Replacing an underperforming distributor

Most manufacturers wait too long. Not because they cannot see the problem, but because the alternative looks worse — and in markets where the partner holds your registration, it sometimes is. Here is how to work out which situation you are in before you act.

First, establish whether it is the partner or the market

The uncomfortable possibility is that the market is simply harder than the plan assumed: reimbursement is worse, the tender cycle is longer, the incumbent is more entrenched. Replacing a partner will not fix any of that, and you will spend a year discovering it.

A few things separate the two:

Are comparable products selling? If competitors in your category are winning business and you are not, that is about execution rather than demand.
Did they do the things that do not depend on demand? Registration maintained, staff trained, product listed, tenders actually entered. A partner who missed these has underperformed regardless of the sales number.
Where did it stall? No meetings is a coverage problem. Meetings but no evaluations is a positioning or pricing problem. Evaluations but no orders may be a product or price problem that a new partner will hit identically.
Has anything changed on their side? An acquisition, a new competing line, or the departure of the person who championed you often explains a decline better than effort does.

Then find out what you would actually be leaving

This is the step that determines whether replacement is a decision or a wish, and it needs answering before any conversation with the incumbent.

Who holds the registration? If it is in the partner's name, the registration is theirs. Replacing them may mean re-registering from the beginning under a new local entity — months to over a year, depending on the market and the class of device or IVD.
What does the agreement say about transfer? Whether there is a cooperation obligation, what notice is required, and whether there is stock to buy back.
Is there a credible alternative? Not "are there other companies" — whether a specific, suitable partner exists who is not already carrying a competitor and would take the line. Leaving before you know this is how a market goes quiet for two years.
What do you lose in the handover? Their tender registrations, their hospital listings, the clinical relationships. Some of it transfers. Some of it belongs to them.

Find out who else could carry it

Before you start the conversation, it is worth knowing what the alternatives look like. We can map the field for that market.

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The conversation before the decision

A surprising number of underperforming relationships recover, and the reason is usually mundane: nobody ever told the partner plainly what was expected, or the thing blocking them was something the manufacturer could have fixed.

Worth doing once, properly, before you move:

Put the expectation in numbers, with a date. Vague dissatisfaction produces vague improvement.
Ask what is actually in the way. Sometimes it is pricing that cannot win a tender, a missing local-language document, or a competitor's service package you did not know about.
Ask who owns the product internally now. If nobody does, that is fixable and worth one attempt.
Set a review date close enough to matter — a quarter, not a year — and be specific about what happens at it.

If the agreement has minimums, this is where they earn their place: the conversation is about a term both sides agreed to, not about your disappointment.

Sequencing a replacement

The order matters more than the decision, particularly where the registration is local:

Line up the successor first. Terminating before you have a replacement leaves the market empty and hands the incumbent all the leverage in the transfer negotiation.
Understand the registration path before giving notice. Whether it transfers, and how long a fresh registration would take. In some markets a transfer is administrative; in others it is a new application.
Expect a gap and plan for it. Customers with your product installed still need service and consumables during the transition, and how that is handled is what your reputation in the market rests on afterwards.
Keep it professional. These markets are small, the distributor community talks, and a public falling-out with one partner makes the next negotiation harder.

What to do differently in the next agreement

Almost every difficult replacement traces back to a term that was not in the original agreement. The ones that matter:

Registration transfer obligations, with a timeline and cooperation duties
Minimums in units, with conversion to non-exclusive as the first consequence
Sell-through reporting, so a decline is visible in month three rather than month eighteen
A defined review point, so performance is discussed on a schedule rather than only when it has become a crisis