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A Case Study of Export Success: Cochlear

By Alex Patrick and Meg Cunningham

May 2002

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Introductory Note This case study was undertaken as part of the subject ECC2520/3520 'Australia in the Asian business world since 1945' at Monash University. The opinions expressed in this study are those of the authors alone. This study relies solely on the extensive information on Cochlear that exists in the public domain. Cochlear, whilst being the focus of this study have not had any direct connection with this study.

Methodology Statement The information we obtained defined the approach we took. Our initial intention was to focus on Cochlear’s venture into China, but as we progressed, we discovered that accessing information specifically regarding entry into China was not readily available. Furthermore, we soon came to appreciate the importance of the sequential nature of the development of the export markets. Our focus on America was not originally intended, but it became apparent that America was appropriate for Cochlear’s first trading market and facilitated their entry into the Japanese and Chinese markets. A limitation of the information we obtained was that no one was overly critical of anything Cochlear had done. We discovered that Cochlear’s rational approach to business, the restrictive nature of the industry and lack of direct competitors made it difficult to develop an opinion other than that Cochlear were a successful company. The simple fact that their share price has risen from $2.50 in 1995 to $48.10 in October 2001 and steadying at $41 in April 2002 illustrates that Cochlear’s shareholders agree. There was also a lack of information regarding financial results and performance that was country specific. This limited the scope of our investigation in terms of comparisons between countries, but it does not appear that having such information would have changed the conclusion we reached. While we were not able to access much academic material, the articles we used were from a variety of global sources, including domestic American and Chinese perspectives.

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Cochlear’s successful export relationship with Japan and China Cochlear’s patience, determination and bold financial decisions have been the key to accessing the unchartered Japanese and Chinese biotechnology markets. It has succeeded where many large Australian companies have failed. This achievement is reflected by an award from the Australian Chamber of Commerce in Hong Kong for its success in the Asia-Pacific region in October 2001. To examine the reasons for Cochlear’s success it is necessary to understand how the vision and product developed. As the bionic ear became a reality, the commercial aspect needed to become more sophisticated. This resulted in Cochlear commencing operations as the internationally recognised Cochlear Ltd. The sequential development of Cochlear’s three main international markets, America, Japan and China, is a critical factor to their success. It is argued that Cochlear’s achievements in Asia would not have occurred if its international standing did not begin in the US. Cochlear’s American experience allowed them to develop connections and trial their business etiquette and culture in a familiar market. They needed all the experience and adaptability that they could extract from America in order to tackle the tougher Asian biotechnology industries. Cochlear’s distinct advantage over other Australian firms came with the nature of their industry. Japanese and Chinese markets require patience, therefore Cochlear’s bionic ear devices suit these markets because they take considerable time to research and develop, let alone implement. This complements Cochlear’s approach because extracting profit from trade with Asia is often a long-term process. Thus, Cochlear has identified and acted upon the fact that it must first raise awareness of hearing deficiencies and the potential success a device may have. Whilst establishing neo-natal testing programmes takes time and money, they are particularly important given that the devices offer maximum results to children under the age of six. If a child with a hearing deficiency can be identified in the womb or as an infant, this increases the opportunity for parents to organise further testing and the necessary implantation while the child remains fully receptive to the device. Cochlear must also train medical professionals in the implant and rehabilitation process and obtain financial support. Their success in the Japanese and Chinese markets can, in part, be attributed to the identification of these issues and their ability to actualise them. The issue of reimbursement is one that will continue to hinder Cochlear’s development. Without reimbursement, Cochlear’s devices cannot reach as many potential candidates due to the prohibitive costs associated with the implementation of the devices. For this reason it will be seen that Cochlear constantly work on developing appropriate financial programmes to increase the availability of the device.

