U.S. healthcare is taking a hit now, however, with potentially different executive governments in post-COVID-19 America, there will be an increased focus on improving public health (including taking control of underlying conditions that lead to more deaths). The Korean health system and leading manufacturers can teach the rest of the world how we won against COVID-19 with the flattest curve in the world without the economic shutdown. When springing to the different market, however, especially the U.S. market, Korean manufacturers must not forget that it was and is a difficult market to penetrate. What are the key mistakes historically made by Korean manufacturers and how they can be avoided when entering the U.S. market now?
I’ve been talking a lot about the U.S. healthcare market as the most attractive market for the Korean companies to enter due to its huge potential and size (30% of global spend), with HealthTech being the #1 most profitable industry with a 22% profit margin.
I have met with many Korean companies that have started this expansion and have been challenged by the process. Some abandoned their plans completely while some settled for a tiny market share and revenue that came through a distributor, while their products were comparable, if not better, than the market leaders. A question that I hear a lot at trade shows is, “Why are Korean manufacturers less successful than they can be?” I’d like to share some of the most obvious reasons that come to mind. For more details, and if you experience a different issue, do not hesitate to reach out for a closer, more personalized analysis and examination.
- Not Understanding Market Complexity. The U.S. market has a unique structure of providers, payers, healthcare systems, community hospitals, and a giant VA (veterans affairs) system with over 1200 medical facilities. Each segment has different buying mechanisms: there are ~6000 hospitals, of which 60% belong to ~630 health systems, with 50% of them affecting top-down purchasing strategies and decisions. There are tens of thousands of outpatient entities & retail clinics managed by health systems, corporations, or independently. We can continue, but this gives you a glimpse of the complexity of the market. Without understanding and knowing the market rules well, it’s easy to fail.
- Product Not Adapted to the U.S. Needs. American consumers and doctors have different habits, cultural norms, and care standards/ restrictions. Not producing a product that’s natively American (i.e. designed and developed in the U.S. by the US innovators) puts your product at risk of being a mismatch. Failures can be as simple as a lack of proper translations or documentation, or as great as not meeting the needs of all parties involved in purchasing (there are usually multiple types of stakeholders: see #1 above). Your product must be U.S. market-ready (e.g. integrate with leading EHR systems, be portable, compact, smart, etc.)
- No Brand Recognition. If you are a foreign entity, invest in making yourself familiar and validated by US buyers, influencers, publications, distributors, etc. If nobody has heard of you – you don’t exist. You need to implement omni-channel targeted and laser-focused awareness campaigns with the right targets, attend the most relevant events and play by the internal market rules before they will purchase from you.
- Do Not Clearly Beat Current Solutions. Your product needs to have a record of sizable improvements: e.g. gets better, faster results or patient outcomes at a lower cost. Help to improve the provider through accuracy and facilitate intuitive, simple usage, etc.
If you come to the U.S. market alone, it will take you some time to figure out the dos and don’ts of success. Partnership with a knowledgeable advisor that knows both markets – Korean and American – will save you from frustrating losses.