Distribution Channels: Medical Devices

| 4 minutes

Medical Devices are regulated, but less so than pharmaceuticals or veterinary medicines. While many products are specific to only one channel, the wide range of products allows for access to many different distribution channels. Medical Devices often complement pharmaceuticals in many of the same channels, and also can serve as a customer acquisition product in which these products bring in a new distributor that we can then develop to also distribute a range of other products.

Types of Medical Devices

Our 5 product divisions include only class I and II medical devices:

● Class I: low-risk and simple in design
● Class II: moderate-risk and can be intrusive
● Class III: high-risk and used in diagnosis and treatment of serious conditions
● Class IV: highest-risk and used for life-sustaining purposes
Note: An easy way to think about class I and II medical devices are: A medical device, instrument, tool or equipment that is disposable, that can be used and disposed of.

Our 5 product divisions include:

1. AccuPoint Injection Instruments
2. AccuQuik Diagnostic Detection
3. StaySafe Medical Disposables
4. StayGuard Skin & Wound Care
5. StayDry Incontinence & Urology

What is Product Registration?

Some countries do not require registration for medical devices. In other countries, it is required that a medical device product, and sometimes the manufacturing facility as well, must be “registered”. This is a process, which can take between 1 to 12 months depending on the country, in which AdvaCare has to submit a compilation of many various technical documents, called a dossier, along with product samples, to the local health authority (FDA, MOH or other name of the national agency for enforcement of medical products).

If registration is not required, our products can be directly imported with minimal certifications and documentation. If registration is required, the registration process must complete, then the distributor can import our registered medical device products, and start to distribute through various channels. The distribution channels through which medical devices products get from AdvaCare to the patient or end consumer can vary.

Advantages vs. Disadvantages

Before getting started with the details of our Distribution Channels, it is important to understand the competitive advantages and disadvantages of our medical device product range:

MEDICAL DEVICES
ADVANTAGES
 		DISADVANTAGES
  • USA brand with competitive price points.
  • Manufacturers cannot produce such a wide scope of products, usually just a few variations or a dedicated scope of products at most because each manufacturer is limited by economies of scale. AdvaCare has ~500 medical device products across 5 product divisions.
  • Manufacturers are less restricted than pharmaceuticals or veterinary medicines to countries for which they have sufficient certifications to meet regulatory requirements, but nonetheless still restricted by certifications. AdvaCare has a wide network of manufacturers to match certifications to country requirements.
  • CMOs (Contract Manufacturing Organizations) are not organized or have sufficient infrastructure to undertake the complexity of coordinating hundreds of data points: products, countries, certifications, etc. AdvaCare is well organized with substantial infrastructure.
  • CMOs lack in-house regulatory capability. AdvaCare has a dedicated Regulatory Affairs Dept.
  • China and India-based manufacturers are respectively limited to the products which they are strong for production
  • China is stronger for most medical devices, but India does excel with a few medical devices. However, compared to pharmaceuticals, our advantage of leveraging both China and India is more limited granted we have to rely on China for almost all of our production.
  • Some distributors only want to work directly with manufacturers because prices can be more competitive. It is more difficult for AdvaCare to add value and differentiate with medical devices when compared to pharmaceuticals or veterinary medicines. However, AdvaCare has a wide manufacturing network to leverage lower cost options.
  • Manufacturers of medical devices are generally easier to work with than pharmaceutical or veterinary manufacturers.
  • Manufacturers of medical devices are more numerous than for pharmaceuticals given less regulations for production. Manufacturing License is easier to obtain for medical devices than pharmaceuticals.
  • Consolidating many products in an order into 1 order, often 1 or 2 containers, is less attractive for medical devices as some products are larger in volume and can consume an entire container, making it easier for a distributor to avoid consolidation.
  • Some distributors want to work directly with manufacturers because they perceive decreased risk with quality control as another party in between manufacturing and the distributor can create more barriers for reimbursement.
  • Some distributors want to work directly with manufacturers because they perceive product registration to be more direct without the involvement of a third party in between the manufacturer and distributor.
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