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Cochlear’s ability to work with micro and macro factors has meant that revenues continue to rise, facilitating further research and development and consequently improved devices that can be offered to hearing impaired people worldwide. Cochlear’s progression from a research project to a company Cochlear Ltd began with the vision of Professor Graeme Clark, an Ear, Nose and Throat specialist. After growing up with a deaf father, in 1961, Clark had begun the challenging eleven year research process required to make the bionic ear a reality. Working out of the University of Melbourne, he created an implant that electronically stimulates the damaged nerves of hearing impaired people so that they can have hearing sensations (www.cochlear.com, 2002). In 1978, with the assistance of a Public Interest Project Grant by the Federal Government, Clark’s prototype implant bionic ear became operational. Given the success of the prototype and the commercial opportunity the technology represented, the research team concluded that to reach a larger market, a company’s financial resources had to be sought. After receiving government permission to call for tenders, Nucleus, founded in 1967 to ‘develop, manufacture and market innovative medical technology’, took the bionic ear on in 1981 (Breaking the sound barrier of deafness, 1988). A survey performed by Nucleus discovered that ‘the Australian market was too small. If there was going to be commercial success for the implant, it would have to be in the export market’. By 1988 sales figures supported this, finding that nearly 90% of Cochlear’s profits were from export sales (Breaking the sound barrier of deafness, 1988). Continuing this trend, Australian sales only accounted for 5% of Cochlear’s total revenue in 2002 (Cochlear rises to 2-month high on FDA approval, 2002). With such evidence, it was clear that Cochlear needed assistance from a company that offered a higher degree of experience when dealing with export markets. Thus, in 1988, Cochlear became part of the medical division of Pacific Dunlop. With Pacific Dunlop’s support, Cochlear took over the world-wide bionic ear business, 3M in 1989. This was done despite the fact that 3M only held 3% of the US hearing implant market, with the other 97% already captured by Cochlear. Cochlear chose not to develop 3M’s bionic ear, instead opting to promote its own 22 channel device (Cochlear takes over bionic ear from 3M, 1989). The Cochlear subsidiary of Pacific Dunlop was successfully floated on the ASX in 1995, creating Cochlear Ltd (How Pacific Dunlop’s Formula Won, 1988).

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Cochlear’s sequential development of its export markets Cochlear realised that its export programme would have to occur in a specific order. Given the highly innovative nature of the technology, Cochlear’s initial export market had to be one that was willing and able to implement and adopt groundbreaking technology. America Given the degree of familiarity and adaptability of the market, Cochlear established in 1984 that America would prove to be the most appropriate initial export opportunity. It represented 70% of the international market for this type of high-tech medical and health care treatment. However, to sell medical devices in the US, approval by the US Food and Drug Administration (FDA) was required. It took two years of stringent testing by the FDA before permission was finally obtained (Breaking the sound barrier of deafness, 1988). Cochlear’s sales increased 42% in the first five months of 2001, after two of its products were approved by the FDA (Cochlear expects H2 sales lift, maintains 20 2, 2002). Due to the events of September 11, Cochlear has witnessed a reduction in revenue given delays in the launch of its new products. They must ensure that the reduction in profits is merely industry related, and not a consequence of poor management. The current economic climate in America may not be conducive to growth in the field of medical technology, but Cochlear must not let their rivals use this opportunity to capture a greater market share. There is currently no evidence to suggest that this is the case, but it is not an excuse for poor financial results and reduced market share. For the moment, it appears that Cochlear’s American operations are in safe hands since Mr Miller, Head of Cochlear America is determined to move into the more than ‘90 percent of the market that is not currently penetrated. There's a lot of potential to help many, many patients out there’ (Profiles of Outstanding CEOs, 2001). He has formulated the following strategies that he believes will meet his aim. Cochlear will aim to continue to develop and improve its technology in order to better serve its patients. Another priority is increasing awareness about the product and its uses (Profiles of Outstanding CEOs, 2001). However, from a consumer’s point of view, results are imperative. While awareness and additional uses for their product are necessary for success, the main emphasis for the general public is finding out how effective hearing can be with a Cochlear implant. Cochlear must maintain a sense of human interest, perhaps more than other companies, and remember that its vision is to improve the quality of life of hearing impaired people. Miller also plans to make the technology more accessible to those who can benefit from it. He highlights that with any new medical technology, reimbursement becomes an issue due to the high cost associated with a new product. Working with insurance

