Introduction
In the realm of medical device sales, developing a robust sales strategy and plan is essential for navigating the complex landscape of healthcare markets, driving revenue growth, and fostering long-term customer relationships. The unique characteristics of the medical device industry, including regulatory requirements, technological innovation, and healthcare provider dynamics, necessitate a tailored approach to sales strategy formulation and execution. Organisations can navigate market complexities through a systematic approach to sales strategy formulation, capitalise on emerging opportunities, and achieve sustainable competitive advantage.
Sales Channels for Medical Devices
The sales channels for medical devices are multifaceted and play a role in ensuring products reach the appropriate markets and end-users effectively. Given the unique regulatory, logistical, and market dynamics of the medical device industry, the choice of sales channels can significantly impact a company’s market penetration, revenue, and customer satisfaction. This discussion explores various sales channels for medical devices, examining their characteristics, benefits, and challenges.
Direct Sales
Direct Sales involves selling medical devices directly to end-users or healthcare providers without intermediaries. This channel is often used for high-value, complex devices that require significant customer education and support. Characteristics of direct sales channels include:
- In-House Sales Team: Companies employ their own sales representatives to market and sell their products.
- Direct Customer Interaction: Sales representatives engage directly with healthcare providers, hospitals, and clinics.
- Customisation and Personalisation: The sales approach can be tailored to the specific needs of each customer. Companies use direct sales to maintain control over their sales strategy, customer relationships, and pricing. Direct customer interaction provides valuable insights and feedback that can inform product development and improvements. Building strong relationships with customers can enhance brand loyalty and repeat business.
The colleges associated with direct sales include:
- High Costs: Maintaining an in-house sales team can be expensive, particularly in terms of salaries, training, and travel expenses.
- Scalability: Scaling direct sales efforts to cover broad geographical areas or international markets can be challenging.
Distributors and Wholesalers
Distributors and Wholesalers act as intermediaries between medical device manufacturers and end-users. They purchase products in bulk from manufacturers and sell them to healthcare providers, pharmacies, and retailers.
Distributors buy large quantities of medical devices from manufacturers. They handle storage, transportation, and delivery of products to customers. Distributors often have extensive networks and can penetrate markets that may be difficult for manufacturers to reach directly.
Benefits:
- Market Access: Leveraging the distributor’s established network can expedite market entry and expansion.
- Reduced Overheads: Manufacturers can lower their overhead costs by outsourcing logistics and distribution.
- Local Expertise: Distributors often have deep knowledge of local markets, regulations, and customer preferences.
Challenges:
- Margin Erosion: Distributors take a cut of the profits, which can reduce overall margins for manufacturers.
- Control Over Brand: Manufacturers may have less control over how their products are marketed and presented to end-users.
- Reliability: Dependence on third parties can pose risks if distributors fail to perform or do not align with the manufacturer’s strategic goals.
E-Commerce
E-commerce has become an increasingly important sales channel for medical devices, particularly smaller, less complex devices and consumer health products. Medical devices may be sold through online marketplaces, manufacturer websites, or specialised e-commerce platforms. E-commerce enables direct sales to consumers, bypassing traditional retail or healthcare provider channels.
Online platforms can reach a global audience, expanding market opportunities and providing convenience to some customer segments.
E-commerce may also reduce costs associated with physical storefronts and associated expenses. However, digital marketing efforts can be expensive, including search engine optimisation (SEO), online advertising, and social media campaigns.
Challenges:
- Regulatory Compliance: Ensuring compliance with varying international regulations for online sales can be complex.
- Customer Trust: Building trust with customers in an online environment, especially for medical products, can be challenging.
- Competition: The online marketplace is highly competitive, requiring significant investment in digital marketing to stand out.
Healthcare Group Purchasing Organisations (GPOs)
Group Purchasing Organisations (GPOs) aggregate purchasing power for a network of healthcare providers to obtain discounts from suppliers and manufacturers. This may also be known as pooled procurement.
GPOs leverage collective bargaining to negotiate bulk purchase agreements on behalf of their members. GPOs establish contracts with multiple vendors to offer a range of products to their members.
Healthcare providers join GPOs to benefit from lower prices and streamlined procurement processes. Manufacturers gain access to a large network of healthcare providers through a single channel.
