An Interview with Piet Lesage on Entering Foreign Markets
Piet Lesage is a Consultant Member of the SDEE. He joined the organization in 2017. He is based in Orange County and regularly drives down to San Diego to attend the SDEE events. He sits on the board of the Orange County Regulatory Affairs discussion group, where he is responsible for outreach to Professional Organizations. We sat down to learn more about GB5D, his consulting company and how GB5D helps Life Science - particularly MedTech – customers.
Hi Piet, thank you for sitting with us. Can you quickly tell us what your company does?
My company GB5D helps Life Science companies - especially companies in the MedTech sector - build and implement their strategy to enter foreign markets. We can act globally, but we are particularly focused on Europe. ny company wanting to expand into a foreign market should do due diligence and develop a strategy before they start implementation. Unfortunately, it often does not work out that way.
I heard that MedTech companies like to launch in Europe, before they launch in the domestic market?
You are right, traditionally, US MedTech companies have brought their products to market in Europe before they made them available to US customers. The obvious reason is the regulatory burden.
The European MedTech burden is governed by the Medical Device Directives (MDD). These have traditionally been easier to navigate than the FDA regulations governing Medical Devices. It was therefore very understandable that US companies looked to Europe first.
Unfortunately, earlier this decade, several products that had been put on the market in Europe proved very detrimental to the public (ruptured breast implants for one). As a direct result of these events, the European Commission decided to replace the MDD with new Medical Device Regulations (MDR) which will become applicable May 2020. As a consequence, entering the EU market will become much more difficult.
As a result, US companies may no longer automatically go to Europe first. And when they do, they will probably need more help than before. We assist them in their strategy development, planning and implementation.
Does the transition from MDD to MDR affect only those companies that newly enter the EU market? Or does it affect everyone active in Europe.
That is an excellent question. The short answer is that the transition affects everyone. There is no grandfathering. All Medical Devices (new or legacy) need to meet the new Regulations. This requirement puts companies with existing products under a lot of pressure. They have to decide whether or not they will keep the devices on the market. The higher regulatory burden obviously results in higher costs. It is possible that the investment required does not support the possible return. Besides, a lot of work is needed to put the devices through the compliance process and very limited time is available to do so. Readers familiar with the issue, will acknowledge that their European business needs a lot more attention than before.
When you mention Europe, I think of Brexit. Are your customers worried?
Yes, a great deal, as they should be. Any company doing business in Europe, bringing goods in through the UK, should worry about Brexit. Pharma, Biotech and MedTech customers should all be concerned and have several plans ready for any number of possible scenarios. The hard Brexit scenario, which had been downplayed for months, is now unfortunately a very realistic one. Either way, hard or soft Brexit, the Life Sciences sector will be severely affected. Already EMA (European Medicine Agency) moved headquarters from London to Amsterdam. In its wake, several large pharmaceutical companies have decided to move as well.
For MedTech companies, the impact is especially threatening. For many products, obtaining EU regulatory approval (CE Mark) requires an independent 3rd party company, called a Notified Body, to certify that the product meets MDD, soon MDR, requirements.
It is estimated that of all foreign companies entering the US, 70% have worked with a UK registered Notified Body to obtain the CE Mark. Under a hard Brexit, these UK based Notified Bodies will lose their accreditation on March 29th this year. When that happens, products certified by a UK Notified Body will also lose their CE Mark. I forecast that there will be several manufacturers who will lose their ability to sell in Europe in case of a of hard Brexit.
By the way, it’s not only Notified Bodies that will be affected. As a foreign company, whenever you bring goods into Europe, you must assign an Authorized Representative. If you have a subsidiary within EU borders, the subsidiary can take on the role of the Authorized Representative. But if you do not have a subsidiary you must assign a 3rd party. In case of a hard Brexit, a UK based Authorized Representative will lose al standing in the EU, causing sleepless nights for company US CEO’s who enter the EU through the UK.
And your company helps sort out these types of issues?
Yes, we do. But besides these issues surrounding the transition from MDD to MDR, we also help with issues that are often neglected when developing the strategic plan: reimbursement and commercialization. It would not be the first company that looks at regulatory, reimbursement and commercialization as independent steps in a linear process. It just is not.
In the end, a company only makes money if customers want its products. Regulatory burdens are obstacles that must be overcome to achieve the ultimate goal, providing the customer with a product they want to pay for.
Unfortunately, I regularly hear about companies that give little thought to how they will make money, what claims they want to make and who will pay for their products/services. Nowadays, in Europe, as in the US, that gets you into trouble. More and more emphasis is placed on evidence-based and value-based medicine. If those tenants are not part of your product design and your clinical trials, obtaining that hard-sought reimbursement may prove elusive.
Besides, Europe represents 27 markets, each with its own healthcare system and its own reimbursement systems. It is entirely possible that in some countries your product is embraced as the perfect solution for its citizens, while in another it will not be possible to put it on the reimbursement schedule at all. Pick the wrong country and you may be in a world of hurt.
Helping companies enter foreign markets, I presume you travel in support of your customers? Does that add a lot of expense?
Not so much actually. I have established good relationships with overseas consultants. We cooperate on the issues our customers are facing here in the US and overseas. Work gets done a lot more efficient that way. It also allows me to create teams with the best possible minds to tackle the specific customer issue at hand. Often the company I assist, benefits when I bring in someone who is intimately familiar with their market, their product or their customers. It gets us up on the learning curve much faster and can save a lot of time. Furthermore, putting together a multi-disciplinary, multi-cultural team encourages creativity in the development of the strategic market entry plan and its implementation.
When I bring an overseas person into the team it immediately adds a knowledge and understanding of the foreign market, which would be extremely hard to source in the US.
What are a few things companies should do right now?
If you are active in the EU, become familiar with the new MDR/IVDR regulations right now. It is important that the top of the company realize that the entire EU business is at risk.
Then look for someone to help you plan and implement the changes you will have to make to comply with the new regulations. These changes will touch on all aspects of your business. Your QMS must be adapted to accommodate the new requirements. All technical files must be updated. And you must restructure your relationships with your authorized representative, importer and distributors. While you may be able to phase certain parts of the implementation - based on the classification of your products - doing so requires careful planning.
If you consider entering the EU market, bundle your regulatory and reimbursement strategies and choose the country or countries you want to enter. Then develop your implementation plan and create parallel milestones so you can measure progress. Go and execute.