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companies to ensure that the technology is affordable to patients is essential (Profiles of Outstanding CEOs, 2001). Cochlear must not develop their technology beyond the financial capabilities of their target market. If they continue to introduce products at a rapid rate, the financial burden in the absence of reimbursement will prevent Cochlear from generating the required revenue. However, the FDA’s lengthy approval process ensures that Cochlear does not release its devices too quickly. Finally, given that of the nearly 700 000 people in America that could benefit from Cochlear's technology, only about 15 000 have the implant. Cochlear is aware of the enormous opportunity that America presents and is determined to maintain and build on its strong market share. Japan

In 1985, Cochlear recognised that to further expand their operations, they would need to widen their vision to encompass Japan, the most important market after the US (Breaking the sound barrier of deafness, 1988). Although Cochlear wanted to recreate its preliminary success in America, it realised that the Japanese biotechnology environment and business culture was significantly different. For example, awareness of the product and its capabilities was far lower in Japan than in America. This meant that a stronger education campaign would need to be introduced. Furthermore, Japanese Ear, Nose and Throat surgeons were less familiar with the device and its relevance in the Japanese market. Consequently, Cochlear needed to obtain their support through an extensive education and training programme. Cochlear established its wholly owned subsidiary, Nihon Cochlear to provide a support base in Japan. If Cochlear were to be granted an import licence, they would first need to educate the Ministry of Health and Welfare on the benefits and opportunities that this medical technology represented to the Japanese hearing impaired population (Australian Bionic ear cracks into Japan, 1991). Working as Nihon Cochlear, they began applying to the Ministry of Health and Welfare for an import licence in 1985. They quickly grasped the need for a long-term commitment in the Japanese market given the nature of the approval process. During the first six months of 1990, Cochlear’s Former Chief Executive for the Asia Pacific region Mike Hirshorn made six visits to study the Japanese business culture (Australian Bionic Ear cracks into Japan, 1991). They felt this was necessary to begin establishing trust and rapport with their trading partners. This relationship was strengthened when Cochlear decided to fund promotions by doubling spending to around $1 million a year, even though annual sales at the time were $500 000. All costs in developing the Japanese market were absorbed by profits made in Cochlear's other subsidiaries (Patience pays off for Cochlear, 1992).

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Hirshorn believed that the key to success would be to apply ‘little bits of multi-dimensional pressure’ in its campaign for acceptance by the Japanese market. He outlined four ways in which this could be achieved (Patience pays off for Cochlear, 1992). Firstly, Cochlear examined how the experienced US companies managed to get licences to import into Japan. They discovered that the American companies did better than Japanese companies trying to get approval to manufacture locally. Surprisingly, the Japanese do not necessarily have influence in government circles, where as the US can bring political pressure to an archaic bureaucracy (Patience pays off for Cochlear, 1992). While the companies researched were not in the hearing device market, they were useful to study in that they provided an example of how the trust relationship could be established. Secondly, the US embassy in Tokyo had an officer who helped US medical technology companies tap into the Japanese market. Cochlear, creatively turned to its US subsidiary, as well as Austrade and the Department of Foreign Affairs, who sent a representative with Cochlear’s management, to put forward its submission for an import licence with Japanese Government officials (Patience pays off for Cochlear, 1992). This illustrates tremendous persistence and trust on Cochlear’s behalf because they were prepared to allow others to convince Health Ministry officials that an import licence would be beneficial for Japan. Thirdly, Cochlear was also able to capitalise on talks between the US and Japanese governments, aimed at increasing US access to the Japanese market. Although Cochlear as an Australian company was ineligible to directly request help, its US subsidiary could through its membership with the American Health Industry Manufacturers Association (Patience pays off for Cochlear, 1992). Again, Cochlear’s US connections were critical. Finally, realising that the Health Ministry relied heavily on the advice of senior doctors and surgeons, Cochlear found a way to influence this powerful group. Since many of the older, influential Japanese ear surgeons had been trained in Europe, Cochlear exploited this by urging their European physicians who were familiar with the implant to write to their Japanese colleagues in support of the system (Patience pays off for Cochlear, 1992). By doing background research and thoroughly investigating the structure of the Health Ministry, Cochlear realised that Japanese people placed great importance on trusted and familiar business associates. By 1989, Cochlear had conducted the necessary clinical trials in Japan. It beat 23 international competitors from the biotechnology industry and was granted a licence to import the devices in early 1991. The aforementioned four factors were crucial to securing the Health Ministry’s preference for Cochlear as a preferred importer of health technology.

