Gaining Market Penetration with Right Medical Device Distributors in ASEAN

Medical Device Distributors ASEAN

Having the right medical device distributor is one of the important criteria for successful market penetration in ASEAN markets. For medical device markets, which are often highly complex with technical details and regulatory requirements, identification of right distributor partner becomes crucial. The hurdles include cultural issues, language challenges, lack of clarity on regulations and guidelines, uncertain government policies and supply chain.

Unfortunately, identifying a suitable distributor is also the most painful part while developing ASEAN market entry strategies. For a foreign medical device company comes across with many different layers of uncertainties before (and if) identifying the right match.

Indonesia and Malaysia are significantly different from each other in terms of medical device market opportunities, though they both offer unique opportunities ASEAN region. Both these two countries also pose a combination of all the challenges mentioned above and more, which makes them ideal markets for assessing ASEAN market potentials.

Indonesia and Malaysia: Opportunity Landscape

Indonesia is described as the world’s largest archipelago, with about 17,000 islands spanning across over 5000 kilometres. This geography poses significant logistics challenges in addition to language, regulatory and cultural challenges. Shipment of medical devices to remote provinces such as Papua can demand significant planning to make the delivery fast and cost effective.

Logistics costs for several medical devices and consumables may even exceed actual device costs. Distributors often shy away from taking orders placed by hospitals and clinics in remote areas. Though challenges are significant, ignoring Indonesia is not an option for most medical device companies considering the country’s 250 million plus population.

Indonesia is currently a fast growing healthcare market as the government is formulating its strategies to achieve universal health care by 2019. This is offering extensive opportunities for pharmaceuticals and medical devices companies worldwide. The country has around 10,000 community health care centres (locally known as puskesmas). Many of these are currently being converted into small hospitals with inpatient facilities. Investments from the government as well as private players have increased tremendously to set up new hospitals, and clinics across the country. The government is also investing in infrastructure projects to improve access to healthcare service centres across the country.

Indonesian government recently substituted tender-based purchase in public hospitals by transparent online systems. This has catalysed interesting new developments in all health care-related industries in Indonesia as industry stakeholders are slowly adopting the new system.

Malaysia on the other hand, has a relatively mature healthcare market. The country offers advanced healthcare facilities, making it one of the health tourism hubs in the region, after Singapore. Malaysians also demand quality healthcare, which compensates for its much lower population, which is approximately thirty million, compared to Indonesia.

AcuBiz Medical Device Distributor Database

AcuBiz team publishes a comprehensive list of medical device distributors in different ASEAN markets, based on the extensive knowledge base we have developed over more than a decade. This is an effective screening tool for foreign companies to identify potential distributor partners based on the detailed distributor profiles in the database.

The database is developed by a team with science and management background who are involved in deriving market intelligence and conduct market opportunity assessment in complex healthcare and life sciences. Being a boutique consultancy firm based in Malaysia, AcuBiz is in a unique position to assist medical device companies keen to enter the emerging ASEAN markets.

For a foreign company, success in Indonesia depends on its local distributors as sales can be done only through Indonesian distributors. Similarly, Malaysia restricts the right to bid most government hospital tenders exclusively to distributors with Bumiputra status. The Bumiputra status is offered only to Malays, the majority race in the country.

Distributor company size is an important factor to consider, while hunting for the right distributor. This is especially true if exclusivity is involved. While leading distributors with large logistics network will be ideal for big multinational companies, small and medium companies prefer second tier distributors, hoping to get a better focus of the distributors.

Distributor’s personal connections play a major role in the purchase decisions of hospital lab managers. During a recent survey conducted by AcuBiz, many Indonesian hospital lab managers indicated that they prioritise a particular distributor with good connections over a period of time above a particular brand while making purchase decisions.

Recently, a laboratory manager in a big hospital in Jakarta decided to switch to a competing brand for glucose meters to retain the same distributor they had been doing business with for many years. The distributor used to sell a leading brand, but could not renew the contract when the principal company identified issues related to lack of compliance with its policies. The distributor switched to a competing brand taking many of his hospital clients along with him.

Getting tied up with a distributor who does not meet the sales volumes is another common risk faced by many medical device companies. If this is a distributor with exclusive rights to the products, moving to another distributor can be a long process that can take 6 months to one year, risking sales during the transition period.

Many distributors in Indonesia, who may not even have a website, happened to have strong network with hospitals and clinics in their provinces and connections to win large tenders. AcuBiz team has collected the details of many such distributors through primary research and included in the database.

The database also includes detailed information that can support decision making. Some of the data presented in the distributor profiles include provinces in Indonesia where the distributors are active, contact details of senior professionals in the company, principal companies that they are dealing with, if the distributor owns import license, and if a Malaysian distributor has Bumiputra status. Our objective is to offer this database as a primary list that will help foreign medical device manufacturers to screen potential distribution partners in Indonesia. Further assistance to contact selected distributors and arrange meetings, help in negotiations can be followed, as and when needed.

AcuBiz database is available in excel format. A sample page of the database can be shared on request by e-mail (info@acubiz.com.co). This database is a continuing effort to map all the medical device distributors in Indonesia, Malaysia, and other ASEAN countries.

Syamala AriyanchiraBy Syamala Ariyanchira

August 01, 2017

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