Challenges:
- Price Pressure: Manufacturers may face pressure to offer significant discounts, impacting margins.
- Dependency: Over-reliance on GPOs can limit a manufacturer’s control over sales and marketing strategies.
- Contractual Obligations: Navigating and managing complex contracts with GPOs can be resource-intensive.
Retail Pharmacies and Chain Stores
Retail Pharmacies and Chain Stores are common sales channels for consumer-oriented medical devices, such as over-the-counter health products and home-use devices. Devices are sold directly to consumers through retail outlets. Products are available across multiple locations, increasing brand visibility, consumer awareness and accessibility. In-store placement can drive impulse purchases and increase sales volume. High foot traffic in retail stores can lead to significant sales volumes.
Challenges:
- Retail Margins: Retailers take a portion of the sales revenue, which can reduce margins for manufacturers.
- Product Placement: Securing favourable shelf space in retail stores can be competitive and costly.
- Inventory Management: Managing inventory across multiple retail locations requires efficient logistics and supply chain coordination.
Institutional Sales
Institutional Sales involve selling medical devices directly to healthcare institutions such as hospitals, clinics, and laboratories. This channel is particularly relevant for high-value, specialised equipment. Sales teams engage directly with hospital procurement departments and decision-makers. The sales process often involves a complex sales cycle, including demonstrations, trials, and negotiations. Sales often include service contracts for installation, training, and maintenance.
Institutional sales can generate significant revenue per transaction. Building strong relationships with institutions can lead to repeat business and long-term contracts. Supplying to reputable institutions can enhance a manufacturer’s credibility and market reputation.
Challenges:
- Lengthy Sales Cycle: The sales process can be prolonged, requiring sustained effort and resources.
- Regulatory Compliance: Compliance with stringent institutional procurement and regulatory requirements can be demanding.
- High Competition: The institutional market is highly competitive, with numerous players vying for contracts.
Hybrid Models
Hybrid Models combine multiple sales channels to optimise market reach and efficiency. This approach allows manufacturers to leverage the strengths of each channel while mitigating their weaknesses. This approach expands market access by leveraging multiple channels while reducing dependency on a single sales channel and spreading risk. It also provides customers with multiple purchasing options, enhancing convenience and satisfaction.
Challenges:
- Coordination Complexity: Managing and integrating multiple sales channels can be complex and resource-intensive.
- Channel Conflict: Potential conflicts between different sales channels, such as pricing discrepancies or competition for the same customers.
- Consistent Messaging: Ensuring a consistent brand message and customer experience across all channels.
Sales Channel Selection
Choosing the appropriate sales channels is critical for reaching target customers, maximising market coverage, and driving sales growth. Sales channel selection involves identifying the most effective distribution channels and go-to-market strategies based on product characteristics, target market, and customer preferences. Key activities in sales channel selection include:
- Channel Assessment: Assessing the strengths, weaknesses, and suitability of different sales channels, including direct sales, distributors, resellers, online platforms, and strategic partnerships. This involves evaluating factors such as market reach, channel expertise, customer access, and cost-effectiveness to identify the optimal mix of sales channels.
- Channel Partner Identification: Identifying and selecting channel partners with the capabilities, resources, and market reach to effectively promote and sell the product. This involves establishing criteria for evaluating potential partners, conducting due diligence, and negotiating partnership agreements to ensure alignment with strategic objectives and performance expectations.
- Channel Management: Developing and implementing channel management strategies to support channel partners, optimise channel performance, and drive mutual growth and profitability. This involves providing training, marketing support, sales incentives, and ongoing communication to enable channel partners to effectively represent and sell the product.
By selecting the right mix of sales channels and deploying effective channel management strategies, organisations can expand market reach, increase sales penetration, and maximise revenue generation while optimising cost and resource allocation.
Performance Measurement
Measuring and monitoring sales performance is essential for evaluating the effectiveness of the sales strategy, optimising resource allocation, and driving continuous improvement. Performance measurement involves defining key performance indicators (KPIs), establishing performance targets, and tracking progress against goals. Key activities in performance measurement include:
- KPI Definition: Defining relevant and actionable KPIs to measure sales performance across key dimensions such as revenue, market share, customer acquisition, customer retention, sales pipeline, and sales conversion rates. This involves aligning KPIs with strategic objectives, business priorities, and sales team responsibilities to ensure meaningful measurement and accountability.
