Expert review: doing business in the Nordics
Some 24.5 million inhabitants are living in the four main countries in the Nordics: Denmark, Finland, Norway and Sweden. If one also includes Iceland one get close to 25 million inhabitants. This is similar to the BENELUX area (Belgium, the Netherlands and Luxemburg). Hence the Nordic area represents a significant market for most businesses based on population. The region’s very healthy economic situation, well organized society and political stability make it even more attractive.
Before I go more into detail I would like to list some facts collected from the CIA World Factbook.
As one can see the countries are quite similar and face the same challenges as most of the western world with an aging population.
Figure 2: Economic indicators of the Nordics
When it comes to economy Norway stands out due to its significant export of oil and gas. But the rest of the countries also have relatively strong economies. Given the global financial crises the growth in Sweden has been particularly impressive. Stable and responsible governments have secured well-functioning societies. Significant cuts in health and welfare are not on the political agenda.
Figure 3: Health indicators of the Nordics
Since this article primarily covers the medical sector key healthcare indicators may be the most relevant. On all parameters the Nordic region are above the European average. The single most important factor that stands out is spending per capita. According to WHO World Health Statistics three out of four Nordic countries are spending at least twice as much as the European average of $ 2035 annually.
“According to WHO World Health Statistics three out of four Nordic countries are spending at least twice as much as the European average”
One should note that most healthcare expenditure is paid by the government and financed through taxation.
Even if the similarities between the countries are pronounced there are also significant differences one should be aware of.
Below I have tried to summarize some key information regarding the healthcare system in each of the four countries.
Healthcare System Overview:
• Nationalized healthcare (public expenditure share >,84%)
• The health care sector in Denmark has three political and administrative levels:
o the State
o the five regions
o the 98 municipalities (national, regional and local levels).
• The responsibility for running the National Health Service (NHS) is decentralized and mostly lies with the regional authorities.
• The five Danish regions are responsible for hospital services, health insurance, general practitioners (GP) and specialists, etc. The 98 municipalities are responsible for any rehabilitation that does not take place during the hospitalization period, along with preventative treatment, promotion and treatment of alcohol and drug abuse.
• General practitioners (GP) act as gatekeepers and are predominantly remunerated via fee-for-service payments and partly via a capitation system.
• The Finnish health care system is organized through a National Health Service system covering all 5.2 million Finnish residents and is mainly funded by general taxation. Public funding accounts for more than three quarters of total health expenditure.
• The main stakeholders are the 416 independent municipalities (1.1.2007), who are responsible for organizing health care and the Social Insurance Institution (Kansaneläkelaitos, Kela), which provides a National Health Insurance (NHI) scheme that covers all permanent residents of Finland for part of the cost of a range of health services.
• The Finnish Ministry of Social Affairs and Health (Sosiaali- ja terveysministeriö, STM) is in charge of planning and supervising, e.g. formulation health care targets and guidelines and also decides on health care subsidies to municipalities and the National Health Insurance regulation.
“…overall sales and marketing should not cause huge challenges for companies planning to establish themselves in the Nordics.”
• The principle of equality in health, both social and geographical, is central when it comes to forming Norwegian health policy. The Norwegian health care system (Helsetjenesten) is founded on the principles of universal access, decentralization and free choice of provider. It is financed through taxation, together with income-related employee and employer contributions and out-of-pocket payments (OPPs) (co-payments).
• All residents are covered by the National Insurance Scheme (Folketrygden, NIS), managed by the Norwegian Labor and Welfare Organization (Arbeids- og velferdsforvaltningen, NAV). Private medical insurance is limited to Key institutions.
• While health care policy is controlled centrally, responsibility for the provision of health care is decentralized. Local authorities at municipal level organize and finance health care services according to local demand. Secondary care, on the other hand, was re-centralized in January 2002 in an attempt to improve the access, quality and efficiency of hospital services and, since then, waiting lists have been reduced. While the central Government has overall managerial and financial responsibility for the hospital sector, counties have a certain amount of financial freedom within set budgets and autonomy regarding the planning, organization and carrying out of secondary health care services. Norway’s current four regional health authorities control the provision of specialized health services by 31 health enterprises.
• All Norwegian citizens are invited to choose their general practitioner (GP) from a list in every municipality. Approximately 99 % of Norwegians have chosen to do so. Outpatient doctors act as gatekeepers for specialist care.
• The Swedish healthcare system is a National Health Service system. The most important law regulating the provision of healthcare is the Health and Medical Services Act of 1982. The law not only incorporates equal access to services on the basis of need, it also emphasizes a vision of equal health for all. The healthcare system provides coverage for all residents of Sweden, regardless of nationality. There are three independent governmental levels – the national government, the county councils and the municipalities – and they are all involved in healthcare. The overall goals and policies are decided at the national level, but the actual provision of services is done by the local authorities.
