls as you contemplate international expansion.

Diversify your portfolio

Why should you consider expanding your business internationally? More than simply expanding your total addressable market, it’s a risk mitigation strategy! While most US companies consider international expansion to be fraught with risk and complexity, they fail to realize just how volatile the US market is and just how quickly their best-laid plans can fail. One swift action by the FDA or one unfavorable coverage determination by a top US payers can compromise your game plan before you’ve even gone to market. Going international with your product is like diversifying your investment portfolio: you can mitigate the risk of unexpected downturns in any one market.

As a topical example, COVID-19 has not impacted all countries uniformly. In fact, while case numbers were steadily rising across Europe and the US, my partners in Singapore were already recovering thanks to early containment measures. As a result, Singapore, Australia and some other international markets fared much better in the face of this global pandemic and were able to resume normal business activities before the close of Q2’2020. If your business model relies on revenue from US hospitals alone—hospitals now completely overrun with COVID-19  cases—the pandemic may pose an irrecoverable threat to your company.

Look for easily accessible international markets first

When should you consider doing this? The short answer is as soon as you have the opportunity to do so without compromising your product and market developments in your priority market. For startups, this is always a difficult decision due to resource constraints. For instance, Brazil is a seemingly attractive opportunity, boasting Latin America’s largest hospital market, but you should be aware of its prohibitive import tariffs and product registration requirements.  Brazil may not present a near term opportunity given that  you will have to invest substantially in product regionalization, translations of collateral, and regulatory approvals. Always invest in your priority market development first, and at the earliest opportunity, identify an international market that is relatively accessible. A good choice is one which requires little product regionalization (perhaps the dominant language is  English) and one that doesn’t pose significant regulatory or product registration hurdles. One such example in Latin America is Colombia, the region’s third-largest economy and one that has business-friendly economic policies. You may be shocked to learn that some international markets are easier to sell into than your own!

Options for international expansion

There are three general approaches to international business expansion:

  • Direct to market: As the manufacturer, you will set up a local entity and sell your product directly to clients. This means you are responsible for all client support, client contracting, local marketing and hiring locally, etc.
  • Distributors: An in-territory company is contracted to represent your company under exclusive or non-exclusive distribution terms. Most distributor agreements are time-bound and subject to sales performance targets negotiated between the parties. The distributor manages all client relationships and generally assumes responsibility for marketing and client support. In this scenario you will need to support the distributor company with training and marketing materials and generally the distributor will expect a margin of 25-35%, depending on whether the product is an instrument, a consumable, or a medical device.
  • Tech-transfer (licensing): Under a licensing agreement, you will transfer intellectual property rights to a third party to manufacture, further develop and/or sell your medical device or molecular diagnostic. These agreements contain terms related to revenue expectations and a proposed royalty structure, as well as territory and renewal terms.

The go-to-market approach that is right for your company depends very much on the following factors:

  1. The stage of your product in the technology adoption life cycle. If your technology is so innovative that you find yourself in the “early market” phase, you don’t need a distributor, you need market developers. Market developers are key opinion leaders in your field who are critical to the early adoption and validation of your product (or concept). They are highly published and influential in their respective fields. When you’re in the early market phase, there is nothing more critical than building relationships with these key opinion leaders. They will help you build evidence and credibility behind your product and will help engage the “early majority” to cross the chasm (see Fig. 1). At this stage, your biggest competitive threat is the status quo, and a typical distributor will not spend time developing your market for you when they can sell something else more easily.On the other hand, if you have a product for which there are known or established predicates in-market, then you may find yourself in the “mainstream” market. In this case, it would be perfectly appropriate to seek a local representative for your company as they can help you set competitive pricing and competitive positioning for your product. At this stage, your biggest competitive threats are the incumbents who have been in-market for some time before you and who you will have to displace. Here, distributors are a good fit because there is an established market for your product which they presumably understand and know better than you.