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The issue of reimbursement in Japan Cochlear’s commercial success in Japan will depend on approval by Japan's Ministry of Health and Welfare for the cost of the device to be covered by national health insurance. After securing the import licence, they began lobbying the Health Ministry to extend its coverage to include reimbursement. It faced a long wait as reimbursement for the Nucleus 24 system was not achieved until eight years later in October 1999 (Australian Bionic Ear Maker Plans launch in China, Japan, 1999). Cochlear continues to press the department to accelerate the lengthy approval process so that Japan’s hearing impaired population can have timely access to the most innovative technology Cochlear has to offer.

China Cochlear’s venture into China was a natural, yet challenging, progression from Japan. Given that China is the most populous nation in the world, it is a lucrative market for any company provided that cultural obstacles and business etiquette can be overcome. Cochlear’s remarkable patience, acquired over many years of product research and dealings with various governmental departments meant that its strategy was ready to be adapted to China. Since Japan and China are distinct markets, it took Cochlear two years of additional background work in China before they became operational. In 1993, to establish itself in the Chinese market, Cochlear began by bringing Chinese Ear, Nose and Throat surgeons to the University of Melbourne’s Bionic Ear Institute for training at a cost of $1m (Hearing Chinese Whispers, 2001). The surgeons then returned to China and were provided with on-going support to establish a Cochlear implant programme. Cochlear recognised that offering training to these surgeons would increase awareness of the product to the medical profession. This acted as a symbol of Cochlear’s intention to engage China in the establishment of the technology in their home country. Eventually, in 1995, Cochlear’s first device was implanted. It was a donation from Cochlear and was implanted by the Australian trained Chinese Ear, Nose and Throat surgeons. The operation was reported advantageously by the Xinhua News Agency because it generated extensive public interest in the product and the company (Cochlear implant recipients greeted by Australian Minister, 1995). Thus, Cochlear’s presence in the Chinese market began to be recognised by the wider population.

In 1998 Cochlear, via its agent, supported the development of an audiology school in Beijing. It also signed a collaboration agreement with the China Rehabilitation Research Centre for Deaf Children to develop a professional programme for the rehabilitation of children who have received an implant (Hearing Chinese Whispers, 2001). By doing this, Cochlear illustrated their commitment to the overall hearing improvement process; the awareness, the device, the rehabilitation and the enhanced level of hearing for the patient.

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In May 2001, in an attempt to make the devices more affordable, Cochlear’s local agent Beijing Orient Strong T&T Development Co. Ltd formed an alliance with the Shenzhen Bank. Together, they established a programme to offer loans to facilitate low-cost medical services affordable to people with hearing impairments (Programme to aid kids with hearing defects launched, 2001). In the absence of a reimbursement scheme, a programme such as this is vital in order to ensure deaf children have access to an implant as early as possible. Cochlear’s long-term ambition to increase awareness of their products extended to an alliance with the Shanghai government, the Australian consul-general and the local community. A local child, aged five and a half, was in need of an implant, but costs were prohibitive. The community rallied, but fell short of the $26 000 required. Government authorities from both China and Australia collaborated to ensure the sum was reached (Hearing Chinese Whispers, 2001). This example again exhibits Cochlear’s ongoing determination to succeed in China, where contacts, especially those in government circles are vital.

