Former Managing Director, Sivantos
Robin spent over 15 years in the hearing aids industry, starting as a salesperson in the hearing instrument wholesale business for Siemens Audiologische Technik (Now WS Audiology). His service at Siemens’ hearing aids business culminated in the role of Managing Director for 5 years, from 2011-16. He is currently the CFO of Method Park, a fast-growing software engineering consultancy headquartered in Germany. Read more
Tell us a little bit about your relationship with the hearing aids industry.
I’ve been working for roughly 15 years in the industry, starting as a salesperson in the hearing instrument wholesale business for one of the big players, namely Siemens Audiologische Technik. I made a career through various functions and left the industry after the sale of that business to a private equity investor when Siemens divested it. In the last few years, I’ve been working as Managing Director of Siemens Audiologische Technik.
Could you describe the journey of a unit of production of a hearing instrument, from the production floor to being fitted on a consumer?
Yes. Let me frame this by saying that a hearing instrument 100 years ago and today still basically, consists of the same contents. You need a microphone/s, a receiver, an amplifier – which is digital nowadays – and you need some energy, a battery or an accumulator. These are the basic ingredients of a hearing instrument. The way it is developed further and is also produced has changed a lot.
You have to understand that the parts of the hearing instrument are purchased from suppliers. The real know-how that’s inside of the hearing instrument is basically signal processing, the audio processing. So the hearing-impaired person gets the amplified tones, speech, whatever signal, in real time, in good quality and amplified in a way that is matching the individual hearing loss.
Having said this, hearing instruments are basically a technical audio device. They are produced in a kind of mass production. There are only very few spots still in Europe; most of the factories are in Asia. Starkey, for example, still produces in the US. The hearing instrument engine nowadays is still, to a certain extent, the same in a lot of hearing instruments and is then like a car, somehow fitted to the need. You can buy a unit with a full set of features or one with not so many features. But the engine in the hearing instrument is the same and is able to provide all required features.
That makes the production much easier than in former times and, nowadays, a big part of the production is automated. 10 to 15 years ago, many things had to be welded manually in the integrated circuits and the pieces that hearing instruments are made of.
I have a good insight, of course, into the value chain that we had in the company I worked for. Traditionally, from a quite central fabrication and logistics point, these goods are distributed into the world, normally into the local presence of a manufacturer who usually – especially in the past – fulfilled the wholesale function in that market and distributed the hearing instruments to the retailer.
In the past few years, the formation of this market has been consolidated so you find big retail chains that own an enormous number of points of sale. You also have small chains, which tend to be acousticians or small groups that maintain a couple of hearing aid points of sale or dispensers. But you still have a significant number of so-called mom-and-pop shops, which would be a single audiologist or acoustician that performs his business, has one shop, maybe owns the facility and works in the shop himself. With the consolidation, that part of the channel is shrinking and moving more and more towards big retail chains that buy these mom and pop shops in the market.
The hearing impaired – this is now the chain starting from the other side – suffer from hearing loss. The interesting part is that the person who suffers from hearing loss doesn’t really feel that he suffers because, in many cases, he doesn’t really have a problem with that. The opposite is the case; certain background or annoying noises are just not hearable, so at a certain point of time, in many cases, this person gets some pressure from family, from work colleagues, to get his hearing tested. He goes to an audiologist or to an ENT doctor and normally gets a diagnosis that he has hearing loss which can be classified from mild to severe or profound. Then usually, with a prescription in his or her hand, the patient will go to the audiologist or hearing aid acoustician and both ends of the chain come together; the hearing aid acoustician then combines the device that is manufactured by the big OEMs, with the patient.
This process is a little bit complex. There needs to be a fitting of the hearing instrument to the individual hearing loss of the patient. We’ll come to that point later in the discussion, because there are some dynamics in the market. But I would say, this is the traditional way a hearing instrument goes from the production floor to the patient which means the hearing instrument itself has a few thousand kilometers journey behind it when it arrives on the ear of the patient.