Fig. 1

Going global: Taking your health product to international markets 1
  1. Local supply chain practices: In some countries, like Japan, you have to sell your products through an in-country distributor. In Japan, hospitals are contracted with local distributors for all of their medical and health tech supplies. The customary “kereitsu” structure remains prominent, and you must be familiar with this structure and partner with the right distributor to access your target clients. In other countries, import permits for medical devices are only granted to local companies, so you may have to work with a local distributor in these cases. Alternatively you may opt to have a third party like EMERGO file your device registrations, and designate them as the permit holders if you don’t want to be beholden to a commercial distributor.
  2. How well you know your market and your user: many companies in the “early market” stage make assumptions about what the market needs. Are you confident you understand the market problem your product is solving and furthermore, are you confident that the market will pay your asking price to fix it? (See our blog on the 8 common mistakes healthtech companies make when building their health products) You may find it beneficial to take a direct-to-market approach initially, to allow direct communication with your user base. These types of market insights may not be relayed to you if you are working through a distributor. You could find yourself with a distributor who is under-performing and you won’t understand why.
  3. Privacy laws: a growing number of countries now restrict the export of genetic samples and of genetic data. In fact, the enactment of GDPR by the European Commission in 2018 has set in motion tighter privacy laws around the world. If you are a molecular diagnostics developer, this may cause you to have to consider either buying or partnering with a local lab to both process test samples and interpret test results. It may mean localizing your database, too. If the market opportunity isn’t sizable enough to consider setting up your own operations, then an out-licensing model may provide a viable path to market.

Date before you marry: finding the right distributor for your company

Should you determine that the distributor/channel model is the best path to market for your company, you should plan to invest some time doing your due diligence on prospective partners. Getting this step wrong can cost you greatly and can cause irreparable harm to your client relationships. Here are some things to consider:

  • Network: Inquire about current sales channels: who are the distributor’s current customers? How well does their client list overlap with your target list? How well connected are they with relevant key opinion leaders in their region? Inquire about their current product roster and sales performance to gauge their level of penetration in the market and their ability to close and manage large accounts.
  • Reputation: your product may be best-in-class and best-in-market, but if you’ve tethered yourself to a partner who has soured relationships with potential clients in the past, you are wasting your time and may not even know it. You should ask for a client reference list and ask institutional partners in that region for any feedback about the distributor.
  • Resident expertise: what skill set is needed to engage the top clients and train them on your product? Does the distributor have those resources in-house? For instance, if you are selling a pharmacogenomic test, you will want to look for distributors who have resident pharmacists or pharmacologists on staff.
  • Communication: There are a few rules of engagement when dealing with international clients and partners: Learn to pronounce their names properly and ask them for help if you’re unsure. This may sound basic, but it’s not. It’s incredibly important for showing respect, and it’s also very helpful to learn how to pronounce foreign names, because then you can track conversations more effectively. Make an effort, as they do with you. Second, if you don’t speak the local language(which is often the case), make sure that your point of contact is fully fluent in your language. Those 11 pm phone calls will be much easier.
  • Accreditations: Select a partner who will be a good steward of your company’s brand. Ask them about their company’s values and ask them what other companies they are representing. You should also ask for proof of any relevant accreditations (ISO, CLIA/CAP, NATA, as the case may be).
  • Salesmanship: ask them to pitch you your own product, slide deck and all. You want to see a) whether they have done their homework and b) how much they understand your product’s value proposition.
  • Street-price: In some countries (Hong Kong, Japan), the distributor model is layered, the result of which is an inflated street price. Make sure you agree on a street /retail price range.
  • Trial period: There is mutual benefit to both the distributor and the manufacturer to evaluate the business relationship with a short pilot or a trial period. The distributor can begin marketing your product and understanding what resources will be needed to successfully sell it. Throughout this period, you will be able to gauge the distributor’s effectiveness. In my experience, you can catch several red flags through this process!

Going global with your health tech product can be transformative for your business and can help you absorb inevitable market fluctuations. A carefully crafted strategy which considers the status of your technology’s adoption life cycle and a risk-benefit analysis of the path to market (direct, channel, or out-license) is of critical importance to the success of your international expansion.

Morgan Donaldson, MDisrupt

Morgan Donaldson, VP of Business Development, MDisrupt

Morgan Donaldson is a business development executive with more than 15 years of experience bringing genomics technologies and molecular diagnostics to global markets (EMEA, LATAM, APAC, North America). She has developed international sales channels, managed business development teams, led product developments, led contract negotiations with Fortune 500s and participated in due diligence assessments. She has led the international growth strategy for several genomics startups in the Bay Area and in Canada.

Whether you are an international company and looking to bring your health product to the US, or a US company considering global markets, MDisrupt can help you ask the right questions, prioritize target markets and de-risk the process for you.

