Sales & Distribution Strategy

Developing a sales and distribution strategy is an exciting step in the biodesign innovation
process because it signals how close the innovator is getting to the launch and commercialization
of a product. The steps below have been excerpted from Chapter 5.8 and are presented with
active web links to assist innovators in getting started.

Evaluate the Impact of the Business Model on Options for Reaching the Customer

1. What to Cover – Assess the characteristics of the company’s business model and
product against the following dimensions (high/low): relative complexity, differentiation
from competitors, price/value, and expected sales volume. Determine customers and end
users.
2. Where to Look – This assessment is subjective and can only be made relative to other
products in the field. Therefore, research should be grounded in the evaluation of
competitors and proxy products (see 2.4 Market Analysis for information about assessing
the competitive landscape) and 6.1 Operating Plan & Financial Model for an approach to
proxy analysis). Refer to 4.4 Business Models for key sales and distribution
considerations related to each business model type. In addition, seek the counsel of other
innovators, experienced sales representatives and distributors, and other advisors. 

Assess the Impact of Intermediaries on Sales and Distribution

1. What to Cover – Become familiar with the various types of GPOs in the U.S., including
large national GPOs and smaller specialized physician purchasing groups. Read through
websites and review online bidding calendars to get a sense of products purchased by that
organization. Consider contacting select GPOs for a phone interview to assess the
contracting environment for a specific device. Learn more about IDNs and their
associated purchasing teams. Read available literature on purchasing trends within the
medical device field.
2. Where to Look –
o Books and Articles – Refer to texts such as the following for a background on
intermediaries and medical device purchasing:
 L.R. Burns, et al., The Health Care Value Chain: Producers, Purchasers
and Providers (San Francisco: Jossey-Bass, 2002).
 Richard Cohen, “The Narrowing Distribution Funnel: How to Get Your
Medical Device to Market,” Medical Device Link, 1999, (April 1, 2008).
o GPO Websites –
 Novation
 Premier
 HealthTrust
 Amerinet/Intermountain Health Care
 Medassets
 Consorta
o IDN and Hospital Systems Websites –
  GroupHealth
 Kaiser Permanente
 Tenet

Choose a Sales and Distribution Model

1. What to Cover – Define how the sales process would ideally work, taking into account
the unique characteristics of the medical field, business model, customer, and product, as
well as the interaction the company hopes to create with the buyer. Take into account the
effect of intermediaries and any special considerations for the product that mandate a
particular type of distribution. Consider how devices will be shipped, stored, and
serviced. Select the sales and distribution model that provides the best fit. Vet the model
against the company’s current financial position and projections (see 6.1 Operating Plan
& Financial Model).
2. Where to Look – Refer back to figures within the chapter for high-level decision tools to
help make this decision. To better understand the sales process with a direct model, try
setting up a field visit with sales representatives in the selected therapeutic area, or attend
trade shows/conferences and visit the exhibit halls to talk with representatives in that
environment. To understand the process for an indirect model, it may be helpful to
contact the following entities:
o Large National Medical Distributors –
 Baxter Healthcare
 Henry Schein
 Cardinal Health
 McKesson
o Independent Specialized Distributors –
 Independent Medical Distributors Association
 Health Industry Distributors Association
o Analyst Reports and Press Releases – Review analyst reports to understand the
portfolios of potential third-party partners and watch for recent press releases
regarding activity in this space.

Coordinate Marketing, Training, and Support Activities

1. What to Cover – Determine which resources and activities will be required to support
the chosen sales and distribution model. Key issues to consider include sales training,
customer service, and the linkage between sales and marketing activities. If an indirect
model has been chosen, determine how to balance responsibilities and costs between the
company and the distributor, taking into account internal resources as well as need for
long-term control over the direction of product. Use the output of this assessment to
inform the selection of one or more distributors/partners with complementary strengths
and capabilities. Then create an internal marketing, sales training, and support plan
designed to work in concert with the chosen distributor/partner(s). Develop a plan to
 ultimately recruit a VP of marketing and sales (this position is relevant in both the direct
and indirect model).
2. Where to Look – Refer to 5.7 Marketing & Stakeholder Strategy and 6.1 Operating Plan
& Financial Model. Examine similar industry partnership examples for best practices on
how to divide sales operations, marketing, and customer service functions. Work with
consultants and colleagues to validate brand support requirements and the feasibility of
outsourcing each component of these functions to distributors/partners. Look to partners,
as well as consultants, to coordinate a cohesive plan.

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