Compare the time, cost and complexity of getting regulatory approval for medical devices

Market	Device class	Risk	TIME* from submission to approval	COST** of gaining regulatory approval	COMPLEXITY*** of registration process
Australia	Class I Non-Sterile	Low	<1 month	1	1
Australia	Class I Sterile	Low	2-3 months	1	1
Australia	Class IIa	Moderate	2-3 months	1	1
Australia	Class IIb	High	2-3 months	1	2
Australia	Class III	High	7-14 months	2	5
Brazil	Class I and II Cadastro	Low	2-7 months	2	3
Brazil	Class III Registro	High	18-30 months	5	5
Brazil	Class IV Registro	High	18-30 months	5	5
Canada	Class I	Low	2-4 months	2	2
Canada	Class II	Low	1-2 months	1	1
Canada	Class III	High	4-5 months	3	4
Canada	Class IV	High	6-8 months	4	5
China	Class I	Low	<1 month	3	2
China	Class II	High	16-24 months	4	5
China	Class III	High	16-24 months	5	5
Colombia	Class I	Low	<1 month	1	1
Colombia	Class IIa	Moderate	<1 month	1	1
Colombia	Class IIb	High	4-6 months	1	2
Colombia	Class III	High	4-6 months	1	2
Costa Rica	Class I	Low	2-4 months	1	2
Costa Rica	Class II	Moderate	2-4 months	1	2
Costa Rica	Class III	High	6-8 months	1	3
Costa Rica	Class IV	High	7-9 months	1	4
Egypt	Low Risk (Sterile)	Low	4-6 months	1	1
Egypt	Moderate Risk (Sterile)	Moderate	4-6 months	1	1
Egypt	High Risk (Sterile)	High	4-6 months	1	1
Europe	Class I Non-Sterile	Low	<1 month	1	1
Europe	Class I Sterile	Low	3-5 months	3	2
Europe	Class IIa	Moderate	3-5 months	3	3
Europe	Class IIb	High	3-6 months	4	3
Europe	Class III	High	6-9 months	4	4
Hong Kong	Class IV	High	8-12 months	3	2
Hong Kong	Class I	Low	Not applicable	No rating	No rating
Hong Kong	Class II	Moderate	8-12 months	2	2
Hong Kong	Class III	High	8-12 months	2	2
India	Non-notified IVD	High	<1 month	1	1
India	Notified Medical Device or IVD	High	9-12 months	3	3
Israel	High Risk	High	1-6 months	2	2
Israel	Low Risk	Low	1-6 months	2	2
Israel	Moderate Risk	Moderate	1-6 months	2	2
Japan	Class I - General	Low	<1 month	2	2
Japan	Class II - Specified Controlled	Low	3-5 months	4	3
Japan	Class II - Controlled	Moderate	7-9 months	5	4
Japan	Class III - Highly Controlled	High	9-11 months	5	4
Japan	Class IV - Highly Controlled	High	13-16 months	5	5
Malaysia	Class A - Active/Sterile/Measuring	Low	Unknown	1	1
Malaysia	Class B	Moderate	Unknown	1	1
Malaysia	Class C	High	Unknown	1	1
Malaysia	Class D	High	Unknown	1	1
Mexico	Low Risk	Low	1-3 months	1	1
Mexico	Class I	Low	4-10 months	2	3
Mexico	Class II	High	8-12 months	2	3
Mexico	Class III	High	8-12 months	2	3
Russia	Class I	Low	12-18 months	5	3
Russia	Class IIa	Low	12-18 months	5	5
Russia	Class IIb	High	18-24 months	5	5
Russia	Class III	High	18-24 months	5	5
Saudi Arabia	Low Risk	Low	3-5 months	3	3
Saudi Arabia	Moderate Risk	Moderate	3-5 months	3	3
Saudi Arabia	High Risk	High	3-5 months	3	3
Singapore	Class A Non-Sterile	Low	Not applicable	1	3
Singapore	Class A Sterile	Low	1 month	1	3
Singapore	Class B	Moderate	1-4 months	2	3
Singapore	Class C	High	4-6 months	2	3
Singapore	Class D	High	6-8 months	2	3
South Korea	Class I	Low	<1 month	2	1
South Korea	Class II	Moderate	4-6 months	4	4
South Korea	Class III	High	6-10 months	4	4
South Korea	Class IV	High	6-10 months	4	4
Taiwan	Class I	Low	1 - 2 Months	2	2
Taiwan	Class II	High	8 - 10 Months	3	2
Taiwan	Class III	High	8-10 Months	3	3
Turkey	Class I Non-Sterile	Low	< 1 month	1	1
Turkey	Class I Sterile	Low	< 1 month	1	1
Turkey	Class IIa	Moderate	< 1 month	1	1
Turkey	Class IIb	High	< 1 month	1	1
Turkey	Class III	High	< 1 month	1	1
United States	Class II	High	3 - 6 Months	3	4
United States	Class III	High	18 - 30 Months	5	5
United States	Class I	Low	1 Month	2	2

