This week at Hearing International we have the third in the series of articles by guest author Siamak Sani discussing Global Market Dynamics. Siamak Sani has worked with various technologies and distributors to address the world’s hearing impairment with his technology and products. It is our pleasure at Hearing International to again have this unique perspective on the problems of bringing hearing healthcare to the international community.
Global Market Dynamics: A Crisis Growing Rapidly
by Siamak Sani
As presented in parts I & II, achieving success in development of international markets for hearing instruments beyond a 1% market penetration requires advances in four general areas:
- Issues and Problems
- 3 Ps: Product, Price, and Performance
- Distribution and Global Training Programs
- Global Cost of Hearing Loss
Distribution and Global Training Programs
“It is all about distribution baby !”
These words were uttered to me by a very wise mentor 17 years ago when I entered the world of hearing; today, these words still ring true. Global markets growth is clearly about addressing major distribution challenges.
Living in Silicon Valley, where we make things cheaper, better and faster, it feels very strange that despite so many incredible advancements in the world of consumer and medical electronics, not much has changed in the hearing world. We continue to stare at the 1% global market penetration, celebrate annual growth rates of less than 3% and watch prices steadily climb.
Having completed their quest for acquiring all competing device manufacturers, the big 6 have turned their attention to acquiring global distribution networks and points of sale. As the result, the number of independent points of sales continues to decline and this decline certainly runs against the grains of what is needed to grow the global distribution channels. Even the promise of PSAPs appearing across US retail chains, after the 2009 FDA ruling, has yet to be realized in form of significant sales volumes at US retail channels.
It can be argued that, despite the most common market limiting factors such as stigma and denial, the global markets could achieve penetration levels of 20% (out of pocket in US) to 40% (subsidized in EU). That is if one can provide the same levels of products and services at much lower prices across large enough global networks of trained professionals.
Today, approximately 200,000 global points of sales (25K in US, 75k in EU and 100K Rest of the World (ROW), serve 7M patient. Since majority of current channels are focused on bundled “device + service” model, in order to significantly increase global penetration, we would need to either:
- Compliment current business model with an unbundled self-fit “device only” business model. Similar to the reading glass concept, such model would enable patient access across existing retail channels such as pharmacies, medical clinics, optic shops, etc. and/or
- Create millions of trained service providers at substantially lower bundled prices required to address local needs
The device only option, the related product requirements, price points and features were covered at length in earlier discussions. It is the latter point we wish to expand further.
Global Training Requirements
Reverting back to the highly developed and working optic distribution models with much higher global penetration rates, we can perhaps deduce what the global needs would need to include, especially in terms of required points of sales growth. In US, approximately 40,000 optometry and 25000 dispensing points of sale provide market coverage. Doubling the current 13,000 audiology and 10,000 dispensing points in US, creating large certified provider networks which can in turn provide the required FDA approved service points for major insurance companies, would be a great starting point for increasing US penetration beyond the current 20%. It is safe to assume that enabling insurance re-imbursement in US should result in increasing penetration beyond the 40% rate seen among several EU countries.
Extending similar statistics across global markets would suggest that over 1,000,000 new jobs would be needed to increase penetration from current 0.4% (2M served in 500M need) to a respectable 20% level.
Given that most of the global markets are not burdened by protective regulatory guidelines as seen in EU and US, minimal starting training and local certification, combined with some level of continuing education should go a long way in creating the proper patient service platforms. As discussed, the required device and product performance issues required to achieve 90% patient satisfaction are currently being addressed and will be available in a much quicker manner than the distribution growth.
The clear lack of comprehensive audiology training programs across global educational institutions, points to the existing trained and certified professionals as the ideal resources to undertake such global training programs. Viewed as a potential source of competition, except for few humanitarian efforts, such large scale training programs have yet to be borne from within the current high priced business model. Thus, it is naïve to think that such global training efforts would be forthcoming from within the current industry.
Creating millions of jobs and micro businesses would have significant benefits to local economies, bring about much needed help to address the unmet need and also avert a growing humanitarian crisis due to the aging population and substantiated rapid growth of hearing loss among younger generations due to use of personal music players.
Global efforts should be focused on alerting government authorities of the growing crisis, soliciting support from private and government sectors and discussing clear benefits of creating jobs and added benefits of addressing the tremendous hidden costs of hearing loss to societies and mankind.
Next Week at Hearing International, Siamak Sani will return for Part IV of his discussion on the Global Market Dynamics of hearing instruments looking at the global cost of hearing impairment…..RMT
Siamak S. Sani, Chief Executive Officer, World Hearing Organization Inc. Mr. Sani holds a BS degree in Electrical Engineering and Computer Sciences from UC Berkeley and an MS degree in Engineering Management from Santa Clara University. He is, currently, President & CEO of World Hearing Organization (WHO) Inc. For the past 10 years, Sani has been creating Wearable and hearing enhancement devices and technologies which provide the highest audio performance, 8- prescription instant-fit feature. He has also focused on developing innovative distribution platforms for the global hearing consumer markets. For more than 30 years in executive management of start-ups and $100M public corporations in the Semiconductor and Hearing Industries, he aspires to address the 99% unmet needs of the world’s 2nd largest medical condition, hearing loss. Siamak may be reached at: firstname.lastname@example.org
Dreamstime (2015). Royalty Free images. Retrieved August 17, 2015
ETF Daily News (2015). Emerging Markets. Retrieved August 17, 2015.
Teton Valley Health Care (2015). Bundled Pricing. Retrieved August 17, 2015.
The Investor (2015). Global Markets. Retrieved August 18, 2015.
Flash Your Mind (2015). International Distribution. Retrieved August 19, 2015.