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Competitor and Market Analysis

NIC Document

Summary

When embarking on developing a new innovative idea or product, it is essential to know that it hasn’t been done before, that there is a market out there and that the competitor hurdles are not too great.  Undertaking the right research at the right time, can help shape your development and particularly inform the strategy needed to take an idea to the market place.  This guide provides some useful background on elements of research needed, what information already exists and which organisations might help.

In Brief

This document contains the following sections:

  1. Background
  2. The National Health Service (NHS)
  3. Cost Savings
  4. Benchmarking
  5. Customer Need
  6. Legislation and Regulation
  7. Factors to Consider in Competitor/Market Analysis
  8. Sources of Information on the Competiton and Potential Markets
  9. Information on Market

Background

The medical device market operates in a global market place, with competition not being restricted by geographical location. This is reflected in the purchasing policies and procedures of the NHS, as they source products and services internationally. 

Competitor and market analysis enables better-informed decision making in all aspects of the innovation (product introduction) process: design, manufacture, marketing and sales. The analysis process is not just about finding evidence to support an innovation to be developed and commercialised; it is also about stopping flawed ideas and concepts going forward and ensuring no infringement of other people’s IP (Intellectual Property).  Such analysis will save resources [money, time, etc] being spent on an innovation that has no added value and benefits.

The National Health Service (NHS)

Analysing and understanding the NHS processes and procedures are paramount because of the dominance of the UK market by the NHS.  Although your major market might be overseas, entry into the home market can ease your path into overseas markets.

The most common methods of purchasing are:

  • Individual local contracts
  • Consortium contracts – hospitals joining together to group purchase products and services
  • NHS Supply Chain
  • National framework contracts

Sourcing information on the NHS is relatively simple, perhaps the most useful resource is the NHS Supply Chain website, see http://www.supplychain.nhs.uk. Here you will find information on thousands of products ranging from toilet rolls to MRI scanners. Users can browse the website and see basic details on the product including price and supplier information.


Why Analyse Potential Competitors and the Market Place?

When developing a new idea or concept you define your ‘product’, therefore you select your ‘market’ hence you have to accept your ‘competition’.

When developing a new idea or concept the analysis of potential markets and competitors may appear to be obvious, but it is often either forgotten or not undertaken to the appropriate level.  Innovators can be blind to the competition when developing a new concept or idea, believing their idea or concept to be technically superior and/or so niche that there is no competition.  (It may often be worth undertaking a patent search before you progress too far to ensure your invention is truly innovative – see ‘How to search for Patents’ – another guide in this series).

Cost Savings

Effective, realistic research will save money by allowing an early decision to be made if there is (or is not) a market for the new idea or concept.  Furthermore, cost savings are likely as the research will inform your decision on how to approach the market with a cost effective strategy for quicker entry into the market.

Benchmarking

An idea or concept has to offer benefits and/or add value above what is currently being offered to the market.  Through the analysis process there needs to be a comparison, both at a technical and managerial level, to evaluate the new innovation against what is currently on the market.  For example, if research identifies strong competition or a market dominated by a small number of suppliers, then the choices and decisions can be evaluated and implemented, such as:

  • Withdraw the innovation because the commercial risks are too high and the potential returns not high enough.
  • Continue and formulate a strategy to overcome the competition.
  • Bring the technology to an appropriate level where it would be of interest to the competition and try to work in partnership with the competition to improve their product portfolio with the new innovative idea or concept.

Customer Needs

If your target market is the UK, the National Health Service [NHS] dominates, therefore the procedures and practices of the NHS need to be understood so a technology can be developed in a manner that meets the needs of this major customer.  This will make the implementation of the new idea or technology a quicker and smoother process, leading to earlier revenue generation, longer product life cycle and a more profitable product.

If an alternative, or additional market is sought, then again knowledge of that market is essential to guide your strategy for product roll-out.