In November 2001, Cochlear believed they were only reaching about 5% of the potential population. In terms of commercial opportunities, the Chinese market is becoming increasingly important since it is estimated that each year 6 500 children are born with a condition that could be helped by a Cochlear implant (Hearing Chinese Whispers, 2001). After making the move eight years ago, Cochlear has finally started to reap the benefits of expanding into the world's most populous nation (Cochlear implant manufacturer makes successful foray into China, 2001). Cochlear’s success in China is particularly well earned as in both America and Japan, they were able to organise reimbursement, albeit to a limited degree. However, given China’s elementary level of economic development and subsequent lack of finance, it is highly unlikely that Cochlear will even attempt to broach the issue of reimbursement in the near future. The financial support from the government sector is not available. Factors contributing to Cochlear’s success Cochlear’s success in recent times can be partly attributed to the nature of the product, industry and markets and their ability to establish financial assistance. Nature of the product Cochlear’s bionic ear is a high-value, low-weight export. It benefits from the relatively low cost of manufacturing high-tech in Australia, has no trouble attracting top scientific talent and is aided by Australia’s ‘clean-image’. Since the implant process is invasive, there is a considerable importance attached to exactly who is providing devices of this

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kind and Cochlear is considered acceptable (What makes an Australian company, 2002). Nature of the industry The biotechnology industry has been the top performing sector on the Australian Stock Exchange for the past three years. The S&P/ASX index for biotechnology rose 36.6% for the year ended June 2001 and has gone up 22.7% a year for the past three years. Cochlear, a sector leader, reported a 54% increase in earnings growth (Growth Magic: What ignites the spark, 2001). Cochlear is well positioned to sustain strong earnings growth because of the high barriers to entry of the industry. Hearing implants cannot be easily replicated by competitors and the combination of onerous regulatory and high capital requirements as well as the time needed to develop intellectual property restricts the number of new entrants (Growth Magic: What ignites the spark, 2001). Hirshorn feels that Cochlear has a natural ‘corporate cultural advantage because of the nature of the medical technology market. The product-development cycle is so long [that] everything takes a long time anyway’ (Patience pays off for Cochlear, 1992). Because of this, successful companies are rewarded with longer than average periods of protection for intellectual property. According to Merrill Lynch, ‘leaders in the sector are distinguished by a strong focus on their core business and prudent use of capital. They do not stray outside the area in which they excel, and they do not invest capital in areas that are incapable of producing high returns’ (Growth Magic: What ignites the spark, 2001). It can be considered that Cochlear is one such leader given that they maintain their focus on managing and improving the bionic ear. While investors remain sceptical about the ability of Australian companies to compete in the global biotechnology market, Cochlear has dominated the world market for ear implants since 1982. This is long enough to constitute a reasonable record (Growth Magic: What ignites the spark, 2001). Nature of the markets Cochlear chose to enter In order to ensure international commercial success, Cochlear had to sequentially pursue its three major export markets; America, Japan and China. All three markets presented opportunities, but opportunities that could only be reached through gradually acquired experience, connections and knowledge. Cochlear began its export programme to America given the high level of market familiarity. Its subsequent ‘long-term entry approach’ into Japan was seen at the time as ‘the exception rather than the rule’ (Patience pays off for Cochlear, 1992). Australian companies were not renowned for venturing into the Japanese market with a long-term vision. Nevertheless, Cochlear proceeded and learnt early the importance of patience

