Executive Insights

Japan Medtech Go-to-Market Strategies in a
Post-COVID-19 World
Japan’s nationwide policy-level shifts areaffecting medical device volume and pricing in
an increasingly competitive market. These shifts— combined with COVID-19-related restrictions
further limiting sales representatives’ access tohealthcare professionals (HCPs) — are driving
changes in the purchasing needs and behaviors
of medtech customers in Japan.
In order to capitalize on the changes, medtech manufacturers
must rapidly adapt their current HCP engagement models sothey can provide the right levels and types of service for theircustomers. Organizations need to assess their current service
levels, taking into consideration the nature of activities provided
as well as the resources invested (time and frequency of effort),
and to optimize across customer segments.
This requires medtech players to develop remote channel
infrastructure, upskill their workforce, and redesign sales
territories and account plans. Traditionally, medtech players inJapan have been somewhat reluctant to change their customer
engagement models, favoring the traditional in-person service
model and an undifferentiated service offering. But this mindset
must change; organizations that fail to do so risk being left
behind in a fast-changing and competitive marketplace.

Market trends and imperatives
Policy-level shifts are affecting device volumes and pricing
in an increasingly competitive market. Financial pressures on
the Japanese healthcare system are leading to more frequent andbigger price cuts for medical devices and increasingly restrictive
reimbursement criteria (e.g., appropriate use criteria). This isoccurring in the face of increasing competition among medical
device players for a smaller spend. Medtechs that fail to adjust
their go-to-market strategies to reflect this environment risk
falling behind their competition.
Evolving customer priorities and a shifting purchase processcreate an opportunity for segment-based engagement
models. Hospitals in Japan are responding to these pressuresin a number of ways, notably by increasingly emphasizing
economic imperatives over clinical considerations, in terms ofoverall strategic priorities as well as how purchases are beingmade.
In addition, economic stakeholders are wielding more influence
across device types. In the past, administrators held little
sway when it came to decision-making for anything except
commoditized devices. Now, in certain institutions, administrators
are becoming highly influential across many device categories,
save the most innovative ones (such as highly novel valve repair
and replacement devices), where clinician primacy still generallyprevails. Hospitals across Japan demonstrate significant differencesin purchasing behaviors, which creates an opportunity for aJapan Medtech Go-to-Market Strategies in a Post-COVID-19 World was written by Patrick Branch, Partner, andSam Wilson, Principal, in L.E.K. Consulting’s Medtech practice. Patrick and Sam are based in Tokyo.
For more information, please contact medtech@lek.com.

Executive Insights
Figure 1
Categorizing types of medtech services

segment-based engagement strategy,
including differentiated services, service levels
and communications for each segment.
As a direct result of COVID-19,
many institutions are limiting or
preventing access to HCPs in the shortterm, hastening an already growing
practice of limiting the access of sales
representatives to HCPs. L.E.K. Consulting
research shows that more than 70% of
medical facilities in Japan have restricted
manufacturer access in response to thepandemic. With medtech sales force practices
halted across the industry, it is an opportune
moment for manufacturers to rethink them.
In addition, the purchasing behaviors ofmany accounts in Japan are no longer
influenced by most of the activities of thesales representative. Approximately 30%40% of hospitals in Japan favor economic
rather than clinical- and product-related
factors in their decision-making.
These two factors combined mean that thetraditional sales model is no longer valid formany customers, and medtechs must change
their engagement models to reflect this.

Sampleprovision

Product
informationDatacollection

Education• Which of these services are
critical to the sale and ongoinguse of the product?
• Which of these services will driveincremental sales for selectcustomer segments?
• Which of these services offer limited
value to select customer segments?
• Which of these services are well
suited to remote channels?

Clinicaldata

EventsTechnical
supportFollow-up
checks

DeliveryInventory
management
Low-value services

High-value services

CaseattendanceCritical services

Logistics services

Access to HCPs is expected to remain
L.E.K. research and analysis
limited even when the COVID-19
pandemic is over. More than 45% ofhospitals expect these restrictions to continue
need to assess their current service levels, taking into
for the long term, even when the COVID-19 crisis is over. In a
consideration the nature of activities provided as well as thetime-constrained environment, medtechs need to align theirresources invested (time and frequency of effort), and to optimize
services with HCP needs in order to maximize sales force impact.
across customer segments.
Adoption of remote tools is increasing rapidly and is
expected to persist. In response to access restrictions,approximately 40% of HCPs have increased their usage of remotetools to engage with medtech sales representatives. The same
share of institutions is also open to manufacturers using remotedetailing on an ongoing basis.