- Data Collection and Analysis: Collecting sales data from internal CRM systems, sales reports, and external market research sources to assess performance against KPIs and identify trends, patterns, and opportunities. This involves aggregating and analysing data at various levels, such as product lines, customer segments, geographic regions, and sales territories, to gain actionable insights into sales performance drivers.
- Performance Dashboarding: Developing performance dashboards and reporting tools to visualise sales performance metrics, track progress against targets, and facilitate data-driven decision-making. This involves leveraging business intelligence tools, data visualisation techniques, and interactive dashboards to present sales data in a concise, accessible, and actionable format for sales managers and stakeholders.
- Performance Reviews and Feedback: Conducting regular performance reviews and feedback sessions to evaluate individual and team performance, identify areas for improvement, and celebrate successes. This involves providing constructive feedback, coaching, and training to support sales team development and enhance performance effectiveness.
By implementing a robust performance measurement framework, organisations can gain visibility into sales performance drivers, identify opportunities for optimisation, and align sales activities with strategic objectives to drive sustainable revenue growth and competitive advantage.
Conclusion
Crafting an effective sales strategy and plan for medical devices requires a systematic approach encompassing market analysis, customer segmentation, value proposition development, sales channel selection, and performance measurement. By conducting thorough market analysis, segmenting the target customer base, and developing a compelling value proposition, organisations can tailor their sales strategy to address customers’ unique needs and preferences, differentiate themselves from competitors, and drive demand and adoption in the marketplace. Additionally, selecting the right mix of sales channels, managing channel partners effectively, and measuring sales performance enables organisations to expand market reach, increase sales penetration, and maximise revenue generation while optimising cost and resource allocation. Through continuous monitoring, analysis, and optimisation, organisations can adapt to evolving market dynamics, capitalise on emerging opportunities, and achieve sustainable growth and competitive advantage in the dynamic landscape of medical device sales.
Resources
- MedTech Europe – Market Access & HTA Advocacy and insights into European medtech access policies.
- Global Medical Device Nomenclature (GMDN) Global Medical Device Nomenclature for regulatory and reimbursement classification.
Adoption: The point at which clinicians or healthcare systems begin integrating the device into routine clinical practice.
Authorised Representative: A natural or legal person appointed by a manufacturer to act on their behalf in carrying out specific tasks related to conformity assessment and regulatory compliance.
Benefit-Risk Analysis: The comparison of a medical device’s benefits to its associated risks, often used in regulatory decision-making.
Biomedical Engineer and Technician: Personnel that maintain and repair medical devices to ensure their proper functionality.
Budget Impact Analysis (BIA): A financial assessment tool used to estimate the cost implications of adopting a new healthcare intervention within a specific budget context over a defined time.
Capacity Building: The process of developing and enhancing the skills, abilities, and resources of individuals or organisations to improve their effectiveness and sustainability. Change Control: The systematic process of managing and documenting modifications to a device or its manufacturing process to ensure that all changes are assessed, approved, implemented, and tracked in compliance with regulatory standards and quality management systems.
Classification: The process of categorising devices into different classes based on their intended use, level of risk to patients and users, and regulatory controls necessary to ensure safety and effectiveness.
Clinical Evaluation: A methodologically sound ongoing procedure to collect, appraise, and analyse clinical data about a medical device and to verify its safety and performance, including its clinical benefits. Also see Clinical Investigation.
Clinical Guideline: A systematically developed statement to assist healthcare practitioners and patients in making decisions about appropriate healthcare for specific clinical circumstances.
Clinical Investigation: Any systematic investigation or study in or on one or more human subjects undertaken to assess the safety or performance of a medical device.
Clinical Workflow: The systematic sequence of processes and tasks that healthcare professionals follow when using medical devices to ensure efficient, safe, and effective patient care.
Commissioning: The process of ensuring that a device is properly installed, tested, and verified for safe and effective use in a clinical setting.
Commercialisation: The full journey of bringing a medical device to market, including regulatory approval, manufacturing, marketing, sales, and support.