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when dealing with the Japanese market and government bureaucrats. This knowledge was essential when Cochlear decided to venture into China. It was necessary for Cochlear, as a subsidiary of Pacific Dunlop, to begin exporting to a market with which they were familiar and had an increased likelihood of success. While America offered a common ground in terms of language and cultural familiarity, it still presented solid opportunities as very few of the 50 states offered neo-natal testing programmes. Since its involvement in the US, Cochlear has helped introduce such testing programmes in over 40 of America’s states (Sounds Where There Was Silence Cochlear implants have opened the door to a new world for the deaf, 1989). These testing facilities raise the profile of the available technology and the company. In the early 1980s Japan was seen as the second largest trading market in the world. In this context it made sense for Japan to be Cochlear’s next target. Again, the development of neo-natal and general hearing programmes was preliminary and gave Cochlear the opportunity to establish itself. Japan’s highly-skilled surgeons were already in a position to perform the necessary surgery with minimal additional training. However, given the nature of the technology Cochlear offered, the Japanese Health and Welfare Ministry were initially wary of the Australian company. Cochlear persisted and exploited their US connections to gain entry into the market. Their decision to double their expenditure relative to their revenue has paid off and they have since begun to reap the rewards of this financial risk. Entry into China required raising the awareness of not only bionic ear implants, but of hearing impairments in general. When Cochlear first entered the Chinese market in 1993, there was no neo-natal hearing testing or trained audiology professionals. Since both of these are considered prerequisites for the product’s success Cochlear put itself under enormous financial strain to establish them. It trained Chinese surgeons (at a cost of $1m), initiated neo-natal testing programmes and rehabilitation centres (Hearing Chinese Whispers, 2001). However, these choices would have been weighed against the fact that entry into the Chinese market would not have occurred without the support of the surgeons and other health professionals. In terms of population, China is the world’s largest market. Thus, in 2002 Cochlear anticipates to implant 400 devices in China as opposed to 300 in Australia (Hearing Chinese Whispers, 2001). This evidence supports the survey performed by Nucleus in the early 1980s that to remain commercially viable, Cochlear would have to seek out overseas markets.

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Reimbursement Although Cochlear’s technology improves the quality of hearing of thousands of people worldwide, it comes at a price of around AUD$25,000.00. Therefore greater financial success depends on its ability to successfully lobby governments and health ministries around the world for patient reimbursement. While implants have been taking place in Japan since the 1980s, reimbursement was not granted until 15 years later. In China, however, Cochlear has not begun to tackle this issue given both the bureaucratic nature of the government and the early state of development of their Health sector. Cochlear’s agent in China has substituted reimbursement for an affiliation with the Shenzhen Bank. Australia offers limited reimbursement and regulatory approval continues to be among the slowest in the world. Cochlear’s recent device, the ESPrit 3G processor is ‘regrettably still not available in Australia despite being available to European and Asian recipients’ (Cochlear expects H2 sales lift, maintains 20 2, 2002). Cochlear continues to battle with the Federal Government over reimbursement for the recently developed Nucleus 24 technology. Nucleus 24 has been launched in every market except Australia and Japan (Cochlear Shares Soar On 54pc Earnings Rise, 2001). Cochlear, an Australian company, is struggling to offer its home country the most advanced technology. Since Cochlear’s world wide market share depends on its ability to continually improve and update its devices, Cochlear continues to encourage Australian Health Departments to support its innovations. Cochlear’s current position Despite a fall in the rate of growth of revenue following September 11, Cochlear still maintains a global market share of 60-65% (Cochlear expects H2 sales lift, maintains 20 2, 2002). Although Cochlear purchased 3M in 1989 to gain 100% market share in the US, it currently has two competitors in America; American based Advanced Bionics and Austrian firm Med-El. As these companies are in their infancy, they pose no immediate threat given industry barriers to entry. In terms of expanding their market base, Cochlear are currently establishing education programmes in Thailand and are working with other agencies to raise awareness. Given their experience in Japan and China, Cochlear are not anticipating their Thai clinics to return a profit until 2005 (Cochlear to open more local clinics, 2001). Forty-one years later, the founder of the bionic ear, Professor Graeme Clark remains committed to the cause. Working out of Melbourne’s Bionic Ear institute, Clark continues to discover ways in which hearing impaired people can improve their quality of life.

