The document discusses potential overseas markets for a medical device startup to expand into. It analyzes Brazil, Russia, India, and China based on their regulatory environment, level of import resistance, local competition/market saturation, and bargaining power of buyers. Brazil is identified as the top choice due to its internationally accepted regulations, zero import tariffs, heavy government healthcare spending, and fragmented distribution channel. China is also considered but faces challenges around import resistance and an uncertain regulatory framework. Europe is not recommended for expansion due to the difficulty of gaining market share. The recommendation is to enter Brazil initially and monitor China, while potentially exiting low margin countries in Europe.

2. Diagnosis
• Lack of a favorable channel in the
US
• High bargaining power of buyers through
group purchases
• High regulatory costs
• Startup mode: limited resources

3. The paradox
Bubble size = Margin
60%
40%
Market

4. Tough US Market

5. And cost…
Bubble size = Margin / Cost

6. Look
elsewhere…

7. Is Goliath weak there

8. What else is good for a startup?
• Disorganized channel
• Low public contribution (govts usually have high
bargaining power; may prefer local)
• Easy regulation

9. Case Information
• Economy
• Health Care situation
• Regulation
• Medical Device Industry

10. Brazil- Qualifiables
Positives
• Government committed to expanding access to essential
healthcare…10% GDP.
• Regulation: International Standards generally accepted
• Swift registration process (takes 10 mo., valid 5 years)
• Few large-scale domestic manufacturers
• Large, rapidly growing market
• U.S. accounts for 50% import market
• Unlike many other emerging markets-
• Low import tariffs
• No import duties
• No value-added taxes

11. Brazil- Qualifiables
• Negatives
• Medical device distribution highly fragmented
• 3000 importers/distributors
• Expected to consolidate creating greater market access

12. Russia- Qualifiables
Positives
• The $1.98 Billion Medical device sector displayed robust long
term growth
• Public and Private Healthcare spending could be 3.8 percent
of GDP which could reach $97.4 Billion by 2013
• The Russian economy is expanding and so are healthcare
investments
• By 2013 a CAGR of 7.74 percent was expected with for the
medical device market and is predicted to have a market
valuation of $2.88 billion
• Imports contribute to 75% of the market in spite of the
economic crisis giving local manufacturers an opportunity as
the price of imported products rose sharply starting in 2005

13. Russia- Qualifiables
• Negatives
• Potential changes to legislation could worsen Tariff's on medical
devices are expected to drop to an average of 5% with Russia
potentially entering the WTO
• Government could seek methods to increase the market share of
local producers using methods like increasing tariffs
• Local manufacturers have sales of about $1.98 billion

14. India- Qualifiables
Positives
• Regulations Improving Continually; becoming more
transparent
• $2.35 billion market for Medical Device Technology
• Private sector accounts for ~75% of Health Care
Spending
• Imported High end Goods increase its share
• Reduction of levies & Increase of foreign firms
• Medical Devices rise by 23% expected YOY(2005-06)

15. India- Qualifiables
Negatives
• Poor, (but emerging) population
•Intellectual Property Laws are lacking
•Shortage of Staff in Private and Public sector
•Private sector accounts for ~75% of Health Care
Spending

16. China- Qualifiables
Positives
• Medical device market accelerating by 12.87% YOY
• Population = 1.3 billion (ageing population), although
population is highly segmented
• Foreign medical device manufacturers are expected to
increase their presence

17. China- Qualifiables
Negatives
• Heavy resistance to foreign imports
• Although Population = 1.3 billion (ageing population), its
highly segmented
• foreign competition gaining presence
• The regulatory framework is hindering the path toward
efficient operations in the medical industry, but
improvements expected in the next couple of years

18. How do we decide?
• Regulation / Compliance
• Brazil: international accepted! Fast process • Import resistance
• Russia: weak teeth/ political; • Brazil: zero tariff!
• India: somewhat hopeful • Russia: 75% potential but strong push for
local
• China: uncertain, seems difficult and slow
• India: Moderate; China : High
• Bargaining power of buyers
• Political
• Russia : Indirect govt. funding
• Russia, China unfavorable
• Brazil: heavy direct govt spending
• Brazil looks much better
• China and India: favorable privatization trend
• Size and Growth
• Local competition / Saturation/Price
pressure • Cost advantage
• China Local players, price pressures • how about geography
• Russia: local encouragement • Early entry advantage
• India: nothing mentioned (better) • Market similarity

19. 25
20
Does size matter?
Brazil
15 Russi
a
India
10
5
0
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

20. Barrier to entry
Brazil Russia India China
Regulation
Import-resistance
Local-C/S
Buyer power

21. Finalists
Brazil China
  Regulation
Import-resistance
Local-C/S
Buyer power

22. How about Europe?
• A startup can easily
make a small dent
• Hard to expand
• Margin/Cost
information not
available for BRIC

23. Recommendation
• Enter Brazil
• Keep an eye on China
• Maintain status-quo in high Margin/Cost countries like
Spain and Greece
• Consider exiting low Margin/Cost countries like Italy
(sorry Professor)