5. Market Challenges

The market landscape identified a number of demand and supply dynamics that have challenged the development of a low cost, high quality, high volume market, which are characterised below.

5.1. Demand
STIGMA & AWARENESS

Stigma associated with hearing loss and the use of hearing aids combined with a lack of awareness around the need for and importance of ear and hearing care services, including hearing aids, among policymakers, service providers, and end users limits uptake.

  • POLICYMAKERS: Policymakers lack awareness and data on the need, importance, and impact of hearing aids and the prevalence of hearing loss. This negatively affects prioritisation in policy, programmatic, personnel, training, and financing decisions. Few countries have adopted national strategies around E.H.C.. Where strategies have been adopted, implementation is very limited.
  • PROVIDERS: Health providers, teachers, elder care providers, parents and others who would be well-equipped to identify hearing loss at an early stage are not informed about the potential signs of hearing loss, the need to have it assessed, and where to refer or how to potentially remedied with a hearing aid. Children with hearing loss are incorrectly characterised as having a learning disability and do not get access to the services they need.
  • USERS: Users may not recognise the signs of hearing loss and may not be aware that there is a device that can correct hearing loss. They may also fear stigma if they wear a hearing aid, either preventing them from seeking services or causing them to discontinue wearing their hearing aid.
  • PUBLIC: The public can stigmatise a person for using a hearing aid, preventing or limiting use. Low awareness or stigma may also contribute to why individuals fail to recognise signs of hearing loss.

Compounding the above is limited available evidence on social attitudes and stigma around deafness, hearing loss, and use of hearing aid to support proper design and delivery of awareness campaigns and services.

POLITICAL WILL

Government involvement is low due to competing priorities.

Hearing services straddle health, education, and social welfare agencies that address disability, and are rarely a priority for any of these, due to limited budgets, relatively low awareness of hearing loss, and advocacy towards other issues. Low prioritisation from governments results in limited to no financing for the purchase and provision of hearing aids, or in some cases fragmented financing across different ministries, with lack of coordination.

FINANCING

There is a lack of public, private and donor financing for the purchase of appropriate hearing aids.

  • PUBLIC SECTOR: Governments lack policies or insurance schemes that allocate funds for hearing aid procurement and provision. When funds are available, they are insufficient. Poor availability of funds also leads to providing hearing aids in a suboptimal manner, such as only providing one hearing aid per user, or providing them at events without appropriate fitting and follow up support.
  • PRIVATE SECTOR: The private sector in L.M.I.C. has not been geared towards low-income clients, so sales are limited to wealthier, urbanised populations. For many people who need a hearing aid, even lower cost hearing aids are priced above the ability to pay. As a result, people procure items that are not technically hearing aids, such as devices that simply amplify surrounding sounds without any fitting but are not appropriate for those with disabling hearing loss.
  • DONOR: No large donor financing is available for the purchase of appropriate hearing aids. Main donor funders are C.S.R. initiatives of Big 5.
GLOBAL POLICY

Current guidelines for service delivery and product selection are outdated or inadequate.

  • SERVICE DELIVERY: The 2004 W.H.O. Guidelines for Hearing Aids and Services for Developing Countries are considered outdated and do not incorporate the use of latest technology for screening and diagnostic services. The guidelines also do not provide adequate information on task-shifting protocols to reduce the need for audiologists in L.M.I.C.s.
  • PRODUCT SELECTION: The 2017 W.H.O. Preferred Product Profile (P.P.P.) provides clarity on model selection and specifications for basic, quality hearing aids for L.M.I.C.s but does not define a limited set of hearing aid specifications that would be able to serve the majority of clients, leading to procurers buying a proliferation of products, complicating procurement and provision. Furthermore, innovative products that can simplify provision in the long run are not addressed by the P.P.P., and thus there is a need for additional evidence and guidance.
PROVISION

Service provision capacity is constrained and fragmented.

Existing guidelines propose a service delivery model that requires highly skilled providers and significant clinical infrastructure, which therefore makes it difficult to scale.

There is little investment by governments to set up hearing aid provision systems and train providers, and donors, philanthropy and C.S.R. have not filled this gap. Poor coordination between different ministries and N.G.O.s along with insufficient investment leads to fragmented, small-scale provision programs that do not reach most users and fail to provide support over time. The quality of non-profit provision varies widely with limited coordination with the government. Provision takes place through one-off events where hearing aids are distributed with limited long-term support and aftercare.

