Building a Medtech business in APAC

In an exclusive interaction with Asia Business Outlook, Shamik Dasgupta, Vice President Asia Pacific, Artivion, shares his insights on the challenging yet rewarding aspects of building a Medtech business in the Asia-Pacific region while giving pointers on how to navigate the multifaceted regulatory barriers this nation had to offer. He has over 28 years of experience leading global teams and a strong track record of executing leadership assignments across Japan, China and Europe.

The APAC region is a diverse landscape with varying levels of healthcare infrastructure and needs. How can a Medtech company tailor its offerings to meet the diverse healthcare demands across APAC markets?

Asia-Pacific is uniquely diverse. It includes highly developed countries like Japan, Australia, and New Zealand, alongside developing nations such as India, Vietnam, and Indonesia—all within the same geographical cluster. This creates significant challenges, particularly in the healthcare sector.

For instance, disease progression and manifestation vary widely across the region due to demographic differences. In Japan, where the population is aging, diseases present differently than in Vietnam or Indonesia, where populations are younger. Healthcare infrastructure also varies significantly, ranging from the advanced systems in Japan, Taiwan, and Korea to more limited setups in countries like India, Indonesia, or Vietnam.

Reimbursement systems are another point of divergence. In many developed markets, governments cover the majority of healthcare costs. In contrast, patients in countries like India and Vietnam often bear a significant portion of these expenses out of pocket. This creates a dynamic where Asia-Pacific can be seen as one region but with vastly different healthcare models.

To make sense of this diversity, you can categorize these countries into clusters:

Developed Markets: Japan, Korea, Taiwan, Australia, and New Zealand share similar healthcare practices and disease profiles.

Unique Models: Thailand, with its "30 Baht Scheme," provides universal healthcare but struggles with financial deficits.

Large and Complex Markets: China is a vast market with extensive insurance coverage but faces accessibility challenges due to its sheer size.

Emerging Markets: India, Vietnam, Indonesia, the Philippines, and Malaysia have comparable healthcare models and population dynamics.

Specialized Market: Singapore is a small yet highly developed market.

Each of these clusters requires tailored commercial strategies. Companies adopt various approaches based on market needs:

Direct Sales: Setting up in-market teams and managing logistics to engage customers directly.

Distribution: Appointing distributors who handle sales independently, with limited direct involvement.

Hybrid Models: Combining direct sales in key cities with distribution in others.

Remote Sales: Centralized teams managing sales remotely, which works well for commodity products but not for complex, high-tech solutions.

Direct sales are preferable for high-touch, complex healthcare products. For example, in Japan, Taiwan, Australia, New Zealand, Thailand, India, the Philippines, Malaysia, and Singapore, we have direct operations because these markets demand a hands-on approach. However, in larger and more fragmented markets like China and Vietnam, we rely on distributors due to the sheer scale of these regions.

Regulatory requirements across APAC are diverse and evolving. What strategies can a Medtech business implement to efficiently navigate regulatory approvals and maintain compliance across multiple APAC markets?

The most important factor for success in these markets is ensuring you have a license to sell—this is absolutely critical. Primarily, it is vital to hire a highly competent and senior leader to head your Regulatory Affairs and Quality Assurance (RAQA) function. This is a complex and vital role, so the person in charge needs to have deep expertise, a strong understanding of the markets, and the ability to navigate their intricacies effectively.

Second, you must stay on top of regulatory changes. With 12 to 15 countries (or even more, depending on how you count the smaller markets) in Asia-Pacific, regulations are constantly evolving, and keeping up is challenging. It's crucial to have someone who is well-connected in these markets and consistently monitoring updates. This ensures you can adapt quickly to any changes.

Lastly, always own your certificates. Never let distributors or third parties hold them. Why is this so important? If a distributor controls your certificates, they essentially hold your license to operate in that market. If your relationship with that distributor deteriorates, it can be extremely challenging to go direct, switch distributors, or make any changes to your distribution model.

In key markets like Japan, Taiwan, Korea, Thailand, and India, it’s critical to ensure the certificates are either in your company’s name or held by a third-party entity that you control. This way, you maintain full control over your ability to operate in those markets.

