8bbdd082e571e29ec43adcaaaffbc962.ppt
- Количество слайдов: 25
Critical Elements of Doing Business in Europe
Contents ● Size, Growth and Benefits of EU Market ● Drivers for EU Strategy ● Sales and Distribution Channels ● Country Selection for Operational Support in Europe ● Legal Entity: Subsidiary, Branch or 3 rd Party Partners ● Advantages of VAT Management and “Arms Length Contracts” ● Conclusions
Why Europe is Changing to Your Benefit? ● One Currency ● Flexible Regulatory Approach ● Fast Pre-Market Approval ● Lowering of Trade Barriers ● More Accessible Markets ● Increasingly Ageing Population ● High level of Healthcare Spending as a Proportion of GDP ● Diverse and Fragmented Medical Device Market ● Considerable Market Opportunities for SME’s With Novel Medical Devices
Staggering Growth European Non Commodity Medical Device Market 2006 US$ bn 2007 US$ bn 2008 US$ bn 2009 US$ bn 2010 US$ bn 2011 US$ bn CAGR Cardiovascular 4. 76 6. 57 8. 1 9. 8 11. 8 13. 9 19. 20% General Surgery 2. 24 2. 29 2. 31 2. 36 2. 42 2. 5 1. 80% Imaging 5. 32 6. 1 6. 89 7. 2 8 9. 1 9. 40% IV Diagnostics 6. 32 6. 95 7. 82 8. 6 9. 1 9. 7 7. 10% Opthalmology 1. 79 2. 1 2. 3 2. 5 2. 76 8. 40% Orthopaedics 5. 32 6. 4 7. 8 8. 2 9. 1 9. 7 10. 50% Respiratory 1. 65 1. 75 1. 96 2. 2 2. 6 2. 8 9. 20% Neurology 0. 36 0. 37 0. 38 0. 39 0. 41 2. 20% Urology 0. 33 0. 55 0. 62 0. 71 0. 88 0. 95 19. 30% $ 28. 00 $32. 77 $ 37. 98 $ 41. 76 $ 46. 80 $ 51. 82 10. 80% Total Average growth of 10. 8% expected across all segments. (Espicom Business Intelligence)
Major European Medical Device Markets ● France, Germany, Italy , Spain, UK ● Market for Medical Devices in These Countries Estimated at $51 bn ● Value of Non Commodity Products $28 bn (55% share of total device market) ● Value of Commodity Products $23 bn (45% device market share) ● All Have Robust Economies with a Rapidly Growing Homecare Medical Device Product Sector and Ageing Population
Key Drivers for European Strategy ● Stage of your Companies Development ● Complexity of your Product ● Financial Resources ● Experience of Management Team ● Reimbursement Potential ● Understanding of Local Distributor Markets ● Management of Sales Channels
Sales Channel and Distribution Options Major Routes to Market ● Distributors ● Direct Sales ● Hybrid Combination ● Joint Ventures ● OEM Partners
Pros and Cons of Distributor Relationships for Medical Companies Benefits: Drawbacks: ● Time to Market ● Control of Pricing ● Learn the Market ● Customer Relationships ● Regular Invoicing ● Inflexible Contracts ● Customer Base ● High Distributor Mark Up ● Suits Less Complex Products
Pros and Cons of Direct Sales in Europe for Medical Companies Benefits: Drawbacks: ● Control Customer Relationships ● Expensive ● Management Time ● Higher Revenues and Invoicing ● Higher Margins ● Fiscal Knowledge ● Control Pricing ● Legal Challenges ● Brand Loyalty ● Market Knowledge
Hybrid Approach of Direct Sales and Distributors Optimal Strategy ● Control Customer Relationships ● Higher Margins from Strategic Markets ● Access to more Remote Markets ● Diversified Customer Base ● Local Management of All Sales Channels ● Revenues from Distributors can aid Cash Flow for Your Direct Sales ● This Combination will Require a More Established
What to Look for When Selecting a Country to support EU Operations Business Benefits ● Low Corporate Tax Rates ● VAT Deferment ● Geographic Location ● Economic Assistance ● Access to Major Airports and Seaports
Which EU Countries best fit the Criteria? ● The Netherlands ● Belgium
What are the Options for a more Established Presence? ● Set up Identity: Subsidiary, or Branch ● Set up Offices and Logistic/Service Center ● 3 rd Party Partner to run your Identity ● 3 rd Party Partner for Back office Services ● 3 rd Party Partner for Logistics
Why Set Up your own Legal Entity? EU Operations ● Establish an Infrastructure ● Employ Personnel other than sales staff ● Signing Authority of Personnel ● Buy or Lease office and Warehousing Facilities ● Risk Management ● Size of Global Operations
Branch Vs Subsidiary Major Difference ● Exposure to Liability § Subsidiary has Limited Liability § Share holder only Liable for Capital Contribution § A Branch is not a separate Legal Entity § Foreign Company that owns the Branch is fully liable for their EU Operation