* The time frames shown above are typical for the majority of medical device submissions but assume that your device does not contain animal tissue, medicinal substances or employ entirely novel technology. Your length of approval will depend on the quality and completeness of your technical documentation and how much time you take to address additional information requests from authorities after submission. YOUR SUBMISSION(S) MAY TAKE MORE TIME THAN WHAT IS SHOWN ABOVE.
** Estimated costs includes registration application fees, product testing, in-country representation, submission preparation consulting and translation of documents. Does not include cost of implementing or auditing a quality management system compliant with ISO 13485 or US FDA 21 CFR Part 820, if applicable. LOW = Less than US$5000; LOW/MODERATE = US$5000-$15000; MODERATE = US$15000-$30000; MODERATE/HIGH = US$30000-$50000; HIGH = US$50000 or more.
*** Our rating of the complexity of the registration process is based on Emergo’s experience with thousands of submissions and the opinion of nearly 1,000 QA/RA professionals worldwide who were asked to rate the difficulty of registering a device in each country. The European CE Marking process is generally considered the mid-point to which all other markets are compared.

Chennai Pharma Entrepreneur Braved Odds To Sell Meds In Latin America

Anu Raghunathan

When C.C. Paarthipan, a first-gen pharma entrepreneur, listed his tiny Chennai company, Caplin Point Labs–with revenues of less than $1 million–it was oversubscribed 117 times.

He raised about $900,000 in the 1994 IPO and deployed it in a formulations plant in Pondicherry. But in just a few years the company got mired in quality-control issues; consignments were rejected, and it became a penny stock. “I couldn’t pay my sons’ school fees–my company had become a nonperforming asset,” recalls Paarthipan, 62. “That’s when I took the risk of going to places where most people fear to go.”

He packed his bags and left for Africa and then Latin America. He braved the weather, the food, guns, drug lords and competitors to set up a base. He networked with importers and pharmacies to forge deals in these semiregulated markets, which lack the stringency of the U.S. market.

The early move to Latin America has differentiated Caplin because small Indian pharmas that choose to export typically go to proximate regions in Southeast Asia, central Asia or the Middle East. But then those markets get crowded pretty quickly. Paarthipan saw Latin America as the Goldilocks spot–too small for big pharma players and too far-off and risky for small players. The move has paid off.

Revenues have grown from $18 million in fiscal 2011 to $40 million in fiscal 2015, while net profits rose from $1.4 million to $6.5 million in the same period. This has earned Caplin a spot on FORBES ASIA’s Best Under A Billion list for two successive years. Investors have taken note. The stock has risen 44% in the past year, taking the market cap to $206 million. (Paarthipan, who along with his family now owns 68% of the company–up from 59% last year–is worth $140 million.)

The company sells ointments, injections and generic pills across 3,500 pharmacies in Central America. It gets 90% of its revenues from this region. And it’s looking to grow from 7 Latin American countries to 12 in the next two years. Product registrations are expected to jump from 1,700 to 2,200. Also in the pipeline: a move to regulated markets like the U.S. To this end Caplin has set up a $15 million “sterile injectable” plant outside Chennai.

“We have comfortable cash flow, reasonable profits and a business based on advance payments for exports,” points out Paarthipan. “This is a rarity for a company of our size.” It’s allowed for $32 million in capacity builds in the last few years with minimal debt.