Compliance: Adherence to regulations, standards, and guidelines set forth by regulatory authorities.
Corrective Maintenance: The process of diagnosing and repairing faults or failures to restore the device to its proper functioning condition.
Corrective and Preventive Action (CAPA): Actions taken to eliminate the causes of existing nonconformities or other undesirable situations (corrective actions) and to prevent recurrence (preventive actions).
Cost-Effectiveness Analysis (CEA): A method of evaluating healthcare interventions by comparing their costs in relation to their health outcomes, typically measured in terms of cost per unit of health improvement gained.
Cost-Benefit Analysis (CBA): A technique for assessing the financial feasibility of interventions by comparing their costs and benefits, where benefits are expressed in monetary terms.
Cost-Utility Analysis: A type of economic evaluation that compares the costs of healthcare interventions to their outcomes in terms of quality-adjusted life years (QALYs) gained, providing a measure of health-related quality of life.
Decommissioning: The process of safely retiring or discontinuing the use of a device, ensuring proper disposal or reprocessing following regulatory and environmental requirements.
Demand Forecasting: The practice of using historical data, market trends, and analytics to predict future customer demand for a product.
Distribution: The logistics and infrastructure used to deliver a medical device from manufacturer to customer or end user.
Distributor: A natural or legal person in the supply chain, other than the manufacturer or importer, who makes a medical device available on the market.
Economic Evaluation: The evaluation and analysis of the costs and consequences of using a medical device or intervention, often comparing different options to inform decision-making. This may also be called an Economic Assessment.
Economic Operator: Any person or entity engaged in the production, distribution, import, export, or supply of medical devices.
End-of-life: The stage in the medical device lifecycle when the manufacturer no longer supports the device due to obsolescence, discontinuation of production, or inability to provide necessary components or services.
Endpoint: The measurable result at the end of a study, including types such as:
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Clinical Endpoint: A precisely defined and measurable outcome used to determine the effect of an intervention.
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Performance Endpoint: A measure of how well the medical device achieves its intended purpose.
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Primary Endpoint: The main result that is measured at the end of a study to see if the treatment worked (e.g., the change in a clinical measurement from baseline to the end of the study).
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Safety Endpoint: A measure of the frequency and severity of adverse events experienced by participants during a clinical trial.
Equipment Management: The systematic process of acquiring, maintaining, calibrating, and retiring equipment to ensure it remains suitable for its intended use and complies with quality and regulatory requirements.
Equivalency: Demonstrating that a new device is as safe and effective as an already marketed device by comparing its technical and functional characteristics.
Enterprise Resource Planning (ERP) Systems: Integrated software platforms that manage and automate core business processes across an organisation, facilitating the flow of information and improving efficiency.
Equipment Management: The systematic process of acquiring, maintaining, calibrating, and retiring equipment to ensure it remains suitable for its intended use and complies with quality and regulatory requirements.
FDA Approval: The process by which the U.S. Food and Drug Administration (FDA) officially recognises that a medical device is safe and effective for its intended use.
Financing: Securing capital or funding to support the development, regulatory process, manufacturing, market entry, or adoption of a medical device.
Follow-Up: The period of observation of participants after the intervention has been applied.
Go-to-Market Strategy: A comprehensive plan outlining how a company will introduce and promote its products or services to its target customers and achieve competitive advantage in the marketplace.
Healthcare Professional: An individual trained and licensed to provide medical care, treatment, and advice to patients, encompassing a range of roles such as physicians, nurses, pharmacists, and allied health professionals.
Healthcare Provider: An individual or organisation licensed or otherwise authorised to deliver medical, nursing, dental, or other healthcare services to patients or clients.
Health System: The organised network of institutions, resources, and people that deliver healthcare services to meet the health needs of a specific population.
Health Technology: The application of organised knowledge and skills in the form of devices, medicines, vaccines, procedures, and systems developed to solve a health problem and improve quality of lives (WHO definition).
Health Technology Assessment (HTA): A systematic evaluation of the properties, effects, and impacts of health technology, such as medical interventions, pharmaceuticals or medical devices, to inform healthcare decision-making.
Health Technology Management (HTM): The systematic planning, procurement, implementation, and evaluation of medical technologies to ensure their safe, effective, and efficient use within healthcare settings.
