The UK has one of the strongest and most productive life sciences sectors in the world, generating an annual turnover of more than £50 billion. The sector comprises nearly 5000 companies (including non-manufacturing and service companies) and employs an estimated 175,000 people. Life sciences in the UK not only contribute to patient well-being, but also support employment and growth.
Building on their success in the UK, many life science companies are seeking to scale-up their operations and maximise their sales by expanding into overseas markets. A large, underserved, ageing population who are experiencing a rising number of diseases — but who also have increased health awareness and improving income levels — provide an important emerging market for life science companies. Many of these companies recognise the opportunities available to them overseas but are often discouraged by what they see as barriers to achieving success.
Appointing carefully selected distributors can be particularly useful as a way of enabling life science companies to sell their goods in a foreign marketplace and increase the sales of their products abroad, whilst also being able to concentrate on manufacturing and supplying products locally. The role of the distributor is to purchase products from the supplier, usually at a discounted rate, on its own account and sell them on, independently, at a profit.
Contracts exist for the sale of goods from the supplier to the distributor and from the distributor and the end customer. No direct contract is in place between the supplier and the final customer, leaving the distributor to bear the risk of those customer sales. In addition, the supplier reduces administrative costs and does not need to have an established place of business in the distributor’s territory. Distributors should also have local knowledge of the law and/or customs of the overseas market within the life sciences and healthcare sectors, and will often be responsible for much of the cost of selling the supplier’s products in that location. These costs might include transport, warehousing and marketing costs, as well as any loss caused by currency fluctuations.
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