Key considerations for entering the US medtech market

October 28, 2021
Business Affairs
Elke Rehbock
By Kiran Johnson

Elke Rehbock is a partner at Dentons US LLP where she co-chairs the manufacturing sector. She focuses on representing corporate and financial institution clients, both US and foreign, in a variety of cross border corporate and finance matters. HealthCare Business News checked in with her to get a better sense of the US medical technology market, and key considerations for companies trying to get involved.

HCB News: The sheer size of the market in the US, and a unified market at that, attract a lot of foreign investment, including medical technology companies. What are some trends you’re seeing today and why are they happening?
Elke Rehbock: What most stands out right now in the manufacturing sectors, including medtech, is that companies are dealing with tremendous pressures on their supply chain. COVID brought a number of disruptions, such as freight bottlenecks, closed borders and stay at home work. We’re now challenged with supply chain issues beyond what COVID initially triggered. For medtech companies, this is an even bigger issue because many of the parts they depend on are highly regulated. Consequently, not only can these companies not get their desired parts, but regulations make substitutions more challenging. More generally, companies in the industry are bringing production and choosing their suppliers closer to where the need is. We’ve also seen companies build flexibility into their contracts to allow for increased supply from one supplier over another, if one falls short.

HCB News: After committing to entering the US market how do companies typically get started? What is the right team to think through such potentially sizable investments?
ER: The initial team needs to include someone who understands the local market. Coming to the market without local guidance creates room for a lot of misunderstandings, resulting in many different missed opportunities. The starting point to fixing these problems is lining up the right marketing, real estate, sales and legal support.

HCB News: It seems like a simple question, but how do companies get their products into the US market?
ER: That depends partially on how the company enters the US market. New market entrants have several options ranging from direct sales, sales representative on a commission basis or go through a distributor. Acquiring a US entity is an attractive alternative for those seeking to leverage an existing structure. A downside is the initial cost and the need for management to integrate companies across all fields: business, marketing, IT and really every function.

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