Investment

Market and competitor analysis will allow a more powerful and successful presentation (business case) for investment, be it from a business angel service, bank and/or government funding. Nevertheless, the research needs to be realistic and in-depth, offering rational outputs and an indication of potential profits and market share.

Legislation and Regulation

The global medical device market works within a framework of medical device legislation, which varies from geographical region to region.  The two main medical device markets are the USA, which uses FDA Approval, and Europe that uses CE Marking.   When developing a new technology, regulatory issues have to be analysed in order to save money, time and resources.  Therefore as part of the market analysis there must be a thorough investigation and understanding of the legislative issues that will affect the commercialisation and development of new technologies.  This includes the classification of the technology, the activities required to pass the regulations and last but not least the cost of attaining the correct regulation.

Factors to Consider in Competitor/Market Analysis

Pricing Strategy – how is the market structured in terms of pricing, is the market ‘pile it high, sell it cheap’ or is it based on technology and can that technology demand a premium price.

Product Development - competitor and market analysis has a direct effect on the direction of the product development and commercialisation.  Through the analysis, decisions can be made on the technological specification, manufacturing, quality and market entry method to achieve the best results and avoid expensive delays in the development process.

Route to Market – research will affect THE market entry method, including decisions on whether to manufacture in-house and sell, or manufacture and seek distributors, or bring the innovation to a suitable level and licence/sell the idea or concept to a company.  This decision is dependent on the competitor and market structure, which can only be fully appreciated after the analysis has taken place.

Sources of Information on the Competiton and Potential Markets

Sources of information on the medical device market are wide and varied, the problem is often that there is too much information rather than not enough.   The Internet is an excellent source of information, but any research needs to be focused and structured in a format that is easily deliverable and answers your questions.   Before beginning any research have a clear set of questions and issues that need answering and when evaluating any information, you need to ask who has provided the information and why?

Information on competitors

Company Web Sites – an excellent source of information on product portfolios, technical detail, benefits of a company’s products, etc. 

On-line company databases - in the UK there are a wide range of on-line company databases available, to list them would be exhaustive, and therefore we have highlighted one on-line company database below as an example.

Exhibitions - The medical device market is niche and to accommodate this there are a large number of niche healthcare conferences, exhibitions and seminars to cover the vast array of clinical sectors or ‘disease areas’ [such as cardiovascular, diabetes, geriatrics, etc].   Through targeting these events valuable information can be discovered. Attendance at an exhibition is effective, but not always necessary.  Research into the event web site or obtaining an event catalogue and agenda will yield information on which companies are either exhibiting or presenting material.

For the medical device market there is one key exhibition in Europe: MEDICA [www.medica.de].  The exhibition is the largest healthcare related exhibition in the world, held annually in November in Dusseldorf, Germany.  MEDICA has over 4,000 exhibitors covering a huge range of medical devices. The exhibition is an excellent source of information on potential competitors and the medical device market, including trends, new technologies and companies operating in clinical sectors and specific markets.

Information on Markets

The amount of information on the medical device market can be overwhelming, which can make the process of finding information daunting and time consuming.  Therefore research has to be carried out in structured manner, with clear objectives. Below are some easily accessible sources of information.

Internet – the internet allows access to a wide range of information, from healthcare providers, clinicians and patients.  For specific disease areas there are often patient groups who have their own web site that can be an excellent source of information.

Disease areas – one way to analyse the market is to look at the disease area for which the new idea or concept has a beneficial effect.  Evaluating the procedures and practise used to diagnose or treat a disease will allow an analysis of how current treatment is administered, technologies used and trends in management of the disease in question.

Market Research Organisations – a number of large organisations offer professional market research services, and the internet will point you to a vast array of market research reports.  These are often expensive and provide much more information than you need.  Working with appropriate market researchers/information scientists and libraries, you can often access specific parts of such reports for smaller fees.  Again, you will need to be as clear as possible on the information you need, to ensure you get value from this exercise.