Marko Lehes, Selfdiagnostics: International visits allow you to make contact with the target market and potential partners

What does Selfdiagnostics do?

Selfdiagnostics is an Estonian-German company that’s involved in the development, production and sale of medical equipment. Our portfolio includes medical equipment and devices designed for professional and home use, such as test kits, inhalers and blood pressure monitors. In product development, our focus is on developing diagnostic devices that make it possible to identify health issue quickly and easily.

How fierce is international competition in your field of activity?

The medical equipment market is led by large international corporations like Medtronic, Johnson & Johnson, General Electric, Cardinal Health and Siemens. The global market for medical equipment is worth about 500 billion dollars a year at the moment. The largest manufacturers are in the USA, Japan and Europe. We planned our cooperation network based on that. Today, lots of innovative appliances are appearing on the market whose development is being led by smaller companies and start-ups. Selfdiagnostics is one of those European start-ups which aims to bring innovative new medical diagnostic solutions to the market and find its place in one of the world’s most value-generating fields.

How difficult is it for an Estonian start-up to compete with the giants of the medical equipment market?

It’s certainly difficult, but not impossible. The medical sector is made up of a variety of fields. Drug development, in which it’s difficult for companies from small countries to succeed, is the most profitable of them. Another big field is medical equipment, which is very competitive internationally, like drug development. But it’s slightly easier for companies from small countries to operate in it because, compared to drug development, the investment volumes are lower, although they can still reach several hundred million euros. Selfdiagnostics has invested around 15 million euros, and we’ve arrived at the first version of our product. In order for us to successfully reach the market with it, at least the same amount needs to be invested again. As such, it’s a capital-intensive field.

How important is the moral support provided by the state on international visits in reaching a level that’s at least comparable to that of the leaders on the medical equipment market?

It’s hugely important, especially when you’re entering the market. There are two things worth mentioning here. The first is the state’s support when you’re developing a device, and the second is that support when you’re launching it. I’d say that a company manufacturing medical equipment simply can’t make a start and develop a product in Europe without the support of the state. When it comes to entering the market with your own product in our company’s field of activity, then products mostly make it onto the market via lobbying. Even if you’re a big global player, state support is really important at that point to showcase your product.

What drove you to go on international visits?

Our company’s visits are about creating a network of development, sales and financial partners and fostering shared business interests with them. Our product’s quite unique and complex, made up of lots of components that are developed by partners in America, Japan, Korea, Europe and here in Estonia. We’ve chosen world leaders as our partners, but unfortunately that means that the companies contributing to product development are spread out all over the world. Through international visits, we create a network of partners we work with and develop relationships with. Our network of sales partners is connected to getting our product on the market and getting it registered. At this point, we have connections with companies in more than 20 countries that are interested in launching our product on their markets. We have sales partners ready to go once the product is ready, who’ll take care of registering and distributing it. But the purpose of creating a financial network is to raise capital. With the support of Enterprise Estonia and the Estonian Development Fund, we’ve started raising investments in Estonia, but we’ve also gotten support from German state programmes and European Commission programmes. Basically, our primary task on international visits has been to showcase our product, the concept behind it and the technology we use, and to get partners involved in the areas I mentioned.

Would creating a network of development, sales and financial partners be more difficult without international visits?

International visits are just one piece of the puzzle. Our company makes a lot of use of the opportunities of a range of programmes. We’ve taken part in the European Commission programme, a state visit to Germany and two visits with the prime minister via Enterprise Estonia. We went to the United States and Japan with former prime minister Taavi Rõivas.

What kind of value does going on a visit with the Estonian prime minister create for entrepreneurs?

Estonian companies are largely unknown around the world, unfortunately, so these visits definitely make you seem more trustworthy. Being a member of a delegation is very important to big countries. It generates this notion that if you’re member of the prime minister’s delegation, then you must be reliable and have a good relationship with the state. Another aspect is that if the organiser of the visit or the prime minister has valuable connections, that definitely helps open doors. Recommendations have a huge impact in our company’s field of activity, and because competition is fierce, a positive recommendation matters a lot. If the prime minister recommends your company to international colleagues, that definitely helps you get ahead. I personally would say that participating in visits and being part of a delegation is important, but it’s never the be-all and end-all. A visit alone isn’t enough. It’s not a magic wand. Entrepreneurs themselves have to work hard.

