Working Out the Details of Medical Device Contracts and Logistics
Important related issues to consider
Besides medical distributor selection and qualification, there are various related issues to consider when setting up your medical distributor relationships. These include preparing contracts, setting up payment processes with your distributors, and ensuring proper logistics.
Preparing Contracts for your Medical Distributor
Once you’ve selected your medical distributor, the next step is drawing up a workable contract with your new partner. Important issues to consider when developing and signing your distribution contract include:
Exclusivity: some distributors may insist on exclusive rights to handle your product in their markets
Define sales regions: contracts should clearly establish sales regions for distribution of your medical device
Cancellation: partners should identify under which conditions a contract may be cancelled—failure to meet minimum service or sales levels, for example
Medical Distributor Payment Processes
When it comes to setting up payment arrangements with your medical distributor, there are three typical methods from which to choose:
Payment in Advance: your distributor pays you up front before you ship your products (least risk to exporter)
Letter of Credit (LOC): letter issued by a bank authorizing seller to collect payment if certain conditions (proof of shipment, for example) are met (moderate risk to exporter)
Open Credit/Terms: credit given to trusted buyer with minimal or no security (highest risk to exporter)
Returns and Servicing Arrangements
It is also important to develop a plan with your medical distributor to handle returns as well as servicing arrangements if your device requires regular maintenance. As an exporter, you should carefully consider the costs of setting up service and repair facilities in the foreign markets where your distributors are selling your products versus shipping devices back to your home-country facilities for servicing.
It may be more cost-effective to outsource servicing of your device to your medical distributor or another company based in your foreign markets depending on how complex your device is, how frequently your device requires servicing and liability issues.
Contact Luctor Medical
Please contact us for more information or a free proposal on our medical distributor services.