Establishing Managing International Sales Distribution Networks

1. Establishing & Managing International Sales & Distribution Networks MassMEDIC International Marketing of Medical Devices Issues and Strategies for Manufacturers Sandy von Stackelberg MedEntry International February 27, 2004

2. (C) MedEntry International 2003 2 Agenda Rationale for International Expansion Complexity: Markets, Internal Management Channel Alternatives at Various Maturity Points Export Manager/ Master Distributor Distributors Direct Selling Converting from Distributor to Direct Sales Pitfalls Conclusion

3. (C) MedEntry International 2003 3 Why Expand Outside The US? Typical scenario New markets and sources of revenue Increases product knowledge base Defense against overseas competitors Diversifies business

4. (C) MedEntry International 2003 4 Global Medical Device Marketplace = $100 Billion Market breakdown US – 43% Western Europe – 25% Fastest growing regions Asia: India, China and Southeast Asia Latin America: Mexico, Brazil, Argentina and Chile Source: Frost & Sullivan

5. (C) MedEntry International 2003 5 A Comprehensive Approach

6. (C) MedEntry International 2003 6 Market Complexity NorthWest Europe – CE mark is easier to get Australia – Class 3- device is now harderNorthWest Europe – CE mark is easier to get Australia – Class 3- device is now harder

7. (C) MedEntry International 2003 7 Channel Alternatives Export Master Distributor/ Export Management Co. Distributor Hybrid JV - Partnering Direct Sales

8. (C) MedEntry International 2003 8 Start-Up Mode, Uninformed, Worst Case

9. (C) MedEntry International 2003 9 Small to Mid Size, Wiser Choice, Better

10. (C) MedEntry International 2003 10 Direct Sales, Largest Market, Best

11. (C) MedEntry International 2003 11 Distributor “As is” U.S. company contract On-going support Distributor owns, title passed

12. (C) MedEntry International 2003 12 Distributor Score Card Quick to market Inexpensive Sales leverage Learn the Customer/Market Limited “loyalty” Representation risk Lack of visibility distributor plans Lack of visibility to customer

13. (C) MedEntry International 2003 13 Distributor Selection Process How do you find them? Colleagues “On-line” tools “Matchmakers” Government resources How do you qualify them? Market fit Product fit Success Their resources References Online-Sercado, EuropagesOnline-Sercado, Europages

14. (C) MedEntry International 2003 14 Direct Sales Dedicated Local company contract Customer interaction Price Margins

15. (C) MedEntry International 2003 15 Direct Sales Score Card Control message to the market Understand customer Company loyalty Brand Priorities (focus) or products Time to market Competitive hospital pricing Expensive!!!! Accounts receivable Inventory Expenses Employment costs Limit bidding? Legal encumbrances

16. (C) MedEntry International 2003 16 Conversion from Distributor to Direct Sales Where do you start? Management Target countries/region “Total cost of ownership” Legal entity Sales leader Who can help? Consultants Government Global search firms

17. (C) MedEntry International 2003 17 Conversion from Distributor to Direct Sales Why? Plant company flag Market control Profit margin Revenues Customer’s needs Consistency Long-term profitability Investments (working capital)

18. (C) MedEntry International 2003 18 Beware of the Pitfalls Cancel distributor contracts Labor Laws PUBLIC medical market Tendering Payment

19. (C) MedEntry International 2003 19 How To Inoculate Yourself Local experts Legal Tax Advisors Local support organizations AmCham Trade support agencies Trade Associations

20. (C) MedEntry International 2003 20 Overseas Distribution Maturity Curve

21. (C) MedEntry International 2003 21 Conclusion The “right” sales model: function Stage of development Product Resources Company Three typical channels Establishing and deconstructing Homework

22. Potential Resource Sandy von Stackelberg MedEntry International Your Innovations to All Nations sm Contacts Phone: 978-394-8788 Email: svonstack@yahoo.com