Talk to us—we can help.

What Employers Should Know About Covid-19 Testing When Bringing Employees Back To Work

What Employers Should Know About Covid-19 Testing When Bringing Employees Back To Work

The COVID-19 pandemic has played out with unexpected twists and turns. The truth is, with a novel infection such as this one, we have to learn as we go along. This has been apparent as we’ve watched public health agencies, state and federal governments and essential businesses respond to the pandemic every step of the way. This is also true for how we track the infection and its immunity.

Employers need guidance on COVID-19 testing. Companies are asking who should we test, when and how often should we test, what do we do with the results and, what kind of testing should we use?

Types of testing for COVID-19

It is important to understand how we test for COVID-19 infection and how we test for presumptive immunity to the infection. There are two different types of tests – diagnostic tests and antibody tests.

  1. A diagnostic test can show if you have an active coronavirus infection and should take steps to quarantine or isolate yourself from others. Currently there are two types of diagnostic tests – molecular (RT-PCR) tests that detect the virus’s genetic material, and antigen tests that detect specific proteins on the surface of the virus.
  2. An antibody test looks for antibodies that are made by the immune system in response to a threat, such as a specific virus. Antibodies can take several days or weeks to develop after you have an infection and may stay in your blood for several weeks after recovery. Because of this, antibody tests should not be used to diagnose an active coronavirus infection. At this time researchers do not know if the presence of antibodies means that you are immune to the coronavirus in the future.
What Employers Should Know About Covid-19 Testing When Bringing Employees Back To Work 2

The FDA is also tracking new diagnostic tests available with alternative methods and benefits.

  • Rapid, point-of-care diagnostic tests use a mucus sample from the nose or throat but can be analyzed at the doctor’s office or clinic where the sample is collected and results may be available in minutes. These may be molecular or antigen tests.
  • At-home collection tests are prescribed by a doctor but allow the patient to collect the sample at home and send it directly to the lab for analysis.
  • Saliva tests allow a patient to spit into a tube rather than get their nose or throat swabbed. Saliva tests may be more comfortable for some people and may be safer for health care workers who can be farther away during the sample collection.

Reliability of these tests have improved and whereas symptomatic testing is usually paid for by medical insurance carriers, there are significant gaps in coverage for other types of testing (see below). Testing for asymptomatic employees (and dependents) is usually not covered. Guidance on diagnostic testing has shifted over the past several months in the United States as more testing becomes available. Most of this guidance, notably, is intended for health care professionals. 

The guidance and use of antibody (immunity) testing is still evolving. There have been more questions around reliability of these tests and the dust has not settled on how or whether employers should leverage antibody (presumptive immunity) testing. 

What does the sensitivity of a Covid-19 test mean?

Sensitivity measures how often a test correctly generates a positive result for people who have the condition that’s being tested for also known as the “true positive” rate. 

A test that’s highly sensitive for current COVID-19 virus infection will flag almost everyone who currently has the virus and not generate many false-negative results. 

For example: a test with 90% sensitivity will correctly return a positive result for 90% of people who currently have the virus, but will return a negative result — a false-negative — for 10% of the people who currently have the virus and should have tested positive.

What does the specificity of a Covid-19 test mean?

Specificity measures a test’s ability to correctly generate a negative result for people who don’t have the condition that’s being tested for also known as the “true negative” rate. 

A high-specificity test for the COVID-19 virus will correctly rule out almost everyone who currently doesn’t have the virus and won’t generate many false-positive results. 

For example: a test with 90% specificity will correctly return a negative result for 90% of people who currently don’t have the virus, but will return a positive result — a false-positive — for 10% of the people who currently don’t have the virus and should have tested negative.

Testing for COVID-19 infection in the workplace

It should be noted that much of the return to work preparedness and business continuity planning involves making adjustments to workplaces, operating procedures, administrative protocols and the requirements for work-from-home versus onsite work. The Occupational Safety and Health Administration (OSHA) points out that employers should continue to implement the basic hygiene, social distancing, workplace controls and flexibilities, and employee training described in this guidance in ways that reduce the risk of workplace spread of COVID-19, including by asymptomatic and pre-symptomatic individuals.