Design considerations
In order to capitalize on the changing market environment,
medtech manufacturers need to rapidly adapt their current
engagement models with HCPs to provide the right levels andtypes of service across their customer segments. Organizations

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Consideration #1: Build an extensive sales force
effectiveness (SFE) fact base to understand existing sales
force activities, as well as stakeholder preferences
An impactful and de-risked sales force redesign requires acomprehensive view of stakeholder preferences and sales force
activities (see Table 1).
Embedded in this is a need to understand the purchasing needs
and behaviors of different stakeholders and to consider theimplications for sales force activities. This should be anchoredon a comprehensive, account-level segmentation. For example,in accounts that are more transactional in nature, HCPs matter

Executive Insights
Table 1
Key components of the SFE fact baseless in the decision-making process, and other stakeholders suchas the procurement department or hospital administrators havemore influence on the decision-making process.

Account intelligence(HCP survey, sales force
survey, CRM, interviews)

Understanding the value of each account is also critical, because it
allows medtech companies to adjust sales force activity to reflectthe underlying value of the account. For example, in small, lowvalue accounts, service levels for certain activities may be reduced.

• Main users, purchasedecision-makers andstakeholder influencers

In the absence of an existing customer relationship management(CRM) system, medtech manufacturers can establish a fact baseby interviewing and surveying HCPs and the sales force, though
the end goal should be to use a data-driven CRM tool to support
decision-making.
Unlike pharma reps, medtech sales reps perform a wide variety
of different services, including case attendance, technicalsupport, education and information provision. Some of these
services are critical to all HCPs, some provide utility to a subsetof HCPs, and some can be withdrawn completely without any
impact on relationships or purchasing. Using the fact base, these
services can be grouped into distinct categories to determine
their role in the new sales force strategy, using the questions inFigure 1 as a guide.
Practically speaking, some service activities, such as providing
basic product information or clinical data, are better suited to a• Visit restrictions andperception of alternative
service delivery models

Sales force intelligence(Sales force survey or CRM)
• Frequency of visits for eachaccount• Time spent at eachaccount, broken down by
type of services• Preference for different
types of services• Group purchasingorganization(GPO) or network
relationships

remote detailing model; some services, such as case attendance
and follow-up checks, require in-person support.
When contemplating the service level required, it is also
important to consider differences by device type. For example,
a more commoditized and well-established product, such as a
drug-eluting stent, usually requires less case attendance support,
while the relatively new and complex transcatheter aortic valve

Figure 2
Identifying opportunities for efficiency improvement
Typical weekly activities for a medtech sales representative — example (2020)

Percentage of weekly service hours

1008033%

Small talk/traveling/waiting

Opportunity for efficiency improvement
through remote detailing25%

Low-value services(e.g., product introduction, sample
provision, clinical data, data collection)

Opportunity for efficiency improvement
across customer segments

20%High-value services(e.g., education, events)

Opportunity for efficiency improvement
for specific customer segments

20%

Critical services(e.g., case attendance, follow-upchecks, technical support)

60

40

203%

0Logistics services(e.g., delivery, inventory management)
L.E.K. survey and analysis

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Executive Insights
Table 2
Example approach to account segmentation
Segment• High-value accounts
Strategicaccounts

Implications

Characteristics and preferences• Large hospitals of all types, typically withmore than 600 beds

Example• Greater return on incremental
service levels and higher revenue
risk• Kurashiki Central Hospital• Willingness to consider remote
service channels• Juntendo University Hospital• Greater scope to rationalize deliveryof lower-value services in exchange
for improved economics• Sapporo Higashi Tokushukai
Hospital• Clinical leadership and reputation

Clinicalaccounts• Medium to large public and university
hospitals, and clinically driven private
hospitals• Clinical leadership, offering the latest
therapies and procedures• Highly value clinical data provision, training
and events• Larger accounts that prioritize hospital
economics

Transactional
accounts• Medium to large private hospitals, and somecost-sensitive public hospitals that purchasethrough GPOs

• More openness to remote channels• Mainly general hospitals that are less research
driven• Low-value accounts, often with fewer than
200-300 hospital beds
Tail accounts• Many small specialty clinics• Prioritize economics while maintaining a needfor high-quality clinical data and educationthat does not need to be delivered in person• More scope to rationalize delivery
of noncritical services, so long aspreferred services can be delivered
through remote channels• Limited revenue risk of redesigning
service model

replacement procedure, for example, requires close and lengthy
case support. Other products, such as pacing systems, require
regular follow-ups.
Sales teams can then identify opportunities for efficiency
improvements by categorizing these services at the product leveland overlaying current sales force activity data (see Figure 2).
Consideration #2: Segment accounts based on their potential
as well as their needs and preferences, and develop a service
plan specific to each account within that segment
Establishing segments of accounts allows the manufacturer to set
a customized service plan that best matches the manufacturer’sbehavior and preferences. We typically observe four key segments
across medical institutions in Japan (see Table 2).
Manufacturers should invest time in order to understand thearchetypes of their accounts and develop a segmentation driven
by the purchasing needs and behaviors of those accounts andadjust their service plan accordingly.
Any service level changes should have negligible revenue risk ifthey are designed according to the needs and behaviors of each

Page 4 L.E.K. Consulting / Executive Insights• Hirakata Kohsai Hospital

account segment and the engagement model is suited to theparticular services being provided.
Consideration #3: Design new territories that support newservice plans and enable a remote sales force
In order to operationalize new service plans and remote activities,
sales force territories need to be redesigned. Given that medtech
services are more nuanced than those of pharma, manufacturers
must consider the complete spectrum of services required when
designing sales force territories.
With service levels assigned for each account, our proprietarysales force territory design tool assists organizations in theoptimization of sales rep and regional territories to provide
those services (see Figure 3). The tool can consider additional
constraints or be adjusted to optimize different criteria,depending on the manufacturer’s priorities.
The tool also determines the remote service resource
requirements by considering the type of service provided and theservice hours expected.