Benefits and Drawbacks of Setting Up a Legal Entity Benefits ● Control of European Operations ● Establish a European Office ● Platform for Rapid Growth ● Protection of USA Parent Drawbacks ● Expensive set up ● Expensive Operating Costs ● Corporate Tax 25% + if you have a Functional Office Set Up ● Branch Taxed on Domestic Income ● Subsidiary Taxed on Global Income
How do you Run Your European Entity? Options ● Set up Offices and Employ Local Staff ● Open up the Entity as a “Shell” and run from the USA ● Appoint a 3 rd Party to Run Your Financial EU Operations
Advantages of 3 rd Party Partner to Support your EU Operations European Services ● Customer Service Support ● Sales Staff Support ● Management of all office and logistic operations ● US Manufacturer has No Set Up Costs or Employees other than Sales Staff ● Tap into their Existing Infrastructure ● Low Cost European Office ● Variable Cost with Short Term Contracts ● VAT Management ● “Arms Length Contract” Set Up
Critical Advantage One: “VAT Management” 3 rd Party Fiscal Representation ● VAT Deferment Exists in Certain Instances in the Netherlands and Belgium ● Goods can Enter the Country Without VAT Being Due at Port of Entry ● VAT Does not Have to be Added to Invoices Within EU countries Except in the Country of Entry ● Your 3 rd Party Partner can Bring Goods in on their VAT Number and Invoice your Customers on Your Behalf ● Reporting to Local Authorities is Handled by 3 rd Party Fiscal Representative
Working Example of VAT Management US Manufacturer ● 3 rd Party Fiscal Representative Goods Shipped from USA to Europe by US Manufacturer – ● EG: UK-Germany-France. Spain- Italy ● Value of Goods 100, 000 ● VAT 19% to 21% 19, 000 ● Amount Paid on Entry 19, 000 ● 6 Months to Claim Back the VAT Goods Shipped from USA to Europe through Fiscal Representative – EG: UK-Germany-France. Spain- Italy ● Value of Goods ● VAT 19% to 21% ● Amount Paid on Entry 0, 000 ● VAT not Added to Invoice in Certain Instances for Outbound Invoices 100, 000
Critical Advantage Two: “Arms Length Contract” Avoiding EU Corporate Taxes ● Business Transactions can be Set Up so that Revenues Generated in the EU can be Recognized in the USA, with no Tax Implications in the EU ● USA Companies must be Considered not to have a Permanent Office with Support Staff in the EU ● All Contracts must be Signed by officers of the Company who are Based in the USA ● Sales Representatives and Non Clerical Employees who Work From their Homes are Considered to be Order Takers and “Field Staff” ● Invoices can be Generated and Paid into a Non- Resident Bank Account and then Transferred back to the USA ● The EU business can be Set Up as a Cost Center not a Profit Center
Working Example “Arms Length Contract” Subsidiary ● 3 rd Party Fiscal Partner ● Goods Sold by US Manufacturer in – EG: UK-Germany-France. Spain- Italy ● Profit EU Corporate Tax 250, 000 ● EU Corporate Tax 000, 000 Net Profit 750, 000 ● Net Profit 1, 000 ● Revenues recognized in USA ● Profit ● ● 1, 000, 000
Considerations Drivers for an Increased European Presence – Market Share and Profit Potential – Long Term Strategy in Europe – Product Type and Complexity – Hybrid Sales and Distribution Approach – Financial Resources – Exit Strategy
Conclusions and Recommendations Is Your Company Suited for an Increased EU Presence? ● (Each Company and Situation is Different) – Are you Planning Pan European Expansion with Multiple Regional Offices? – Are you Planning to run your Entity with no Support Staff, or by a Third Party? – If Yes, A Subsidiary or Branch Could be Appropriate – In Most Other Cases Outsourcing to a 3 rd Party Provider until you Grow to a Size that Warrants your Own Facilities is More Beneficial to Your Company: – Huge Savings on Infrastructure Costs, EU Taxes, and VAT
Health. Link Europe Contact Information Contact our North American Office: Rick Hughes President Health. Link Europe 800. 781. 8926 EMAIL info@healthlinkeurope. com PHONE Quoted Text: Europe, Effectively Selling Medical Devices & Equipment in Publisher; Espicom. Author; David Scott Doing Business in the Netherlands 2007, Author; Baker & Mckenzie
8bbdd082e571e29ec43adcaaaffbc962.ppt