In the OSHA Guidance to Returning to Work [4045-06 2020] employers may consider implementing strategies to reduce risks to the safety and health of workers and workplaces from COVID-19 that include conducting diagnostic testing. “Neither the OSH Act nor OSHA standards prohibit employer testing for diagnostic testing, if applied in a transparent manner applicable to all employees (i.e., non-retaliatory)” the guidance affirms. 

Because of the limitations of current testing capabilities, employers should act cautiously on negative test results. OSHA is quick to point out that employers should not presume that individuals who test negative for COVID-19 infection present no hazard to others in the workplace. 

OSHA also provides guidance and resources for employers and employees  on the control and prevention of COVID-19 by industry. This guidance applies to all workers and employers, while other sections focus on those at lower risk of exposure and those with increased risk of exposure, including workers involved in:

  • Airline operations
  • Border protection and transportation security
  • Business travelers
  • Construction
  • Correctional facility operations
  • Dentistry
  • Emergency response and public safety
  • Environmental (i.e., janitorial) services
  • Farmworkers (developed in partnership with CDC)
  • Healthcare
  • In-home repair services
  • Laboratories
  • Manufacturing (developed in partnership with CDC)
  • Meat and poultry processing (developed in partnership with CDC)
  • Postmortem care
  • Retail operations
  • Solid waste and wastewater management 

Testing asymptomatic employees for infection

According to the May 2020 CDC Activities and Initiatives Supporting the COVID-19 Response and the President’s Plan for Opening America Up Again, testing of asymptomatic individuals is a growing consideration as the role of asymptomatic and subclinical infections in transmission becomes more apparent. 

Emerging evidence suggests that asymptomatic infections may play an important role in the epidemiology of the disease. Nevertheless, it is important to define the circumstances where testing asymptomatic persons is likely to be helpful in controlling the COVID-19 pandemic. 

The CDC provides further clarification that effective testing programs will focus on (1) persons with an increased likelihood of infection and (2) settings with particularly vulnerable populations, including but not limited to the following: 

  • Contacts of known (symptomatic or asymptomatic) cases. This may include testing of contacts going back one to two weeks before the onset of symptoms, particularly contacts who work with vulnerable populations.
  • Staff of long-term care facilities. Periodic testing and sentinel surveillance in these settings may serve to detect outbreaks early in this setting, where devastating outbreaks are known to occur and to be associated with high rates of asymptomatic infection. 
  • Other healthcare facility workers and first responders. Healthcare facilities may consider testing staff periodically, starting with staff in high traffic, high risk areas such as emergency departments.

Workforce: CDC guidance on “vulnerable individuals”

As workplaces consider re-opening it is particularly important to keep in mind that some employees are at higher risk for severe illness from COVID-19. These vulnerable workers include individuals over age 65 and those with underlying medical conditions (regardless of age). Such underlying conditions include, but are not limited to, chronic lung disease, moderate to severe asthma, hypertension, severe heart conditions, weakened immunity, severe obesity, diabetes, liver disease, and chronic kidney disease that requires dialysis. Vulnerable workers should be encouraged to self-identify, and employers should avoid making unnecessary medical inquiries. Employers should take particular care to reduce vulnerable workers’ risk of exposure to COVID-19, while making sure to be compliant with relevant ADA regulations.

OSHA recommends that employers should identify workers who may be at increased susceptibility for COVID-19 infection or complications and consider adjusting their work responsibilities or locations to minimize exposure. Other flexibilities, if feasible, can help prevent potential exposures among workers who have diabetes, heart or lung issues, or other immunocompromising health conditions. 

Serology testing for immunity to COVID-19

The CDC recently acknowledged that serologic testing may play a role in a back-to-work strategy provided it can be shown that serologic testing can reliably infer immunity. This immunity may not need to be absolute: protection against severe infection may be enough even if immunity against reinfection isn’t reliable or durable. Some employers, and some industries in particular are counting on serologic testing for immunity.

While there appears to be considerable public optimism that serologic testing will allow return to work without the need for PPE or other precautions, there are many unknowns at this early date that limit implementation of serology for this purpose. 

There is a need for high-level consensus on the role of serologic testing in a back-to-work policy. Consensus is also needed on a plan for how to provide documentation of that immunity, be it through federal- or state-based immunity registries, digital proof-of-immunity, or physical documentation such as “immunity certificates”. Despite these limitations, continued interest in the use of serologic testing in a back-to-work policy is likely.

In its most recent guidance, however, CDC Interim Guidance said that antibody test results “should not be used to make decisions about returning persons to the workplace.” 