Finally, always keep your ears to the ground. Listen carefully to what's happening in the market and stay informed about regulatory shifts. This proactive approach ensures you're ready to address changes as they arise and continue operating smoothly in these dynamic markets.

The APAC region shows rapid adoption of digital health technologies. How can Medtech companies strategically invest in digital transformation to capitalize on APAC’s digital health trends?

Using AI to directly treat patients, like making decisions about therapies, is a distant goal. The main reason is the heavy regulatory oversight required to ensure patient safety. Treating a patient using AI carries immense risk, and the last thing anyone wants is for a system to cause harm. Regulatory agencies are understandably cautious, so meaningful AI-based therapeutics are likely over a decade away. 

Diagnostics, on the other hand, are a bit closer to reality. We’re already seeing AI systems assist in interpreting X-rays, ECGs, and other imaging data to assess disease progression or prognosis. Wearable tech and sensors that monitor things like sleep patterns and blood pressure are also part of this shift. But when it comes to AI fully analyzing complex medical reports or images and providing a detailed diagnosis, we still have work to do. It’s promising but not quite there yet.

Where digitalization and AI are making a real difference today is in operational efficiency. Companies that embrace these technologies are already seeing substantial benefits, while those that aren’t risk falling behind. Predictive analytics, for example, is helping businesses plan their supply chains more effectively. AI can analyze historical trends to predict product demand, ensuring factories produce just the right amount to avoid shortages or overstocking. This reduces waste, saves money, and ensures products are available when needed.

AI is also helping companies manage equipment better. Algorithms can predict when machines are likely to fail, allowing for better planning of maintenance and staffing. Similarly, remote technical support has become a game-changer. Instead of sending engineers to hospitals for every issue, they can now assist remotely, saving time and resources. This approach, which we pioneered in Europe years ago, has since been adopted more widely. Technologies like remote programming for pacemakers are also emerging, though regulatory approvals are still catching up.

AI is even making strides in areas like case planning for aortic technologies, where it analyzes imaging data to suggest the right stent graft size. Sales analytics is another area seeing transformation, with AI helping companies identify declining sales trends and pinpointing where efforts should be focused, whether it’s specific hospitals or individual customers. 

For now, the most immediate opportunity lies in using digital tools to improve internal operations and enhance how care is delivered. These advancements, from supply chain management to remote tech support, are happening now and driving real results. While diagnostics and therapeutics powered by AI will take time to mature, operational efficiency is where companies can already make a significant impact, and those embracing these technologies are setting themselves up for long-term success.

Price sensitivity is a key factor in many APAC markets. What impact does pricing have on the adoption of MedTech innovations in emerging APAC markets?

In reimbursed markets like Australia, New Zealand, Japan, Korea, and Taiwan, pricing plays a less critical role since governments operate within fixed budgets and predetermined pricing for products. Hospitals in these markets are reimbursed at these rates, so price sensitivity is relatively low. The challenge arises when governments are reluctant to categorize a superior, technologically advanced product at a higher price point compared to older, less effective alternatives. 

For example, a situation where an older product with basic technology is priced lower, and a newer, innovative solution offering better outcomes and shorter operating times enters the market. Governments often demand long-term clinical data—sometimes spanning four to five years—before they will agree to a price adjustment. This delay can hinder patient access to advanced treatments. Overcoming this hurdle requires close collaboration with medical societies and government bodies to communicate the value of such innovations effectively.

In contrast, markets like Vietnam, Indonesia, and parts of India operate differently. These are price-sensitive markets where tenders often favor the lowest bidder, and private hospitals—especially in India, which accounts for about 85-90% of the market—focus on acquiring products at the lowest cost to maintain profit margins through markups. Pricing strategies in these regions need to be more nuanced to balance affordability with the business's financial health. Unlike reimbursed markets, where higher volumes might justify a lower price, the volumes in private markets often don’t reach levels that would make this approach viable for complex technologies.

This is what makes healthcare such a rewarding field; not only is it a profitable business, but it also provides the unique satisfaction of making a tangible difference in people's lives. Anyone considering this sector knows that it’s a career that offers both financial success and immense personal fulfillment.