It was a long haul from the village of Pooavalambedu outside Chennai to the pharmacies of Latin America. The son of a farmer, Paarthipan studied in a Tamil-language school. After college a string of odd jobs culminated in his becoming a pharma company rep. In 1985 he started making protein tonics himself, then generics as he set up Caplin Point (which stands for “CAPsules, Liquid INjections, Powders, OINtments and Tablets”) Labs with four partners in 1990. (They exited management in 2006 and later sold out.)

Caplin started off by manufacturing creams and ointments. All was well until the quality issues crept up in 1997-98. That led to a decade pursuing markets abroad. “I had to struggle a lot,” says Paarthipan. “It hasn’t come on a platter.”

Even today the issue of physical safety is always at the back of his mind. He recalls arriving in war-torn Somalia and being robbed at gunpoint in Angola. (The company still has 10% of its business in Africa.) However, the Paarthipans have gotten adept at living and working in Latin America. The founder’s first son, Ashok, 33, heads the business there. He moved there in 2003, lives in Guatemala and is married to a Guatemalan.

Ashok travels 20 days a month between countries applying for tenders, clinching supply deals and completing product registrations. He’s assisted by 35 executives–mostly hired from villages in and around where Paarthipan grew up. They were trained in Spanish before being sent. “The boy who used to bring me tea in Chennai is now a manager in Ecuador,” says Paarthipan.

In Latin America Caplin executives travel in bulletproof 4×4 cars. They steer clear of discos and dangerous neighborhoods. Ashok has his own rule of thumb: “You can see a gangster from a mile [away],” he says. “If you are ever confronted, you must give away whatever you have on you.”

Over the years the Latin American business has grown to nearly 400 items–from vitamin gummy bears to antibiotics to cardiovascular medicines. “It has a lot to do with living here for the last 12 years,” says Ashok, who has an undergraduate degree in marketing and business administration from Middlesex University in London. “It has to do with the relationships that have been built over time. I can tell the local distributor that I am the founder’s son and I can vouch for the quality.”

Customers at a pharmacy in Managua, Nicaragua, one of Caplin’s territories. Credit: Inti Ocon/Archivolatino

From the time the senior Paarthipan first hit the Dominican Republic in 2003 and then Guatemala in 2005, Caplin has been pliant on matters like product sizes, which the market wants small. Ashok in the region takes direction on product mix, and while he files for registrations, his father and younger brother Vivek handle the manufacturing end. Increasingly, Caplin does its own distribution.

“The company’s performance has been very consistent,” says Amey Chalke, pharma research analyst at Mumbai’s Motilal Oswal. “The return on capital employed is at 67%. Typically, 25% is considered good in the industry. They are also looking to enter the sterile injectable space, which will fetch them high margins.”

To counter investor concerns that it sells in unregulated markets where there’s no reliable data on key players or market shares, Caplin put out a detailed annual report last year outlining the Latin American pharma market, estimated at $80 billion in 2014.

Paarthipan says that even deep-pocketed competitors would be challenged to eat into Caplin’s share because the product registrations take several months. Also bigger players do branding while Caplin’s products are plain vanilla generics.

Even though he manages six pharmacies, he’s not interested in setting up physical pharmacies. “When you open a chain of 100 pharmacies, you’ll put 100 people out of business and you’ll antagonize 100 people,” he says. “Again and again I will be attracting physical risk. I don’t want that.”

Nearly half of Caplin’s revenue comes from outsourced meds. It has contracted with Chinese manufacturers for cephalosporin and penicillin, which it then sells in Latin America. “We’ll never be able to compete with the Chinese in the unregulated markets,” says 31-year-old Vivek, who is the chief operating officer. “But the top Chinese manufacturers have massive capacities. So we tap into their spare capacity.”

Vivek, fluent in Mandarin, went to China in 2005 after getting an undergraduate degree in biotechnology from Monash University in Australia. He tied up with large Chinese manufacturers and also set up a quality control lab in Shijiazhuang. Now he travels there every quarter to oversee the operation.

His father, meanwhile, is trying to break out of his comfort zone. A bookish sort , Paarthipan says an early interest in communism led him to a “pro-poor” approach. His business model in Latin America entails selling to the bottom of the pyramid. But the next phase looks to premium products. The injectable plant has received approvals from Brazil and the European Union. Caplin has inked deals with major Western pharmas. “Sterile injectables is a big boys’ domain,” Paarthipan says. “We have identified specialty products that we’ll be focusing on.”