Audiologists are scarce and often concentrated in a few urban areas or in specialised hospitals, and technician-level support cadres are often not defined or effectively deployed. Lack of adequate referral networks prevents users from receiving services needed in the cascade at appropriate points of care.

5.2. Supply
APPROPRIATE DESIGN

Hearing aids with basic features are a good starting point for L.M.I.C. provision.

The Big 5 release new hearing aids on a 3-year cycle. This rapid pace of innovation has resulted in products with advanced features that may not be required for all users. However, older models with basic features have excellent sound quality and signal processing. If there is sufficient demand for these products, they can be profitable at much lower prices as R&D costs have already been recouped. Opportunities may exist to transfer technology of older generation models to manufacturers who would be willing to supply them in L.M.I.C.s.

Innovations in self-fitting technology may present the opportunity to expand the reach of hearing aids as new models and software become available, but this will need to be complemented by operational research in L.M.I.C. contexts to understand user experience and effectiveness of the new products, and to develop appropriate service delivery models around the products.

PRODUCTION ECONOMICS

Cost of hearing aid production is high, so even though price reduction can be achieved through volume-based negotiations, the final purchase price may still be rather high to the end-user.

Current manufacturers have optimised their production processes to reduce costs to the extent possible. While there are no expected constraints on the production capacity of components given that component manufacturers serve other markets that are much larger than hearing aid markets, no pathway was identified to reduce component costs further.

COMPETITIVE LANDSCAPE

The Big 5 dominate the industry, with limited opportunity for lower-cost entrants to break through, even in highly underserved markets in L.M.I.C..

The Big 5 have created market entry barriers to cement their position in their industry. At the same time, their primary focus is geared towards premium products, indicating that there may be opportunities at the lower end of the spectrum. The Big 5's participation in public tenders, which demand high volumes for lower cost, quality products demonstrates that with sufficient volumes, even low margin products make a sufficient business case for major players.

COST-EFFICIENT SUPPLY CHAINS

The sales model adds mark-ups along the supply chain, increasing cost to the buyer.

In the licensed provider model within the private sector, the bundled pricing model obscures the levels of mark-ups for both products and services in the final price to the consumer.

Most hearing aid manufacturers do not respond directly to government tenders in L.M.I.C.s and therefore their products are provided by local distributors who add an additional margin when responding to tenders. It is not known if the margins added are commensurate with the value provided by the local distributor. Furthermore, import duties and taxes in some cases can also add additional cost for the buyer.

5.3. Enablers
QUALITY

Lack of an objective quality standard means that procurers and providers do not have a way to differentiate quality from non-quality products.

  • DEMAND: Where countries have funding, they often select low quality, cheaper products that do not meet the needs of users. Quality standards and product specifications for what constitutes appropriate product and provision are not in place. When a government puts out a tender for hearing aids, often the only information they have to differentiate products is price.
  • SUPPLY: The existing quality regulation mechanisms, including F.D.A. and CE mark, are not able to fully differentiate quality products and no global quality standard for testing exists.
PROCUREMENT

Low funding and inadequate procurement practices lead to lower-quality and more expensive products purchased.

  • N.G.O. SECTOR: N.G.O.s do not have sufficient funds to procure hearing aids and often rely on support from C.S.R. initiatives and in-kind donations that may not lead to the optimal product being available for provision.
  • PUBLIC SECTOR: Poor availability of funds in the public sector limits the ability to procure appropriate, high-quality hearing aids to meet the current need. Where a public payer does exist in L.M.I.C.s, funding is fragmented across ministries or difficult to access. Even when procuring products, some governments buy across an overly wide range of specifications or tender without rationalising specification assortments.
MARKET VISIBILITY

There is limited visibility on the potential and current market in L.M.I.C..

  • BUYERS: Lack of understanding of available and quality suppliers and their product offerings limits purchasers' ability to make informed choices when navigating a market of suppliers with a vast product mix. The lack of clarity of specifications and quality standards leads to confusion about which hearing aids to procure.
  • SUPPLIERS: Lack of demand information, such as visibility on government tenders and capacity to respond to government tenders that do exist, limits market entry options into L.M.I.C. markets. Lack of presence in L.M.I.C. markets, combined with a distributor-focused model, prevents suppliers from developing a stronger understanding of L.M.I.C. demand.