• The healthcare system is primarily funded through taxation. Both the county councils and the municipalities levy proportional income taxes on the population to cover the services that they provide. The county councils and the municipalities also generate income through state subsidies and user charges. Overall responsibility for the healthcare sector rests, at the national level, with the Ministry of Health and Social Affairs (Socialdepartementet). The National Board of Health and Welfare (Socialstyrelsen), an independent government authority, has a supervisory function over the county councils, acting as the government’s central advisory and supervisory agency for health and social services.
• The 21 county councils own and run most of the healthcare facilities, such as hospital and primary care centers. There are few private hospitals, and the number of private physicians and health centers varies widely between counties. Counties are grouped into six medical care regions to facilitate cooperation regarding tertiary medical care. The 290 municipalities are responsible for meeting the nursing-home care, social services and housing needs of the elderly.
Doing business in the Nordics??
Since most of the healthcare systems in Western Europe are quite similar and the cross-border interactions within the medical profession are well developed, marketing in the Nordics is very similar to other local countries. In most cases one can just translate sales material used in other countries with minimal local changes.
Access to physicians is as in many other countries an increasing challenge. Meetings have to be booked well in advance and your proposed agenda must add “medical value”.
But overall sales and marketing should not cause huge challenges for companies planning to establish themselves in the Nordics.
The fact that the languages in Denmark, Norway and Sweden are very similar actually makes it possible for a small company to hire one person covering these three countries. Finland has a totally different language and is best served with a local representative. Most customers are fluent in English, hence sales calls can be done in English even if it is not ideal. The area which really makes the difference between success and failure is Market Access.
“The area which really makes the difference between success and failure is Market Access.”
The power of Market Access??
Healthcare personnel are instructed / strongly encouraged to use certain products based on some kind of Health Technology Assessment where value offered is balanced off with price.
All Nordic countries have rather advanced cost containment systems. The most common methods are:
• Approval for general reimbursement
• Product recommendations based on tenders
• Positive / negative lists
• Maximal reimbursement price
• Preferred drug per indication
• Generic substitution
In the hospital segment the use of annual tenders are quite normal, hence proper handling of these are of outmost importance.
Within Market Access there are significant differences between the countries and advanced knowledge of each system is essential in order to obtain reimbursement / funding.
One should be aware of the fact that without proper reimbursement / funding it is more or less impossible to be successful in the Nordics.
Most companies planning to launch an operation in the Nordics start with hiring sales and marketing personnel anticipating that they are able to work out the access issues.
Unfortunately very few sales / marketing professionals have sufficiently detailed access knowledge / experience. Market access has become its own profession and most companies with a certain size have built its own local market access department.
This development has been so profound that experienced market access professionals are really hard to find in the Nordics. In addition, skilled professionals tend to prefer major companies with a larger “access portfolio / volume” enabling them to focus on this area only.
Smaller companies try to solve this issue by establishing “Nordic access unit” localized in one of the countries. Unfortunately most of them discover that whilst their Nordic team is skilled and effective in their “home country” they do not add much value to what exists in Head Quarters for the other countries.
The surge for market access professionals from big pharma companies may explain the almost non-existing market access services available from consulting firms.
There are a few companies specializing in developing health economic dossiers and Public Relation companies that can support your communication. But companies that can help build a “tailored” value proposition, develop a detailed action plan and have the network necessary to obtain input / advice from stakeholders / decision makers are really hard to find.
“…without proper reimbursement / funding it is more or less impossible to be successful in the Nordics.”
The merger and consolidation activities in the industry may actually help new companies entering the Nordic markets. Quite a few seasoned senior executives with a wealth of Nordic experience may be attracted to time-limited project.
So what should you do if you plan to expand your presence to the Nordic area?
• Hire local sales / marketing people with a documented track record.
• Make sure you have strong medical support to your access team. Medical data is the single most important building block in your access project.
• Try to identify experienced consultants with a documented track-record that can work cross-functionally with your local sales / marketing team and your home office / regional teams.
If you decide to work with a local consultant, ensure they have access to central resources such as: legal, medical, regulatory, logistics and marketing. Having a central cross-functional team speeds up decision making and obtaining results.
Properly prepared and executed, a launch into the Nordics represents a significant business opportunity for most companies within the medical sector.
The next article in the ‘Expert review’ series on the topic of co-morbidities in an aging population can be viewed here.
About the author:
This article was written by Frode Hellesnes, Managing Partner, Access-Dynamics, and was commissioned by PiR Interims.
Mr. Hellesnes has more than 20 year experience from senior positions in the Life-science industry, from 1997 to 2010 he held the General Manager position of Schering-Plough in Norway.
Access-Dynamics is an independent consultant company offering high level services to the pharmaceutical industry. If this article has stimulated further ideas that you wish to discuss please contact Frode Hellesnes on +47 909 97833 or at Frode@Access-Dynamics.com or read more about us on www.Access-Dynamics.com.
PiR Interims is a leading provider of interim management solutions to international life science organisations. They identify and place some of the most highly regarded professional interims in the life science sector. PiR Interims works across a range of functions including: medical, clinical development, regulatory affairs, project management, commercial, market access, manufacturing, quality operations, supply chain, HR and finance.
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What’s your experience of entering Nordic markets?