U.S. Healthcare Market Versus Latin America: Apples To Oranges

By JOSE “JOE” MIR

Partner

[June 19, 2024] – There’s an old, snide expression in the franchise industry when multiple operators fly the same brand’s flag but inconsistencies exist from one operation to the next. 

“If you’ve stayed at one XYZ hotel before, you’ve stayed at one XYZ hotel.”

“No two XYZ hotels are the same” is the opposite of what franchisors want when they expand their one-off operations into multi-unit enterprise systems flying that same flag. Breakdowns in consistency from location to location are due to many factors: unmonitored quality standards, apathetic operators, delayed maintenance, differences in surrounding areas, zoning regulations and local laws, you name it.

Bottom line: Just because you had a positive experience in one market doesn’t always mean you’ll have the same positive experience in the next. 

In some ways, the same is true when overly confident and “underly” informed U.S. healthcare manufacturers attempt to gain entry to a non-U.S. market. Expectations of what you’ll encounter are quite often very different than the last successful launch you spearheaded in a previous market. Unfortunately, that carefully crafted Blueprint for Success you and your team worked so hard on is typically a one-time-use scenario when targeting new countries. Starting from scratch is the norm.

Nowhere is this more evident than when U.S. healthcare manufacturers try to tackle the mosaic-like marketplace of Latin America.

“If you’ve entered one Latin American market, you’ve entered one Latin American market.”

In the U.S., the formidable challenge lies in gaining FDA approval of your new product or drug. While typically a years-long, daunting and often dispiriting undertaking, the good news is once you’re FDA green-lighted, you’re green-lighted in all 50 U.S. states.

Not so, south of the border.

Consisting of 33 countries in Central and South America, Latin America is a collection of unique cultures, varying levels of sophistication, a mix of economic health and prosperity, unique approaches to business, and a wide variety of healthcare regulatory and approval processes. 

In short, there is no one-size-fits-all solution like we enjoy in the U.S. What works in this Latin American country does not work in that Latin American country. Establishing a meaningful presence in Latin America is a step-by-step, country-by-country, custom-tailored mission, not a mass-produced effort. And it starts by registering your product in every country you hope to enter.

No doubt, there is great growth potential in Central and South America, if only based on the sheer number of hospitals. [In Brazil alone, there are more hospitals than in the entire U.S.!] It is also a region of the world that’s home to 656 million people [based on 2021 statistics] which is double the U.S. population. 

Ah, but those pesky 33 individual regulatory agencies. Let’s take a closer look at how Latin America differs from the U.S. healthcare market …

Per-Capita Healthcare Spending: U.S. vs. Latin America

One huge difference between the U.S. and Latin America is the gap in per-capita annual healthcare spending. In the U.S, annual per-capita healthcare costs are in the $13,000 range while only $1,200 is spent per-person each year in Latin America.

What’s driving that? Who knows, for sure. But it’s a safe bet that discretionary income, access to insurance, varying levels of health and fitness, and a leaning towards home remedies in some regions come into play.

As a result of the 10:1 spending disparity, hospital budgets are much tighter in Latin America; so tight, in fact, that competing vendors are more likely to be accepted based on low-cost-provider status versus the value-based criteria used in many of the world’s healthcare markets. In many cases, there’s a finite pot of cash available and decision-makers are left with no other option than best price.

[On a side note, I remember there have been times, in some areas of Latin America, where budgets were so tight that administrators had to decide which floors were sanitized on what days, and some hospitals were not beyond opting for using fine monofilament -- fishing line, literally -- versus more costly sutures.]

As a result, your Value Proposition has never been more critically important. Not only must you present a compelling case that factors in four key constituencies – hospital, clinician, payor [government or private insurer], and patient – you must clearly articulate why and how your offering is innovative and superior to the incumbent product. 

You must also demonstrate supply chain reliability, how your product delivers greater operational efficiencies and improved patient outcomes and, very importantly to decision-makers in this part of the world, you better land on a price that’s agreeable to all or you’ll be on the sidelines wondering how a few extra coins here or there made such a big difference.

In the event you’re unable to match or beat a competitor's price, build an economic model that clearly shows how the hospital will save in the long run … but don’t be surprised if they still choose based on the lowest bid.

Selling Direct or Through a Third-Party

Another fundamental question you must ask early on in the process [again, this varies by country], is whether or not it’s best to sell directly to the hospital, or are you better served working through a distributor similar to the way some European countries work. [I prefer to call distributors “business partners” because they really can be an asset in helping you gain entry to certain markets.] 

Having said that, you must carefully vet distributors and be sure you’re aligned with an entity that has a proven track record of success, as measured by strength of relationships with key decision-makers; ability to accelerate your launch plan; and one who can help you navigate the subtleties and nuances when operating in culturally unique markets.

Whether going direct or through a distributor, you must also be realistic in terms of the time it could take to gain approval and, yes, once again that varies by country. This is a significant factor when building your Country-Specific Launch Plan.

Latin America: Another Harsh Reality

The world is often a challenging and dangerous place, and that can be especially true in Latin America. Every country has its own level of geopolitical stability … or unrest. Many Latin American nations are peaceful and prosperous while others have a tendency to go in and out of political hotbed status, often with little to no warning. Like it or not, you must also keep this in mind when targeting markets to enter.

If you’re hoping to penetrate multiple Latin American countries, you may need to swap out a priority country with a substitute if there are hints or warning signs of unrest on the horizon. You can always go back to them once tensions have eased.

Final Thoughts …

These are but a few of the differences between operating in the U.S. healthcare market versus the Latin America market. There are many more but this should give you a sense that what may have worked for you in the past in the U.S., may not work for you in the future in Latin America, and you must adjust, plan and proceed accordingly.

Excelerant Consulting has deep and wide-ranging experience collaborating with clients who’ve successfully entered the Latin American market. We can accelerate the process for you and help you avoid pitfalls you might unknowingly discover the hard way. 

Bottom line: It’s OK to admit you don’t know what you don’t know. That’s why we’re here. Let us know how we can help.

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ABOUT JOE MIR — Joe has 30+ years’ experience in medical devices, including positions in sales, marketing, international business, and national accounts. He has negotiated and executed numerous contracts with regional GPOs and IDNs throughout the country and has extensive experience developing relationships with senior leaders and key clinical personnel within health systems. Prior to joining the Excelerant team, Joe served 25 years at Johnson & Johnson in a variety of roles domestically and in Latin America.

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ABOUT EXCELERANT CONSULTING

Excelerant Consulting is the go-to organization for med-tech companies that need to position products and services successfully for Value Analysis Committees, contract acquisition, and sales modeling and execution to commercialize the launch of medical devices or services with Group Purchasing Organizations [GPO], Integrated Delivery Networks [IDN], or Regional Purchasing Coalitions [RPC]. Clients rely on Excelerant to identify their unique Value Proposition, enhance their product positioning, navigate corporate contracting opportunities, and provide sales support to accelerate growth and profits.

For more info, contact Excelerant Consulting at info@excelerantconsulting.com