Mr. Leendert Santema, CBI Consultant
The medical sector in certain developing countries,
notably South Africa and India, is healthy enough to compete on the
European market. The only problem is that many producers there lack
the capacity to supply the quantities European buyers need.
Specialising in low-quantity niche products or forming clusters with
other exporters may be the solution, says CBI consultant Leendert
The medical sector in developing countries has everything but
volume, says Leendert Santema.
The European medical deices sector is clearly on
the look out for cheaper production countries, says Santema.
"There is a definite shift going on at the moment. That means
there are some very interesting opportunities for exporters from
A Strict Consultant
Santema’s knowledge of the medical devices market
is first hand. After 38 years of experience in the medical and
paramedical sector with a special knack for all things technical, the
59 year old Dutchman now runs a successful medical disposables
business himself – in fact the company is the Netherland’s market
leader in the total pain management segment, he says. "It is a
fascinating market. I love it. I learn new things every day about
people as well as technology."
Despite his business responsibilities, Santema has
plenty of energy leftover to consult a host of CBI-supported companies
in developing countries. He formally began working with the CBI in 95.
"The programme is very intensive and I am a very strict
consultant", he says with a wink. "I always tell our
participants: If you don’t do your homework, you can get lost."
He smiles, half apologetically, "I am very direct."
Santema’s motive for being a consultant is as
straightforward as his manner of speaking. ‘I am getting older’,
he says, patting his round, balding head. "In a number of years,
I will be stretched out in a wooden coffin. All the experience and
knowledge that has been granted me will disappear – unless I do my
best to share it while I can. Of course I love meeting new people,
seeing new places, but the biggest kick of this work is sharing in the
success of others. Their success is my success. No, I don’t intend
to stop for quite a while yet."
Sourcing is the big thing
Considering what is happening on the global market,
there will be plenty of work for Santema in years to come. "Many
European companies are either shutting down their European plants
altogether or relocating the high cost units abroad", he
observes. "For instance, I heard about an Austrian company just
recently that set up a production plant in Malaysia as well as moving
its entire packaging facility across the boarder to Hungary. Sourcing
is the big thing at the moment. Budgets are being slashed and the
demand for cheaper sources is huge."
The main drawback of many producers in developing
countries is not that they are lagging behind technologically. On the
contracy, says Santema "The level of the South African sector,
for instance, is very high. They know their suff and there is a lot we
can learn from them. India has a very highly developed sector as well,
although the Indians do still send their people to the US and Europe
for advanced training. But even so, I would say many private clinics
in India are 5-10 years ahead of our Dutch clinics. They have a very
wide range of scientific equipment there. In terms of technology,
industrialization, labour conditions and the like, both India and
South Africa have little room for improvement compared to countries in
Two million intravenous sets
The problem, however is that many producers in
developing countries also have little room for production.
"Volume is a big issue. There are companies out there – in
Egypt, for instance – whose product range and quality are very
attractive to European buyers. But they can’t supply the quantities
needed. Take intravenous sets, for example. I know a company that
produces good quality IV sets, 15000 a day. With a lot of effort, they
might be able to double that capacity. But even then they are no party
for big European conglomerations like Tyco and others. Companies like
that would be asking for two million sets a week. Anything less is not
interesting for them."
Clusters and niche markets
One answer to the volume problem is clustering.
Says Santema: "The CBI places a lot of emphasis on the importance
of clustering for small and medium sized producers. Especially those
in the commodities segment will just not make it onto the export
market if they don’t find partners with whom they can increase their
Getting intimate with perceived rivals is not
always easy. Santema admits, "Many smaller companies in
developing countries are family-owned. That can make things very
complicated. For instance, if there is a grandfather around who
founded the business and still wants to wear the trousers, he won’t
get excited about sharing the leadership with outsiders or getting up
close and personal with long-time competitors."
On the other hand, Santema has seen some examples
of very effective clustering. "The role of business support
organizations is very important in this respect", he says.
"They can provide a lot of help in terms of mapping out
government subsidy channels, country presentations and
An alternative advice to producers that can’t
deliver the volumes needed in Europe is to avoid the commodities
segment and specialize in low quantity niche products. "Despite
the opportunities, we don’t want exporters in developing countries
to think Europe is paradise", says the consultant. "The
growth of the market as a whole is limited. In the context, focusing
on specialized products is a sensible option.
Don’t forget the details
Before getting onto the European market through a cluster or with a
niche product, there are certain details – for instance in the areas
of hygiene or presentation – you can’t afford to forget as an
exporter. Explains Santema: "I remember a company I visited this
year. As I approached their building the first thing I noticed was the
shabby entourage. The paint on the front of the building was peeling
off, the grounds were unkept and on a pile of garbage over to the side
of the grounds I saw a big, fat rat. Inside the place was spotless.
Absolutely perfect. And their product was excellent as well. But the
exterior was a mess. I met the director and early in the conversation
I got pretty angry with him about it. "What do you think your
client from Europe is going to think if he comes on his first visit
and almost trips over a rat by your front door?" I said. The
director was not very happy with my telling-off, but when I came back
for another visit less than three months later they’d cleaned the
whole place up and he thanked me for being so straight forward. I have
seen quite a few situations like that in developing countries. Whereas
the staff, the products and the production process re excellent, many
companies neglect external details that are in fact very important to
clients. Another example is of a company that took a group of visitors
including myself on a tour through the plant. We came to the clean
room and it was perfect, just like everything else. Except for one
small detail: when we washed our hands, we all used the same little
towel. Ten people. I gave that company a telling-off, too. You can’t
tell your client hygiene is important to you and then give him a towel
ten other people have just used."