Not long after successfully selling a medical device in the US (or perhaps even the EU) manufacturers and developers look to expand the map. There is a tendency to leap before planning, which invariably leads to advice when plans hit a snag. It’s not uncommon for something to go wrong managing sales from a continent or two away. In the haste to enter the market the first hiccup arises in the reliance on a foreign distributor to manage regulatory, distribution, and sales.
Latin America is a favorite region for expansion. Countries like Mexico, Brazil and Argentina offer huge populations and growing demand for medical services. My experience in the region is to look before leaping, to take a moment to plan instead of acting on the enticing potential the market offers.
In most Latin America countries registration holders must have a physical presence in the country. This means a company office and personnel. The quickest and easiest solution is to use a distributor as a registration holder. Many distributors will offer this service and there are even some entities that will simply act as registration holder. Although appealing, it’s important to note that the registration of a medical device is held, or in other words owned, by the registration holder. If that relationship sours or doesn’t meet expectations, then a device’s registration is in limbo. Switch distributors (assuming they are acting as registration holder) and your product must go off market while it is re-registered. Re-registered meaning the whole process from the beginning (registrations in South America are unlike the US 510(k) or PMA which are indefinite so long as unchanged; in South America on average a registration expires after 5-years).
This wrinkle in Latin America device regulations makes a Foreign Distribution Agreement a crucial component. It’s one that is often overlooked in the eagerness to begin sales. When drafting a foreign distribution agreement for clients there are several areas I build up to mitigate the time-off-market for a device, like notification windows and performance standards. There are also ways to build in incentives or penalties for poor performance that can compensate for the loss due to time-off-market.
If you are considering expanding your medical device sales into Latin America, or any region, of the world – look before you leap. The time you take to consult experience counsel will mitigate the risk of operating and managing sales thousands of miles away.
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