Manufacturers find refuge overseas

Thursday, July 21, 2011

YARMOUTH, Maine – With reimbursement cuts and other pressures in the United States, a bright spot for some HME manufacturers are sales outside of the country.

The Roho Group, a manufacturer of wheelchair seat cushions, credits exports sales for more than 55% of its business. Nidek Medical, a manufacturer of oxygen concentrators: 90%.

“The biggest growth of our business far and away has been our international business,” said Tom Borcherding, president of The Roho Group. “We put more resources into supporting our international business.”

When it comes to sales outside of the United States, The Roho Group and Nidek Medical have a similar business model: For the most part, they both find distributors to be their sales, marketing, education and distribution arms in foreign countries. (The Roho Group, however, forms exclusive agreements with distributors; Nidek Medical does not.)

DME manufacturers say there are numerous advantages to selling product outside of the United States, including healthcare systems that are preventative- vs. treatment-based, and consumers who are hungry for “Made in the USA” labels.

“In my experience of going to some of the international trade shows, there is a perception, and a reality in my opinion, that products from the U.S. are better quality,” said Debbie Moore-Chitlangia, director of sales and marketing for Nidek Medical. “These people are very excited about having our products in their country.”

DME manufacturers say these advantages outweigh the increased cost (shipping is more expensive) and red tape (getting the right certification can take years) associated with doing business in other countries.

Other DME manufacturers like Invacare and MK Battery, which manufactures sealed batteries for wheelchairs and other equipment, have a physical presence in the foreign countries where they sell their products. Invacare is “landed in” Europe, Australia, New Zealand and Canada, and sells its product in a few dozen other countries.

“It’s a very important part of our business,” said Carl Will, senior vice president, global commercial operations. “When I think of Invacare, I don’t think of a U.S. company; we’re a global company. What we do, in terms of products and services, is absolutely applicable to many geographies.”

While there are advantages to selling product in other countries, Will points out that these countries are facing some of the same pressures as the United States.

“These governments may have different models for reimbursement, depending on how you serve them, but whatever their approach is, the one consistent thing that’s happening right now is that governments are out of money or struggling,” he said.

Still, DME manufacturers continue to invest and expand outside of the United States. MK Battery recently opened new distribution centers in the United Kingdom and Germany.

“Over the last several years, our international sales to the DME segment have grown considerably,” said Wayne Merdinger, vice president of international sales. “MK Battery services both the dealer market and many of the mobility equipment manufacturers, and both segments are growing at double digit rates.”