Working with a distributor in the country of your target market is one of the most effective ways to quickly get your medical device approved by the local regulatory agency. The benefits of choosing a competent and qualified distributor outweigh the risks of developing and maintaining a transnational, or even transcontinental, business relationship; however, sometimes things go awry.
What do you do when your distributor fails to meet sales targets quarter after quarter or fails to represent your company in the ways that you want it to? You may feel inclined to cut ties with the distributor and immediately replace it, but the process is almost never that simple.
Remediation from a distributor fallout is a common complication for manufacturers in the medical device industry. When a distributor holds exclusive rights to a manufacturer’s license, replacing it without disrupting product sales and distribution can seem impossible. This case study examines how RegDesk helped a client overcome this economically dangerous issue.
A large, multinational medical device manufacturer with significant market share in Taiwan sought to discard its current local distributor and collaborate with one that would better represent its brand and products. The company aimed to conduct this transition while causing minimal disruption to the distribution of its products to local hospitals and pharmacies, but there were several unanswered questions standing in the company’s way:
What if the fallout is adversarial?
Will we be able to continue selling our products in the midst of the transition?
How long will the new registrations take?
What are the requirements of the registration process?
Will we lose the contracts we currently have with local hospitals and pharmacies?
Is a smooth and simple transition possible?
The company hired RegDesk to help them get reliable and up-to-date answers to these questions.
This situation posed a number of challenges to the company and to RegDesk. Not only was a transition nondisruptive to product sales desirable from a commercial perspective, but it was also required by Taiwanese authorities in order to prevent shortages of products necessary to the operations of local healthcare facilities. Additionally, given the nature of the terms upon which the business relationship had ended, there was a possibility that the distributor would take legal action against the client. This action could delay, or even prevent, the changing of distributors by the manufacturer.
RegDesk’s unique, multipoint intelligence report identified an efficient strategy that accommodated the client’s top priority: keeping the supply and distribution of its products uninterrupted during this major transition.
The plan suggested that the old distributor retain exclusivity and rights to sell the manufacturer’s products until its license expired while the manufacturer applied for a new license for the new distributor. The application process for the new license made use of the manufacturer’s Certificates to Foreign Government (CFG) from the U.S. FDA and Free Sales Certificates (FSC) from the E.U. With these two actions working in tandem, the gap between the old and new distributors would be sealed, allowing for the transition between them to occur as smoothly as possible.
The continuation of the exclusivity period for the old distributor until the expiration of the existing license staved off any legal risks associated with changing distributors. Simultaneously starting a new license application ensured that the expiration of the old license would seamlessly blend into the validity period of the new one. Furthermore, the use of the manufacturer’s CFGs and FSCs reduced the company’s regulatory burden. Product evaluation costs and timelines were cut by 66 percent.