In light of this CDC guidance, under the ADA (Americans With Disabilities Act) an employer may not require antibody testing before permitting employees to re-enter the workplace. An antibody test constitutes a medical examination under the ADA. An antibody test at this time does not meet the ADA’s “job related and consistent with business necessity” standard for medical examinations or inquiries for current employees. Therefore, requiring antibody testing before allowing employees to re-enter the workplace is not allowed under the ADA.  

Of note the EEOC acknowledges that an antibody test is different from a test to determine if someone has an active case of COVID-19 (i.e., a viral test).  The EEOC has already stated that diagnostic COVID-19 viral tests are permissible under the ADA. The EEOC will continue to closely monitor CDC’s recommendations, and could update this discussion in response to changes in CDC’s recommendations.

What’s covered?

As of this writing, most insurance carriers will cover COVID-19 testing under certain circumstances and employers should factor costs into their plans to include these tests in business continuity planning and execution. Employers should be sure to contact their insurance carrier(s) and understand exactly what is and what is not covered under each of their health plans. Insurance testing for coverage will almost certainly be a moving target, so employers should plan to monitor insurance carrier communications and postings on a regular basis.

Medical insurers typically don’t cover medical services that aren’t ordered by a health care professional, or that aren’t considered medically necessary in fully insured, or through medical insurance administered self-funded plans. As an example, pre-employment testing for job requirements are usually paid by the employer themselves. Some insurers and health plan administrators explicitly exclude surveillance testing for their members.

According to a recent AXIOS article, UnitedHealthcare, for example, says that “we will cover medically necessary COVID-19 testing at no cost-share…when ordered by a physician or health care professional.”

  • BlueCross BlueShield of South Carolina will cover diagnostic tests “when ordered by an attending health care provider and provided at the point-of-care for individuals who are symptomatic and are concerned about infection.”
  • Blue Cross and Blue Shield of Kansas City will cover both diagnostic and antibody tests “with no cost share if you have symptoms consistent with COVID-19 and your physician orders the test.” 
  • BlueCross BlueShield of Mississippi  says it won’t cover tests that are “not medically necessary,” which includes tests for asymptomatic people as part of public health monitoring efforts or screenings for returning to work. 

Not every insurer has added coverage limitations. Aetna, which is owned by CVS, has waived cost-sharing for all diagnostic tests, which “can be done by any approved testing facility.”  

Partnering with employers on COVID-19 testing

Employers are interested in partners who can help them deploy, manage and track testing. If new testing technology enables that, it must have the proper regulatory approvals solidly in place. FDA approval is paramount. Healthtech companies or test provider must remember that there are tremendous liabilities attached to all aspects of this testing- companies are looking for demonstrable reliability and sufficient specificity and sensitivity.

Employers need to follow CDC’s and the Occupational Safety and Health Administration (OSHA) guidance for reducing workplace exposure for all employees. All decisions about following these recommendations should be made in collaboration with local health officials and other State and local authorities who can help assess the current level of mitigation needed based on levels of COVID-19 community transmission and the capacities of the local public health and healthcare systems. In addition, specific industries may require more stringent safety precautions. Finally, there may be essential workplaces in which the recommended mitigation strategies are not feasible.

It is important for any test provider   to fully appreciate the regulatory landscape that employers face. This is the time to be a true partner.

What Employers Should Know About Covid-19 Testing When Bringing Employees Back To Work 3

Ronald S. Leopold, MD, MBA, MPH, Physician Consultant

MDisrupt Advisor and Senior Consultant Specializing in Employee Benefits, Medical Cost Solutions, New Medical Technology

As a credentialed and experienced professional, Dr. Leopold brings credibility and a breadth of knowledge as a consultant, client advocate, and marketplace spokesperson. He is an industry thought leader in employee benefits and health and productivity.

Specialties: Medical Costs, High Cost Claimants, New Medical Technologies, Employee Benefits, Heath and Productivity, Population Health Data Analytics, Global Workforce, Generations in the Workforce, Financial Wellness, Thought Leadership, Public Speaking.

At MDisrupt we can help, If you are an employer wanting to deploy back to work protocols and would like expert guidance – please contact us.   

If you are a test developer wanting to access the Employer market we can help you understand the strategies and protocols necessary to be successful.

Talk to us—we can help.