Finding and selecting medical device and surgical distributors in Europe

So you're ready to start selling in Europe. You have your documentation in order, you've met all requirements for CE Marking and you're ready to go.

But wait. Who will distribute your products? In the rush to meet the regulatory requirements for Europe, many companies forget that great products do not sell themselves.

Indeed, many companies are so focused on developing their product or meeting regulatory requirements that they don't leave enough time to properly research and screen medical device / surgical distributors. The result? Lost opportunities, disappointing sales and the potential to start your corporate brand down a damaging path.

Clients often come to us and say, "We want to sell our products throughout Europe."

One of the first things we ask them is not where they want to sell, but what they need to accomplish. It's not as simple as loading up a crate of goods, calling UPS and crossing your fingers. Before you start the initial search for medical device/surgical distributors in Europe, you need to ask yourself some questions. For example: Who are our current competitors in Europe? Where are they concentrated? How does our product compare to them in quality, cost, etc.? Is reimbursement an issue? How well served are each of the European markets already and what is the future potential in those markets?

Europe is a very attractive market, but also very challenging. The good news is that U.S. products are well respected and innovative products are in high demand. The exchange rate is also in favor of U.S. manufacturers, making U.S. products much cheaper to European buyers. Plus, you can't ignore the numbers. With more than 490 million people, it is 60% larger than the United States and there are about 67 million people over age 65 in Europe compared with 36 million in the U.S.

As a first step onto the continent, most companies gravitate toward Germany, France and the UK. That makes a lot of sense because those three countries account for nearly half of the combined population of the European Union. But those markets, while excellent targets, are more competitive and have fairly stagnant population growth. Depending on your product and the market dynamics, it might also make sense to look at smaller second tier markets (e.g. Spain, Poland, Slovakia, Czech Republic, etc.) Often, these countries are not as well served and have good growth potential due to rising incomes and other factors. But do not forget that Europe is unique. There are 27 different countries (plus Switzerland, Norway, Liechtenstein and Iceland which are not part of the EU) with 20+ official languages. Although the EU has come a long way in harmonizing regulations among member states, and the movement of goods among EU countries is unfettered, each has its own laws, languages and cultural values. Many people do not fully appreciate these differences and sometimes leave the market in frustration.

Which Type of Medical Device/Surgical Distributor?

After you have determined which countries make the most sense for you, the next step is to determine which type of distributor is best suited to meet your needs. For instance: Is your product relatively simple or complex? Will servicing be required? Do you want to start in one or two countries? Or is it imperative to have widespread medical distribution from the outset? Is the product new and unique to the European market? Or a high volume, low margin item?

Again, companies often skip (or feel pressured to do so due to time constraints) due diligence and simply want "a list of medical device or surgical distributors in Europe" or enter into an agreement with the first opportunity that presents itself (e.g. meet a distributor at a trade show).

But look at it this way: If you wanted to sell your house and you went online to get a list of real estate agents, wouldn't you want to know whether the agent 1) specializes in your neighborhood, 2) has a good reputation for service and 3) has a plan for actively promoting your home to potential buyers?

The process of finding a medical device/surgical distributor is no different. And while the internet is an amazing tool for research, there is no substitute for talking to someone over the phone or looking them in the eyes to really ascertain their intentions. After all, you would not hire a new employee based on a series of email conversations right?

That brings us back to the questions mentioned above. Determining which type of medical device/surgical distributor you need depends on how you answered these questions. If you want to focus on one to three countries and manufacture a fairly simple product, smaller distributors might make the most sense because they can sometimes better serve you. But if you need to get started in numerous countries and have a fairly complex, high margin product that requires customer and technical servicing, a master distributor with an established pan-European service network may offer the best option.

Remember, although a master distributor offers a wider network, there are more people with their hands in the cookie jar, and thus your margins need to be adequate to cover the additional layer of distribution. People often get caught up in the excitement of launching their product in Europe and forget a few basic things like market research, developing distributor profiles, etc.

Some people erroneously believe that because their product is a success in the U.S. that they will be fending off rabid distributors with a sharp stick. Unless your product is truly revolutionary to the market, you are the one doing the selling to the medical device/surgical distributor. Do your homework, create a profile of the distributor you want and put on your sales hat. Be prepared if opportunities present themselves because making the wrong choice can be costly, indeed.

Once you have determined what type of distributor you want and the countries you will target, you'll need to make an initial introduction, perhaps by email or mail. Introduce yourself, outline what you are looking to accomplish, the benefits of your product and request a time to speak in more detail. If your literature is not already translated, do so now and have it done by a professional firm that specializes in medical translations.

Once a dialogue has been established and the distributor has expressed interest, ask them what types of similar products they sell already, how long they have been selling in the market(s), percent of their sales from your target market and how they would promote your product.

Again, this is where you need to be a diplomat. You want to make sure the distributor is interested and excited about your product, but you also need to know that they are the best fit for your company and culture.

For instance, if your company is known for providing great service and you pick a distributor that is aggressive and moves a lot of product but provides lousy service, how will that impact your brand?

Also, don't automatically believe medical device/surgical distributors that say they can represent your product all over Europe. Some can, but ask for specifics.

Find out what percent of their sales come from your top three market choices. And before you make any decisions, ask for customer references and follow through on checking them out.

Don't be surprised if the distributor peppers you with questions too. After all, they want to make sure they are doing business with a reputable company that makes a quality product and will be able to deliver a reliable supply on time.

Cultural Differences

It seems painfully obvious, but Europe is not America. Even though the internet, email, cheap phone calls and the spread of English as an international language have made our world smaller, differences in how business is conducted exist and are quite profound in certain countries in Europe. You have to remember that, for the most part, the U.S. and Canada are very homogenous business environments. Business people in Phoenix are not much different in their approach from those in Orlando or Chicago.

But in Europe, the French are quite different in their approach to life and business than, say, the Spanish or Brits. (This topic alone could be an entire article or book).

Don't assume that when you call a medical device/surgical distributor in Italy that they will speak English. In the Netherlands, for example, about 75% of people speak English. But in Italy only 28% of people speak English, and in Spain, only 18%. In total, about 47% of people in Europe speak English, at least enough to hold a conversation.

Having someone on staff that is experienced with international business (or calling upon outside resources who have experience in Europe) is critical. Understanding the nuances of the different business cultures can have a big impact in determining whether your business will flourish or languish in Europe.

Okay, so now you have a better idea of how to go about researching medical device/surgical distributors in Europe. Now what? Read more about negotiating contract terms, prepare your product for international shipment, handle payment details, plan for returns/service issues and manage the distributor relationship.

November/December 2005