Importer: A natural or legal person who places a device from another country on the market.
Indication of Use: A concise statement specifying the medical conditions or purposes for which the medical device is intended to be used, as approved by regulatory authorities.
Intended purpose: The use for which a medical device is intended according to the information provided by the manufacturer on the labelling, in the instructions for use (IFU), or in promotional materials. This may also be referred to as the Intended Use in some jurisdictions. Also see Indication of Use.
International Medical Device Regulators Forum (IMDRF): A global regulatory collaboration focused on harmonising medical device regulations to facilitate patient access to safe and effective devices. This organisation was formerly the Global Harmonization Task Force (GHTF).
Interoperability: The ability of different systems, devices, applications, or products to connect, communicate, and work together effectively without requiring special effort by the user.
Just-in-Time (JIT) Inventory Management: An inventory strategy that aligns raw material orders and production schedules closely with actual demand to reduce storage costs and waste.
Key Performance Indicators (KPIs): Measurable values that demonstrate how effectively an organisation achieves key objectives.
Labelling: The label on a medical device and all descriptive and informational literature associated with the device. Also see Instructions for Use (IFU)
Lifecycle Management: The process of overseeing a product, service, or system from its initial development through its growth, maturity, and eventual decline or disposal, ensuring optimal performance and resource utilisation at each stage.
Logistics: The process of planning, implementing, and controlling the efficient movement and storage of goods from origin to consumption.
Maintenance: Regular, planned actions taken to ensure that the devices remain in optimal working condition, including inspection, calibration, cleaning, and repair. Also see Preventative Maintenance and Corrective Maintenance.
Manufacturer: A legal entity that designs, produces, assembles, or labels a medical device with the intention of placing it on the market.
Market Access: The process of ensuring a medical device can be reimbursed, adopted, and used within a specific healthcare system or market.
Market Development: Expanding or creating new customer segments, geographies, or clinical indications for a medical device.
Marketing: Activities that promote awareness, education, and demand for a medical device among stakeholders like clinicians, payers, and patients.
Market Launch: The coordinated introduction of a medical device into a specific market, often involving regulatory clearance, marketing, sales training, and distribution setup.
Medical Device Management System (MDMS): A comprehensive framework that oversees the lifecycle of medical devices from acquisition to disposal, ensuring regulatory compliance, safety, and operational efficiency.
Meta-Analysis: A statistical technique that combines the results of multiple scientific studies to integrate findings and derive overall conclusions about the effectiveness or impact of a health technology or intervention.
Mode of Action: The means by which a device achieves its intended therapeutic or diagnostic effect.
Needs Assessment: A systematic process to identify and prioritise gaps or requirements in healthcare delivery that could be addressed through technological interventions.
Notified Body (NB): An organisation designated by a country authority to assess the conformity of certain products before being placed on the market, ensuring they meet applicable regulatory requirements and standards.
Payer: An entity or organisation, such as an insurance company or government agency, responsible for reimbursing or funding healthcare expenses related to using health technologies.
Preventative Maintenance: Scheduled inspections, servicing, and adjustments performed regularly to prevent potential equipment failures and ensure continued reliability and safety in clinical settings.
Post-Market Surveillance (PMS): The proactive collection and review of experiences and data related to a device after it has been released onto the market to ensure continued safety and performance.
Predicate Device: An existing on-market device that provides a basis for comparison or reference in demonstrating substantial equivalence for regulatory purposes.
Pre-market Approval (PMA): The process by which the U.S. FDA evaluates and approves the safety and effectiveness of high-risk medical devices before they can be marketed and sold in the United States.
Pricing: The strategy and process of setting the cost at which a medical device will be sold, balancing value, market conditions, and reimbursement.
Procurement: The process of acquiring, purchasing, or obtaining medical equipment, supplies, or technology necessary for healthcare delivery.
Qualification: The process of determining whether a product meets the definition of a medical device in a particular jurisdiction. Quality Management System (QMS): A formalised system that documents the structure, responsibilities, and procedures required to achieve effective quality management.
Quality Management System Regulation (QMSR): The U.S. Food and Drug Administration (FDA) regulation that aligns its medical device quality system requirements with ISO 13485:2016 to streamline global compliance and enhance device safety and effectiveness.
