Overview

Institutions are a minor distribution channel for the AdvaCare Pharma medical device product range in terms of a percentage of our total medical device sales, but can be strategically important. Institutions have many options for medical device suppliers, many of which are manufacturers, which makes it more difficult for us to compete on a price basis. But we also have some advantages for our medical device range including our USA brand and a wider product range than manufacturers. However, specifically for medical devices, it is very competitive given the large number of manufacturers compared to pharmaceuticals.

MEDICAL DEVICES FOR INSTITUTIONS

ADVANTAGES

DISADVANTAGES

  • USA brand and reputation.
  • Much wider product range than any single medical device manufacturer.
  • Our distributor might have special relationship with institution.
  • Institutions have many options for medical device suppliers, much more so than pharmaceuticals.
  • Manufacturers can submit lower prices as they have more control over the production cost.
  • Quality is deemed less important a factor for medical devices than for pharmaceuticals.
  • Tenders for medical devices often provide vague product specifications which can make it difficult to quote.
  • Corruption is commonplace with tenders, especially those issued by government.

Our ability to get orders from Institutions, either by winning tenders or by direct order, largely depends on our distributor’s capability and relationship with the Institution. Our ability to submit for a tender may depend if the tendered medical device products require registration in the importing country or not, but this is less common a requirement than for tenders of pharmaceuticals. If registration is required, then we would have to have our products already registered as there would not be enough time to complete the registration process. Otherwise, many tenders do not require product registration, but in this case price competition will be much more intense reducing our likelihood of winning the tender.

Product Range: Which products apply to this channel and why?

Our entire medical device range is positioned for institutional orders, meaning we can cover many of the products that would be included in a tender or private order. Institutions can issue a tender for any medical device products, but given that most of the products tendered will be for the hospital channel, specifically for public hospitals, the devices aligned for this channel are more likely. It is not to say that it is impossible that tendered products would be distributed through other channels, but rather most will be distributed through public hospitals. For example, pharmacies are retail points of sale and almost always privately owned, unless the pharmacy is inside the hospital.

See:

Medical Devices: Hospitals/Clinics > Product Range: Which products apply to this channel and why?

Target Audience

B2B: Primary Target Audience

As institutional orders, especially for medical devices, will usually be submitted through our distributors, our distributors are our customers. However, the terms of every tender or private order will dictate the payment arrangement, meaning our distributor will most likely be the buyer of our products and then deliver to the institution, or in some cases the terms might dictate that the institution is the buyer and in such a case would have to provide a commission to the distributor, but this case is rare. Regardless, our distributor, given their role in between us and the institution, will be the primary target audience.

See:

Distribution Channels: An Overview > Distributors

B2B: Secondary Target Audience

Government

The government health agency, which goes by varying names depending on the country MOH (Ministry of Health), FDA (Food & Drug Administration), DOH (Department of Health), etc.), whom our distributors sell our medical devices to, are the secondary target audience - a later stage in the supply chain. The decision makers of the government health agency decide which suppliers get awarded which products in the tenders, unless it is a direct order given without tendering which does occur in some countries.

In order of importance, the deciding factors for winning government tenders are:

1. Product prices
2. Relationship of distributor with government decision makers
3. Product quality
4. Product availability
Inter-Governmental Organizations (IGOs)

IGOs are international or national government-related organizations that have a budget for health initiatives in lower income countries. The larger IGOs that regularly issue tenders for pharmaceuticals include UNICEF, WHO, World Bank, etc. Such organizations can be more difficult to work with given their oversight, and therefore we rely on our distributor to have the necessary connections to facilitate such tenders.

In order of importance, the deciding factors for winning IGO tenders are:

1. Product price
2. Relationship of distributor with government decision makers
3. Product availability and regulatory compliance (if product requires registration for importation)
4. Product quality
Non-Governmental Organizations (NGOs)

NGOs are usually international organizations that focus health initiatives on lower income countries. These institutions are the smallest and least likely to issue tenders given budgets are smaller than IGOs and government institutions.

B2C

Patients are the end users of our medical device products. These people usually use the products in the hospital channel or could be distributed directly in some cases. Branding awareness and messaging are less important, but still relevant if the same people come to trust our products, they might buy the same or other AdvaCare brands in the future from the pharmacy channel.

Supply Chain

Institutions are the third to last stage in the supply chain before the product is distributed to a hospital or pharmacy and ultimately used by a patient or consumer:

API Manufacturer > Finished Manufacturer > AdvaCare > Distributor/Importer > Institution > Hospital/Clinic OR Pharmacy > End Consumer (patient/consumer)

See:

Distribution Channels: Introduction > Understanding Supply Chains

Promotional Materials: Which materials apply to this channel and why?

Institutions do not advertise specific brands or products as they are not in the business of selling specific brands, but rather best allocating an assigned budget to secure pre-determined medical devices that are distributed and used to address specific health objectives that are inline with a health initiative.

The kind of promotional materials we produce for our distributors to provide to hospitals should be based on materials that can be provided to:

The institution with the main purpose of proving credibility.
Hospitals that can use the related promotional materials.

The promotional materials we provide for institutions, and by proxy hospitals, must meet the intended purpose:

Medical Devices: Hospitals/Clinics > Promotional Materials: Which materials apply to this channel and why?

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