How should entrepreneurs who are thinking about international visits manage their expectations?

It’s vital that you foster your contacts yourself. It’s also important that your visit is planned out over a long period of time, so you can prepare yourself better. If you already have a network of contacts in the target country, it’s worth planning events they can take part in during your visit. Tying informal events and formal ones together is always a good idea. I’ll say it again – the preparations definitely have to be done properly. The better you prepare for your visit, the more fruitful it will be.

What were your expectations when you went on your international visit?

Our aim was to make new connections and introduce our company and Estonia, and we achieved both. We’re still working with our partners in Japan and America, who operate in both the private and public sectors.

Is continuing cooperation an indication of a successful visit?

Of course, yes. My feeling is that if a company goes on a visit that results in continuing cooperation with its partners, that’s an important message. It reassures the entrepreneur that it will possible in the future to strike deals on that specific market. Even in our case, the prime minister’s visit gave us the push we needed to keep going forward in the USA and Japan. We can’t claim it gave us the initial push, but it definitely allowed us to strengthen our partnerships. Those visits helped established reliable connections to companies and public institutions involved in getting new medical equipment on the market. And although no financial deals came from those visits, we’re still working towards them. It’s a long process with some very high barriers to entry, but it’s a profitable field in the long run. That’s one of the peculiarities of the medical field.

How important is going on international visits for Estonian entrepreneurs?

Very important. In terms of our company’s field of activity, getting new medical devices on the market requires robust cooperation with government and non-government institutions alike. In Estonia, visits and cooperation at the highest level of the state are unavoidable if you want to launch innovative products and services to government organisations and international NGOs like WHO, FIND, the World Bank, the Bill & Melinda Gates Foundation and UNICEF. Launching innovative new products on developing markets is never faster than with their help and support.

Analysing the situation in a broader sense, not just in terms of your own company, what are the primary benefits that participating in visits gives entrepreneurs?

They allow you to make contact with the target market and the partners operating there. If your company becoming global is a goal you’ve set yourself, international activity goes without saying. It’s important to utilise a range of opportunities to foster connections and open doors. To illustrate that with our company, I can honestly say that our product will never pay for itself on the Estonian or even European market alone. As such, we need to focus on the global market and make international connections. That’s why visits organised at the national level are so important. All the more so because where our company’s concerned, lobbying to get our product on the market still lies ahead of us.

How do international visits contribute to improving Estonia’s economic environment?

Visits that are planned and prepared well encourage the exporting of goods and services developed by Estonian companies. Exports are the only thing driving the development of the country’s economy. In that regard, I’d add that it’s the exporting of goods with high added value that’s the foundation of economic growth. Visits also help attract foreign investments to Estonia. Any investment is an expression of trust, and trust in Estonia can be increased by way of visits.

Critics might say that the knowledge and skills gained on visits are difficult to put into use in Estonia. They ask how these visits benefit Estonian people. How would you answer that question?

Recognising the good that visits do is a long-term thing, but communication oriented towards exports and foreign investments is the only way of approaching things from the standpoint of Estonia’s economic success. Sadly, it’s not as easy as just saying, “Today I’ll head off to another country and tomorrow I’ll start enjoying the fruits of my labour.” It’s a long, constant process in which results can take decades to materialise, depending on the field. For example, the development of medical technology in Estonia is in its early stages. There are some really interesting initiatives here, but if we compare ourselves to big industrialised countries, we’re only just starting out. It will most likely take us decades to reach a high level in the field. But the visits as a whole have brought Estonia a lot of positive results, such as foreign investments and the creation of new jobs. Lots of Estonian companies have expanded abroad, too. Every member of society benefits from higher tax revenue. I think it’s great that companies in the ‘new economy’ have been included in visits more and more in recent years. Old-economy companies, like construction firms, have definitely gained a lot from the visits, and now other companies are getting the chance. Balance is really important.

What sort of companies should consider going on international visits?

Any company whose business model considers exports vital. Contact with the foreign market is particularly important to them. If you get a chance at that via a state visit, it’s a great opportunity you definitely want to make the most of. In order to succeed abroad, you have to know your target market. That means knowing local contacts, the local culture and politics and decision-making processes. That said, let me stress again that a visit just for the sake of it shouldn’t be your end goal. It has to fit your company’s business operations. At the same time, entrepreneurs have to put in a lot of effort to establish themselves on the market.


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