Release date: 2014-08-08
This article was written by Wenyi, a medical device innovation network.
In the US blood glucose testing system market, the retail market accounts for as much as 85%, far exceeding the hospital's professional market share. Although the domestic hospital market still accounts for about half of the overall market, the experience of the US market is that the retail market is the future direction of the industry.
Figure 1: The retail market dominates the US blood glucose monitoring system market
In China, the growth rate of the OTC market exceeds the hospital market. The overall growth rate of the blood glucose monitoring system is about 20%, while the growth rate of the OTC market is about 30%. Due to technical limitations, domestic companies are still unable to compete with foreign brands in the hospital market, and more than 90% of the hospital's professional market share is occupied by foreign brands. The faster growth of the OTC market is the main direction of domestic brands. In the current OTC market, foreign and domestic brands are now splitting the world, but in recent years, the market share of domestic brands is rapidly increasing. The reason is that although there are factors that improve the quality and performance of domestic brands, the business model of “knife holder + blade†is also an important killer for domestic brands to land.
"Tool holder + blade" business model
As early as a century ago, salesman King Gillette invented the razor holder with replaceable blades and created a new business model: he broke the razor holder into a "tool holder" And "replaceable blades", then sell the knife holder at a very low discount (with two blades). After the blade is blunt, the tool holder is not damaged, so the consumer will purchase the blade to continue to use. When Gillette first launched this model, it sold the $2.5 knife holder at 55 cents and sold the blade costing 1 cent to 5 cents. This pricing strategy helped Gillette monopolize the razor market. ten years.
The "razor/razor blade" has also become a classic business model. Many companies use the "tool holder + blade mode" to bind the "blade" business by selling "knife holders", and the "blade" often becomes the company's main source of revenue and profit. Because "blades" are reusable, "blades" can continue to generate revenue for the company. "Tool holder + blade mode" is not limited to tool holders and blades. It is suitable for durable consumer goods that require high service requirements. For example, HP's "printer + cartridge" mode, the printer itself accounts for only 1/3 of all profits in the life cycle of the machine, and the other 2/3 profit is created by the ink cartridge.
This kind of marketing model is called cross-subsidy, which means that the main business can be close to the cost, and it can lock customers and form a relatively stable operation platform. It creates conditions for the promotion of high value-added related products and value-added services. The secret of the success of the rack + blade business model.
Domestic brands rush to the beach OTC
Blood glucose meters and test strips are similar to razor holders and blades. Glucose meters and test strips are used together, and products from different companies cannot be mixed. The marketing strategy of domestic brands is to use low-cost sales of blood glucose meters to occupy the market, and then to make profits through test strips. Taking Sannuo as an example, the company has significant channel advantages and cost-effective advantages. It has more than 1,000 first-level dealers, about 400 retail teams, and covers 40,000 pharmacy terminals. In 2013, in its product structure, the sales of blood glucose meters accounted for 17.3% of the total revenue, the gross profit margin was only 8.18%; the sales of test papers accounted for 82.7% of the total revenue, and the gross profit margin was 83%. It can be seen that the strategy of Sannuo Bio is obviously the profit model of Geely's “Knife + Bladeâ€, which means that the market is occupied by low-cost sales of blood glucose meters, and the test paper is used to make profits.
At present, the performance and quality of domestic brands are close to or reach international standards, and domestic brands have a large price advantage through good cost control. From the perspective of consumers, since most of the diabetic patients are middle-aged and elderly, the price/performance ratio of the products is the most important factor affecting their purchasing behavior. At present, the average price of foreign brands in the market is between 400-1200 yuan, the average price of domestic brands is only 100-200 yuan, and the price is less than half of the foreign brands; the test paper of foreign brands is 4.5-5 yuan/sheet The domestic brand is 2-3 yuan/sheet, and the price of test paper is only about 60% of foreign brands, which has great appeal to consumers. Significant price advantage provides a good foundation for domestic brands to use the “tool holder + blade mode†to capture the OTC market.
The new player of the blood sugar testing market, Yuyue Medical, has taken a different approach in sales strategy and adopted the method of selling OTC sales through hospital sales. In 2013, Yuyue Medical's blood glucose meter has won the bid in more than 50 regions, and 83 of the top three hospitals have been developed. In the OTC market, Yuyue has used more than 500 dealers and more than 400 sales teams, and has settled in more than 7,000 pharmacies. The diving blood sugar products are positioned at a relatively high level, and the price of the products is also between the domestic brands and the foreign brands. The differentiation of the price positioning reflects the difference in the market positioning of the company's products.
Source: Medical Device Innovation Network
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