The healthcare industry is highly competitive across nations, and top players are dabbling with various regulatory changes. This has got healthcare companies rapidly investing in and extending their presence in not only developed economies, but also in emerging ones like Asia-Pacific (APAC). Leading players have highlighted the growth potential and market opportunities across the length and breadth of these geographies.
However, breaking into a new market is not always easy, whether it’s a completely new region with a variety of cultural, linguistic, and economic factors to consider, or simply a new age demographic. Creating effective market entry strategies helps firms in defining and identifying their consumers, service providers, and payers, allowing them to design appropriate sales and marketing strategies.
In this article, we will uncover the major barriers to healthcare market entry and guide you with a few key tips to help mitigate them.
Major barriers to healthcare market entry
In developing nations
1. Dynamic regulatory landscape
Governments worldwide take a keen interest in healthcare market sectors, and new entrants may have to jump through several legal hoops before they can enter any healthcare market. New market entrants face additional financial and administrative challenges, when it comes to licenses, permissions, compliance, etc. Further, in developing regions such as the APAC, regulatory processes are being worked upon and new laws are being created in order to accelerate regulatory examinations and approval.
More markets in the APAC region, are showing interest in joining the International Council on Harmonization (ICH), with an aim to integrate the best practices from competent regulatory authorities like the US FDA. Given how the regulatory environment in various regions is changing as we speak, industry players often find it difficult to keep up.
2. Emergence of healthcare technology assessments
Health technology assessment (HTA) is becoming more popular in major economies, as it evaluates the qualities and impact of a health technology using systematic and precise techniques. There is a larger demand for HTA reviews and the use of evidence in them, both from randomized controlled trials (RCTs) and from real-world evidence (RWE), and this trend is expected to continue in the next 5–10 years.
However, conducting HTAs in such regions is time-consuming and ends up expanding the overall timeline of bringing a drug or medical device to market.
3. Evolving drug price control regulations
Price control is a significant concern in HTA reviews, and financial risk-sharing agreements are frequently put in place. In certain regions such as China and in Middle-Eastern countries, drug pricing is completely determined by the government.
For instance, in China, as per the 2019 NRDL (National Reimbursement Drug List), drug pricing is established solely by negotiation. The 2020 Interim Measures unequivocally state that the payment standard for medications with exclusivity will be decided through negotiation, while the payment standard for drugs without exclusivity will be determined through bidding.
4. Pricing disparities between innovator v/s generic drugs
Developed countries employ generic drugs as competition to keep pharmaceutical costs down for innovator drugs. However, in developing nations, the pricing disparities between innovator brands and generics are being investigated, as generic name drugs typically cost about 80% to 85% less than innovator drugs. This on-going process of investigation is especially noticeable in China and Taiwan, where the goal is to eliminate the discrepancy.
In China, for example, the government is already working to reduce the prices of innovator drugs, making them more accessible to individuals of various socio-economic backgrounds.
In developed nations
1. Keeping track of changing payment schemes, economic models and policies
The payment model of healthcare systems varies from country to country. The payer can be the government, such as the US government’s Medicare program, the State (Medicaid), one’s employer’s health insurance, or their own resources.
The rise of the value-based care model, on the other hand, is transforming the dynamics of the healthcare industry. In this model, healthcare organizations are compensated for keeping the general population of patients healthy, rather than for treating individual patients as a service. It is critical for healthcare organizations to understand the payment model of the market they wish to enter, as this will have an impact on all future strategies throughout their value chain.
On the other hand, in the European Union, a key goal of most member countries’ health policies is to regulate and control the cost, access, and usage of new and expensive medical equipment. Despite this unifying goal, the means by which it is achieved vary greatly among countries due to disparities in healthcare, pricing, and payment systems, as well as local industry, economic policies and objectives. Healthcare companies need to be aware of the combination of metrics used as per the country’s economic and industrial standing, as well as the characteristics of their health policy and health care system.
2. Greater number of people involved in purchase decisions
According to the Conference Executive Board (CEB), in a regular business, around five people are involved in making a purchase decision. Healthcare, on the other hand, is not a typical industry. In healthcare, buyers include not only physicians but also nurses, technological professionals, those involved in IT and hospital management, and so on. It is fairly common in this industry for 10 or more persons to be involved in such decisions. As a result, additional time is required before purchasing decisions can be made, creating a market entry barrier.
A patient-centered environment, on the other hand—whether in a medical practice or a hospital setting—includes more hard-stop decision points for the healthcare consumer. This process includes choosing an insurance plan, reviewing and selecting a provider (typically more than one), understanding the diagnosis, and, to a lesser or greater extent, accepting and complying with the course of treatment and/or medication.
With the entire process and experience set to be assessed and rated in terms of clinical outcome and patient satisfaction, healthcare organization must make sure that their marketing and sales strategies are patient-centric and well-informed of the current consumer behavior and purchase patterns.
3. Difficulty in connecting to buyers
Buyers in certain healthcare sectors may be barred by contracts with existing companies from doing business with competing healthcare firms, or they may be greatly incentivized to do so. This makes it difficult for a new market entrant to get their products in front of patients so that they can be adopted.
The key to breaking this barrier is an effective marketing strategy. This entails doing an in-depth assessment of the patients’ needs, finding latent physician needs, and providing novel health services that have not been explicitly requested by the stakeholders. Rather than starting with products or services, modern marketers base their strategies on buyers. They are more concerned with developing a long-term relationship than with completing a single transaction. Their goal is to increase buyer satisfaction so that they will return to the same supplier.
4. Beating existing dominant players
In most developed nations, the healthcare sector has several dominant players who can be significant barriers to market entry and make it even more difficult for nascent firms to penetrate the market. These players typically wield a considerable degree of power over buyers’ purchasing decisions. Many dominant companies are also actively pursuing consolidation, buying up market share and increasing their bargaining power.
As a result, a healthcare company must obtain holistic competitive insights before entering a new market to assess the strengths and weaknesses of the market’s leading players and design their strategies accordingly.
Tips to mitigate healthcare market entry barriers
Before product development, a healthcare firm must identify the entry barriers, and develop strategies to overcome them, prior to signing off on significant investments. However, there is no one-size-fits-all strategy when it comes to entering new markets in healthcare. To effectively overcome entry barriers, strategies must be developed to adapt precisely to a specific market. Here are some pointers to get you started:
- Gather primary feedback from patients on system shortfalls to assess demand gaps.
- Leverage industry networks and relationships with healthcare key opinion leaders (KOLs) to identify market opportunities.
- Focus on providing personalized care by leveraging existing patient insights.
- Understand market entry strategies implemented by leading industry players and use that to determine suitable pathways for entering new markets.
- Develop a financial model entailing forecasted revenues, operating expenses, investment expenses, and investment returns.
How Netscribes can help
Any market entry strategy should be supported by comprehensive and quality-assured data sources. Furthermore, the data is meaningless unless appropriate filters and analytics are used to generate meaningful insights. This brings savvy healthcare companies often partnering with market research firms like Netscribes.
Netscribes provides full-service healthcare market research services to global firms across varied therapeutic areas. With experience working across more than 57 countries, 86 specialties, and 60 medical conditions and ailments, we couple local expertise with rich insight from carefully verified KOLs, including physicians, allied healthcare professionals, administrators, thought leaders, and payers, to help your firm develop the right market entry strategy. To know more about how we can help you, contact us today.
Based on insights by Anil Mudili, Manager – Healthcare, Market Intelligence team, Netscribes.