Quality System Regulation (QSR): Outlined in 21 CFR Part 820, the U.S. Food and Drug Administration (FDA) framework requires medical device manufacturers to establish and maintain a quality management system to ensure their products consistently meet applicable requirements and specifications.
Real World Evidence: Clinical evidence regarding the use and potential benefits or risks of a medical product derived from real-world data (RWD) sources outside traditional clinical trials.
Record: A documented piece of evidence detailing activities, decisions, or results, created and maintained to demonstrate compliance with regulatory requirements and quality management standards.
Regulation: The rules, laws, standards, and requirements set by regulatory authorities to ensure the safety, efficacy, and quality of devices intended for medical use.
Regulatory Approval: Official authorisation from a competent authority or regulatory authority that a medical device meets safety and performance requirements.
Regulatory Authority: An official body overseeing and enforcing laws, regulations, and standards within a specific industry or sector to ensure compliance and protect public interests. Also known as a Regulatory Authority. Also see Competent Authority and Notified Body.
Regulatory Submission: The formal process of submitting documentation and data to regulatory authorities for review and approval to market or sell the device within a specific jurisdiction.
Reimbursement: The process of receiving payment from insurers, government health programs, or healthcare facilities for the use of medical devices in patient care.
Risk: The combination of the probability of occurrence of harm and the severity of that harm.
Risk Management (RM): The systematic application of management policies, procedures, and practices to the tasks of analysing, evaluating, controlling, and monitoring risk.
Safety: The condition of being protected from or unlikely to cause danger, risk, or injury.
Sales: The process of engaging customers, negotiating terms, and closing transactions to deliver medical devices to end users.
Sales Channel: The route through which a medical device reaches the market, such as direct sales, distributors, or strategic partners.
Sensitivity Analysis: The process of evaluating how the variation in the output of a model can be attributed to different variations in the input parameters.
Service: Post-sale support including installation, training, maintenance, and customer assistance to ensure proper use and satisfaction.
Sponsor: An individual, company, institution, or organisation that takes responsibility for the initiation, management, or financing of a clinical investigation.
Stakeholder: Any individual or group with an interest or influence in the delivery, outcomes, or policies of healthcare services.
Standard: A document that provides guidance, requirements, or specifications established by regulatory bodies, industry organisations, or international consensus groups.
State-of-the-art (SotA): The current knowledge or good practice acceptable in the medical devices industry.
Supplier: An entity or organisation that provides materials, components, or finished products used in the manufacturing, assembly, or distribution of medical devices.
Supplier Management: Overseeing and controlling the relationships and activities with external suppliers to ensure the quality, reliability, and regulatory compliance of sourced materials and components.
Systematic Review: A structured and comprehensive synthesis of research studies that aims to identify, select, assess, and summarise the findings of all relevant individual studies on a particular topic.
Technical Documentation: All documents that demonstrate the design, manufacture, and performance of the device, essential for ensuring compliance with regulatory requirements. This is also known as the Technical File.
Technical Specifications: Detailed descriptions of the requirements, characteristics, and standards that a product, service, or system must meet or adhere to, ensuring clarity and consistency in its design, production, or implementation. Also see Standard. Technical specifications can also be an alternative term for Design Inputs.
Technology Integration: The seamless incorporation of health technologies into healthcare organisations.
Total Cost of Ownership: The comprehensive sum of all expenses associated with acquiring, operating, maintaining, and eventually disposing of the device over its entire lifespan.
Total Product Lifecycle (TPLC): A U.S. Food and Drug Administration (FDA) term referring to the entire process of a medical device’s development, from initial concept and design through premarket review, manufacturing, marketing, post-market surveillance, and eventual product retirement. It emphasises continuous evaluation of safety, effectiveness, and quality throughout the device’s lifespan.
User: Any individual who operates or interacts with a medical device, including healthcare professionals, patients, and caregivers.
Validation: Confirmation by examining and providing objective evidence that the particular requirements for a specific intended use can be consistently fulfilled.
Value Proposition: A clear statement of the clinical, economic, and operational benefits a medical device offers to its stakeholders.
Verification: The process of evaluating whether or not a product, service, or system complies with a regulation, requirement, specification, or imposed condition.