Europe Versus U.S. - Not All Healthcare Markets Are Alike

INSTALLMENT 1 of 2

In Installment 1 of this 2-part blog series, we’ll compare and contrast the distinct differences in Sales and Marketing for healthcare companies operating in European markets versus American markets … and what you need to know if you’re contemplating expansion into the U.S. market.

By TOM NOLAN

Partner

[April 30, 2024] – If you’re a European healthcare entity seeking to expand internationally to the lucrative U.S. market, you probably think you understand the target market [and you may] … but you probably don’t.

Where do we begin?

Well, how about, “Apple, meet Orange” and “Orange, meet Apple.” The differences between the two markets, and how to succeed in each, are night-and-day different for a variety of reasons. Let’s take a closer, compare-and-contrast look …

Because there is one centralized Federal agency — Food & Drug Administration [FDA] — in the U.S., and not individual state-based regulatory agencies, it’s understandable that overseas companies might assume the process in America is simpler and more streamlined than what they’re accustomed to. Here, what’s approved at the FDA level is approved in all 50 U.S. states. In Europe, there is no single, overarching approval agency like the FDA and healthcare organizations must understand and adhere to each European country’s unique demands and requirements for regulatory approval.

As they say across the pond, “If you’ve gotten approval for your product in one country, you’ve gotten precisely that … approval in one country.” Having said that, standards for approval are not as rigorous and stringent as what the FDA demands so, while in Europe you are burdened with developing multiple, country-specific strategies and tactics, the likelihood of your product being approved sooner and not later is significantly higher.

If only it were that easy in the good ol’ U.S. of A.

How Do You Put Wind in Your Sales?

A second fundamental challenge for those European companies seeking to gain FDA approval and go to market in the U.S., is the approach to sales. Should you employ an in-house, direct sales force; a 1099 team of sales professionals; or a hybrid of both? There are plusses and minuses for each option.

If you elect to go the 100% in-house route, your costs of employment will be significantly higher but you will, in essence, “own” your reps and be able to hold them fully accountable for their performance.

In the second scenario, if you choose to utilize a salesforce made up entirely of 1099s, you may or may not gain 100% commitment and drive to propel you toward achieving your stated goals. While your cost of fielding this type of sales force will be significantly less than hiring full-time W2 employees, the tradeoff is a caveat emptor conundrum: Buyer beware.

In the third scenario, as you might imagine, you get a mixed bag – in-house employees serving entirely at your direction and independents who may or may not be quite as dedicated and accountable.

One of our Partners at Excelerant Consulting recalled a situation in which an international spine company approached a very junior person to spearhead their entry effort to the U.S. market. Being young and relatively new to healthcare sales, this individual was reluctant to challenge leadership and tactfully manage objections from prospects. He was in over his head and the company’s expansion efforts stalled.

In another situation, a person hired to lead the way into the U.S. market, treated his role as a side gig and during our initial discussions, revealed he planned to soon take on a full-time role with a new company. As a result, he had little interest and energy invested in the “side gig” as he shopped for greener employment pastures. At the very least, he was unqualified and, to further complicate matters, he was uninterested and uncommitted. Again, the company’s expansion efforts bore no fruit.

In both cases, an up-front, candid conversation about the complexities and demands of the U.S. market with CEOs of both companies would likely have helped them avoid wasting their trust and dollars in the wrong person.

Don’t Get Lost in the Messaging

I believe the best way to tell your story is to build your messaging on a platform of unique product advantages versus existing products, and to demonstrate improved clinical/patient outcomes at a lower cost to healthcare providers and administrators.

In recent years, most supply chain products have required approval by Value Analysis Committees [VAC], so developing key messaging tailored specifically to the unique expectations of each VAC is paramount. More than ever, targeted key messaging addressing both clinical and economic outcomes is expected and demanded by the VAC.

As for how to get your compelling message across, it’s critically important to seek and gain referrals from existing customers in the U.S. healthcare system. It’s also equally important to gain exposure and endorsement from physicians who are key decision-makers or influencers to VACs. Some of these products earn PPI status [Physician Preference Items] and that holds significant “sway” with VACs.

European Health System versus U.S. Health System

In Europe, healthcare is nationalized. In America, healthcare is free-market-based. That’s another huge difference you must factor into your expansion plans into the U.S. market. Meanwhile, healthcare reimbursement by the U.S. government is going down, not up. That’s a trend that has played out for a number of years and all indications are reimbursements will continue to steadily decline in the years ahead.

Thus, identifying the right and reasonable ROI on your product is very, very tricky. You’ve got to find that sweet spot in which buyers are confident your price is a fair value, and your company is able to enjoy the highest reasonable profit.

It’s Not Only What You Know, It’s Who You Know

In Europe, healthcare companies are heavily reliant on what’s known as Dealers and are unaccustomed to the prevalence of Group Purchasing Organizations [GPO], Integrated Delivery Networks [IDN] and Regional Purchasing Coalitions [RPC] in the U.S., not to mention the difficulty involved in gaining an audience with key decisions-makers at each entity. That’s a big contrast right there.

Further, to have a reasonable shot at success, you must be able to accurately target the right GPOs, IDNs and/or RPCs or you’ll be spending spend time, energy and money just to spin your wheels unnecessarily. Determining this requires an insider’s understanding of which entity is the best to target, who the key decision-makers are, and what they’re looking for. To approach them without this knowledge is simply a waste of time.

So how do you navigate the often confusing and complex world of GPOs, IDNs and RPCs? You can hire full-time, seasoned and knowledgeable Senior Account Executives [at that aforementioned hefty price tag, ahem] or utilize the resources of a trusted, equally seasoned and knowledgeable healthcare consultancy as a far more cost-effective option.

Because you only engage the consultancy for as long as necessary , you don’t t have to fund costly overhead that comes with experienced W2 employees. Additionally, when you engage a consultancy, you are hiring an entire team of healthcare professionals with skill sets rooted and refined in a variety of healthcare disciplines and markets. Collectively, this group has more knowledge, firepower and connections than any single Senior Account Executive.

If you’ve got your eyes set on the lucrative U.S. market and you’re unsure where to begin, reach out today. We’d be delighted to chat with you!

info@excelerantconsulting.com

NEXT UP – In Installment 2, we’ll look beyond sales and marketing and compare/contrast healthcare-related Manufacturing and Regulatory differences between Europe and the U.S.

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ABOUT TOM NOLAN —Tom is an accomplished Senior Account Executive with a solid track record of driving sales for small-and mid-size medical device companies and has vast distribution experience in acute and non-acute verticals. He has worked with start-ups to Fortune 500 companies – VP Health Systems Cardinal Health, VP GPO Market McKesson, and previously founded his own consultancy that connected suppliers with corporate customer channels. Tom excels at driving sales share gains through insightful market analysis and contract structure tactics and has longstanding, trusting relationships with C-level executives at major Group Purchasing Organizations [GPOs] and Integrated Delivery Networks [IDNs].

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ABOUT EXCELERANT CONSULTING

Excelerant Consulting is the go-to organization for med-tech companies that need to position products and services successfully for value analysis committees, contract acquisition, and sales modeling and execution to commercialize the launch of medical devices or services with Group Purchasing Organizations [GPO], Integrated Delivery Networks [IDN], or Regional Purchasing Coalitions [RPC]. Clients rely on Excelerant to enhance their product positioning, navigate corporate contracting opportunities, and provide sales support to accelerate growth and profits.

For more info, contact Excelerant Consulting at info@excelerantconsulting.com