Executive Insights
Figure 3
Sales force territory design

Annual service hours per account

Hours of service required
per account•

Accounts receiving remote services

Sales rep territories for in-person service

Accounts that receive services
remotely can be serviced by acentral remote sales team

L.E.K.’s tool designs
territories with minimized
travel time for sales reps

0.0 hours per year

• 200.0 hours per year

• 400.0 hours per year

• 600.0 hours per year

• 840.0 hours per year

Service levels are set according toaccount needs and behaviors

Annual service hours and travel time for each sales rep territory
10005000

The tool ensures sales rep territories
have an even share of service burden
Source: L.E.K. research and analysis

Capability requirements
There are a number of elements that are crucial to keep in mind
when establishing effective medtech remote detailing.
• Before an organizationwide rollout, we recommend
conducting a pilot remote detailing initiative in a selectgeography, business unit or product category in order todevelop capabilities and ensure that the tool is fit for theorganization’s purposes• Manufacturers should consider the range of options fordelivering these services within a hybrid model wherein
sales representatives service customers both physically andremotely through a single team of remote specialists• Effective remote service delivery is an esoteric skill set thatcan be challenging for traditional sales representatives
to develop; therefore, we typically recommend training a
dedicated remote sales force that specializes in remote selling
activities (see Figure 4)

Figure 4
Flow of remote sales activities

AccessEnrollment of target
physicians in platform

Strategy

Development of specificobjectives for typicallylonger yet less frequentsales callsSource: L.E.K. research and analysis

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Content
development

Development of compliant
content, appropriate forremote channel, tailored todesired objectives of callCommunication

Effective communicationof content and messages
over remote channel

Orchestration

Coordination with othercustomer interfaces (dealer,face-to-face rep, etc.) in
response to outcome from call

Executive Insights• If developing an internal remote sales force ischallenging for financial or capability reasons, several
third-party remote detailing providers that can provide
specialist support, such as EnTouch, exist in Japan• Incumbent sales representatives and managers may
resist a shift in service delivery; therefore, a businesscase and rationale as well as employee training andcoaching should accompany any remote program
implemented across the organization• While remote service adoption is increasing
significantly, select hospitals will lack the required
infrastructure; where necessary, manufacturers should
offer portable connectivity solutions, such as pocket
Wi-Fi routers, to improve adoption• Once the remote team is implemented, organizations
must monitor and manage it; this may requiredeveloping different KPIs than those of the traditionalsales force

Case study: Go-to-market redesign, including sales
force territory redesign and remote detailing capability
development
We recently supported alarge, multinational medtech
player in redesigning its goto-market strategy in Japan.
This included a review of its
current engagement models
and service levels at the accountlevel, and the development ofsegment-based service levelrecommendations, including
the recommendation to develop
a remote detailing capability.
We then supported theclient in implementing theserecommendations throughthe development of a complexorganizationwide, account-levelsales force territory design. We
also helped the client establish
and run a remote detailing pilot,
with a view to expanding thisacross the organization. As aresult of our work, the client
realized significant gains insales force efficiency, leading toa reduced cost to serve whilestill ensuring service levels wereappropriate to the needs of thecustomer.

About the Authors
Patrick Branch is a Partner in L.E.K. Consulting’sTokyo office and a member of the firm’s Life
Sciences practice. He has more than 13 yearsof experience advising clients across Tokyo,
Singapore and the U.S. He works with businesses
and investors in the biopharmaceutical, medical
device and broader healthcare sectors. He advises
clients on a range of topics, including commercial
strategy, corporate and business unit strategy, pricing, and market
access and M&A.

Sam Wilson is a Principal based in L.E.K.
Consulting’s Tokyo office. He joined L.E.K. in2008 and has worked in the firm’s Sydney,
Melbourne, Auckland and Los Angeles offices.
Sam brings extensive experience in assistingorganizations with strategic and opportunity
assessments, including market strategies. His
experience also includes providing advice toclients in the healthcare, medical technology and life sciences sectors.

About L.E.K. Consulting
L.E.K. Consulting is a global management consulting firm that uses deep industry expertise and rigorous analysis to help businessleaders achieve practical results with real impact. We are uncompromising in our approach to helping clients consistently makebetter decisions, deliver improved business performance and create greater shareholder returns. The firm advises and supports global
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