Caplin could enter the U.S. by 2019-20. Until then Latin America will continue to be the cash cow–with a potential scale-up to $150 million.

That’s heady stuff but, to the founder, not like past hazards. “The rough-and-tumble atmosphere is over,” he says. “The physical risk and the blind-risk part is over. Now it’ll be more of intelligent risks.”

A Year-End Checkup to Keep Your Small Business Healthy

By Karen Klein 

Where does your business stand now? Where do you want it to go? And how will you achieve that success? A new calendar year is a good opportunity for small business owners to examine these questions. Taking time in the next few days or weeks to audit your business informally is a good way to get the information you need to plan for 2013.

Here are four areas to tackle:

Financials: Run a broad-based diagnostic test on your business that includes an informal valuation, financial projections for 2013, and a forecast for your industry as a whole. Companies go through life cycles: Is your business in growth, maintenance, or mature mode? “A younger, growing company needs the people, systems, and marketing in place to bring in additional revenue. In maintenance mode, you want to reduce expenses and maximize profits,” says Roger Murphy, chief executive of business brokerage Murphy Business & Financial Corp. in Clearwater, Fla.

For mature companies, having your financials in order will make it easier to sell your business when you are ready. “I’ve worked with the owner of a medical device company for years, and we had him compliant with [generally accepted accounting principles],” says Gregg Landers, managing director of the CBIZ MHM accounting and tax advisory office in San Diego. “When it came time to sell to a large international company, they had a historical record of his accounting, and the transaction went through fabulously, without all the expense of cleaning up the books.”

Risks: “This year has been the first year that companies started to take a breath following the recession. Our clients had cut to the bone in 2010 and 2011, so now one person is doing the job of three or four. Controls that were put in place went by the wayside,” Landers says. Have an outside expert, such as your accountant, assess your internal controls and identify weak spots where fraud or errors may occur.

Pay particular attention to your tax payments and human resource policies for areas of trouble, especially with new rules going into effect Jan. 1 and governments at all levels looking for revenue. “States are broke, and they’re getting aggressive,” Landers says “Small businesses that may have been under the radar in the past no longer are.” Likewise, if you use independent contractors, make sure they are properly classified as such under IRS rules so you don’t get caught paying hefty fines for workers who should be classified as employees.

Inventory and Operations: Look through each of your business processes from beginning to end to find ways to streamline and cut expenses. You can outsource an inventory count or close your company for a day or two and have your employees do it, says Scott Gillanders, chief credit officer at 44 Business Capital, a Blue Bell (Pa.) lender that specializes in Small Business Administration loans. “If you do it yourselves, mix things up so the office manager counts widgets in the warehouse and the warehouse manager counts office supplies. That reduces the potential for fraud,” he says.

This is an area where technology can help. Several companies sell barcode systems that automate inventory tracking. Brian Sutter, marketing director at Wasp Barcode Technologies in Plano, Texas, says small businesses write off an average of $20,000 in lost inventory each year. “Carrying old, obsolete, or misplaced inventory on your books is a huge cost for small businesses,” he says. Make sure that any technology you employ meshes with your in-house system and isn’t too complicated or costly. “A small business owner doesn’t need to have a Jaguar,” Gillanders says. “A Ford will get him from A to B just as easily.”

Strategy: Too many small businesses depend on their owners to make sales and run the show. If your company revolves around you, it won’t be valuable to a buyer when you want to move on or retire. “Take yourself out of the process of being involved in all the critical decisions day to day and start to work on your business growth, your long-term strategy, and things like finding cost savings,” Murphy says.

While you have a breather over the holidays, think about the bigger picture of your business. What does it do best? How can you do it better? How do you differentiate your company from its competitors? Jim Sharvin, a CPA at McDowell, Dillon & Hunter in Torrance, Calif., advises his small business clients to ask their customers, friends, and neighbors for their opinions. “A lot of people may have ideas about your business, but they don’t speak up unless you ask them,” he says. “Insights from your inner circle can be valuable if you can listen to critiques without getting defensive.”