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Cochlear’s development from a research project to a successful company has been characterised by its ability to sequentially progress in all areas of business. Starting with humble beginnings, they have appealed to higher authorities when called for. While the government has contributed through funding and departments such as Austrade, it has not been a key player in Cochlear’s overall development. Instead, Cochlear has preferred to rely on fostering its own connections. As Cochlear establishes itself in new markets around the word, the devices, to a degree, can draw attention to themselves. However, given the diversity of cultures, societies and economic circumstances around the world, Cochlear’s initial mode of entry will vary. Since Cochlear did not have the initial resources to export internationally, Nucleus and Pacific Dunlop, recognising Cochlear’s vision, were prepared and in a position to encourage the development of the export of the implants. The sequential progression from America to Japan to China was critical. While America offered a relatively familiar market in the beginning, it presented the necessary challenges and obstacles that needed to be overcome so that the Japanese market could be accessed. The process that Cochlear adopted when solving such issues was the key to gaining a stronghold in Japan. Japan was the necessary progression from America as it offered a balance between the East and the West. Having traded extensively with America for many years, its export/import culture has been somewhat Westernised. However, its internal governmental departments and social culture remain traditionally Japanese. Given America’s strong trading position in Japan, Cochlear was able to exploit its highly favourable American connections. Cochlear appealed to recommendations from its European surgeons who had trained their Japanese counterparts. They carried considerable weight given the trust the Japanese had in their European mentors. The Japanese Health and Welfare Ministry finally accepted Cochlear as an approved importer on the weight of the support its American subsidiaries offered. If Cochlear had progressed directly from Australia to Japan it seems most unlikely that they would obtained an import licence. Given the questionable nature of relations between China and the US, not to mention the structure of the Chinese business culture, Cochlear could not appeal to its American subsidiaries again. Based on their Japanese experience, Cochlear felt it could begin by appealing to the surgeons who would eventually be required to implant the devices. Unlike Japan, China had no suitably trained audiology profession and Cochlear used this to their advantage by offering a free education and training programme at the Bionic Ear Institute in Melbourne. Cochlear has a natural competitive advantage given the nature of its product and the industry in which it operates. Its American based competitors are currently showing no inclination to pursue the Asian markets given the barriers to entry. This supports

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Cochlear’s initiative and bold decisions to invest heavily when the returns were uncertain. The issue of reimbursement is one that will continually challenge Cochlear. It will always be launching new devices with the intention that they be available to as many patients as possible through financial aid. While establishing reimbursement is predominantly up to Cochlear itself, much depends on the financial situation and empathy of the relevant government. Cochlear defines what it means to be an Australian multinational in the 21st century’s globalised economy. They have been prepared to incur short term financial risk in order to secure long term benefits. Over the last 20 years, Cochlear’s vision of providing hearing devices to as many people as possible has remained the driving force behind its strategy.

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Cooke, R. (1989), “Sounds Where There Was Silence Cochlear implants have opened the door to a new world for the deaf”, Newsday, 28 March. Dampney, J. (2001), “Cochlear implant manufacturer makes successful foray into China”, AAP Newsfeed, 19 July. Gottliebsen, R. (1988), “How Pacific Dunlop’s Formula Won”, Business Review Weekly, 16 December, p. 66. Hayes, S. (2002), “Patience key to success in China” The Australian, 8 January. Johnstone, B. (1992), “The Bionic Ear”, Far Eastern Economic Review, 15 October, p. 78. Korporaal, G. (2001), “Hearing Chinese Whispers”, The Australian, 7 November, p. 44. Noonan, R. (2002), “Cochlear rises to 2-month high on FDA approval”, Bloomberg News, 25 March. Roberts, P. (1989), “Cochlear takes over bionic ear from 3M”, Australian Financial Review, 17 June, p. 36. Roberts, P. (1990), “Government can help industry develop products”, Australian Financial Review, 10 December, p. 28. Rowbotham, J. (1992), “Patience pays off for Cochlear”, Business Review Weekly, 28 February, p. 32. Sing, T. (1988), “Breaking the sound barrier of deafness”, Sydney Morning Herald, 13 October, p. 6. Internet site Cochlear implant system, http://www.cochlear.com/rcs/cochlear/publisher/web/home/index.jsp, accessed 22 March 2002.