The minimally invasive surgery market, and associated Danish ...

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The minimally invasive surgery market,
and associated Danish opportunities
We are thus arguing that there exists an increasing animosity towards Chinese produced goods, an
animosity that is unlikely to decrease over the next decade, as the European recession is likely to
worsen and potentially lead to a breakup or reduction of the Euro Zone, which in turn will increase
national debt levels to China. Should this situation progress it is probable that even 7th grade school
kids will understand that what drove European nations into Chinese “ownership” was the combination
of (a) fiscal negligence and (b) an artificially maintained low Yuan which has fueled the Chinese export
Eldorado – or expressed with an extra portion of sarcasm: The artificially maintained low Yuan is the
reason China can “buy your country with your money”.
In order to be successful at this strategy, one would have to apply consumer look-a-like marketing
techniques towards hospital executives playing the “based in and produced in Europe card”.
If a Danish based company cannot produce its “copy & paste” MIS devices in China, how is one to run
a profitable business? There are many reasons why such a solution might be as profitable or even more
profitable than the multinationals currently marketing such MIS devices and also more successful than
the Chinese based devices. We shall discuss the top two reasons in the below and add a little twist as a
third option:
1) R&D cost and overhead
2) Price point
3) The “made in Switzerland” twist
6.3.1 R&D cost and overhead:
First of all when one implements a “copy & paste” strategy the R&D cost should by definition represent
only a fraction of the original R&D cost (carried by the multinationals). Secondly, when competing
against the multinationals with copies of their own portfolio in a hospital environment as described
above, one needs less sales people trying to sell marginal and insignificant device differentiation. In this
kind of environment quality relative to price will, ceteris paribus, be the main sales driver.
6.3.2 Price point:
What this also translates into is that the “copy & paste” MIS device need not be of the exact same
quality as the original – it merely needs to be “close enough”. Likewise the price point need not be one
tenth of the originals - a 25-40% price reduction will suffice as long as the quality is “close enough”. To
draw an analogy from the world of European commercial airliners, one could state that to be successful
with this strategy one need not become the Easy Jet or Ryan Air of MIS companies – becoming the Air
Berlin will not only do – it might be the more successful strategy.
A real life example of a company that has successfully implemented this strategy could be represented
by UK based Purple Surgical, founded in year 2000, it has taken basic MIS devices (low to medium unit
priced devices) in the field of laparoscopy, applied the “reverse engineering” or “copy & paste” strategy
into a new, less expensive, yet, good enough quality product range.
A US-based example that has gone down that same route is Applied Medical, which allegedly, has
surpassed Covidien in terms of market share for laparoscopic access ports in the US.
6.3.3 The “made in Switzerland” twist:
Having covered the basics of R&D, overhead and quality versus price point, we are left with the last
interesting factor – we call it the “made in Switzerland” twist. It is hard to think of a label that by
consumers across the globe is regarded as highly as the “made in Switzerland” label. If “made in