Michael Barbella, Managing Editor10.11.22
The COVID-19 pandemic has created numerous healthcare challenges over the past two years—a gnarled supply chain among the most inhibiting—but it’s been quite a boon for medtech research and development.
The virus that has killed more than 6.5 million individuals worldwide led to a major boost in R&D spending in 2020, with the top 10 medtech companies collectively investing more than $15 billion, Evaluate Vantage data show. And while that figure rose to $17.4 billion last year, the financial news analyst organization expects R&D investment to slow in 2022 and rise only moderately through 2028.
“However, even modest growth year over year represents a record level of spending,” David Stuart, Life Sciences senior analyst, director, wrote in a Fall 2022 Industry Outlook for RSM, a London-based accountancy network. “We expect the trend of record R&D spend will continue as companies jockey for technical superiority and the pace of innovation continues to accelerate. There are no viable substitutions; if medtech companies don’t maintain strong R&D spend, they risk being left behind in a highly competitive and segmented industry.”
Substantial R&D investment has long been tied to healthy product innovation and market capitalization. Whether R&D spending levels stay consistent or falter in the near future remains to be seen, but medtech firms will most certainly have maintain robust research and development pipelines to ensure their future success.
MPO’s R&D feature details the trends and market forces driving medtech research and development. Samir Parikh, Global Vice President, R&D and Clinical Affairs at Hologic, was among the experts interviewed for the feature; his full input is provided in the following Q&A:
Michael Barbella: How has COVID-19 changed companies’ approach to R&D, if at all? Why did it change the approach to R&D?
Samir Parikh: The most significant change brought on by COVID-19 has been the introduction of remote R&D work. To ensure our employees’ safety during the onset of COVID-19, we transitioned to a remote work environment. As a company, we had minimal experience with facilitating remote R&D work, particularly for capital equipment. Our team dedicated a lot of energy to ensuring everyone felt comfortable working remotely, putting the proper technologies in place to ensure success, and doubling down on our communication pathways to help work continue. While our foundational approach to R&D has remained the same, remote work challenged us to collaborate more and communicate in new ways to ensure ongoing innovation.
Barbella: In your observations and customer dealings, what areas of healthcare are companies focusing their R&D on (for example, diagnostics, cardio, robotics, etc.)? Why are companies investing in these particular areas?
Parikh: With the onset of COVID-19, innovations in diagnostics have taken center stage in the global health care market, including R&D. The global pandemic created a challenging time for diagnostic R&D, but already fostered a lot of opportunities for innovation and unique collaborations to address the numerous diagnostic challenges we’re facing as a society today.
Another prominent R&D focus is remote connectivity for physicians. For example, in breast health, radiologists are increasingly interested in reading remotely. This demand is driving R&D to deliver on remote connectivity toolkits with a more comprehensive and focused approach than previously seen. This also feeds into remote diagnostics and treatment, where AI and automated robotics are poised to help physicians provide personalized care more quickly and, most notably, remotely. In the future, this could redefine what kind of care is centralized in hospitals and what can be facilitated in outpatient centers.
Barbella: In your observations/customer dealings, are companies allocating their R&D dollars more into transformational or incremental innovation? What is the reason (or reasons) behind their choice?
Parikh: In R&D, we always strive to maintain an appropriate balance between transformational and incremental innovation. As we transition into a “new normal” since the onset of the pandemic, we find ourselves in an environment uniquely positioned to support a lot more transformative innovation in order to address the new and ever-changing challenges we’re facing. I anticipate we’ll see more resources directed to transformational innovation than ever before, but incremental innovation will undoubtedly remain a foundational element of any company’s R&D strategy.
Barbella: Is there an ideal or best R&D outsourcing strategy that companies should employ when pursuing new innovation? Please explain your answer.
Parikh: R&D outsourcing strategies need to strike an appropriate balance between internal teams and external partnerships. It is my belief that organizations should define their core R&D competencies and strengths, then build upon these internally. As priorities shift and the industry changes over the years, that internal “core” can also shift and evolve by augmenting with additional expertise. On the other side, external R&D collaborations and partnerships are best suited for bringing in talent and technologies in areas outside of your core work focus or for offloading some of the more basic tasks such as testing or sub-system design—that allow your internal team to accelerate innovation to drive growth while serving the needs of the customer.
Barbella: When does it make sense—if ever—NOT to outsource medtech R&D?
Parikh: Companies should generally avoid outsourcing medtech R&D for their core competencies. They should also be careful not to outsource work that may ultimately slow down internal innovation due to the support required to bring external companies up to speed on projects. R&D outsourcing needs to be balanced with internal work. The goal for R&D is to provide customer need-based solutions in an accelerated and efficient manner. If anything throws off that balance, it should be avoided.
Barbella: What benefits do an academic partnership bring to R&D?
Parikh: There is intrinsic value in academic partnerships, particularly for their unique viewpoints and thought-provoking research. However, the journey of translating academic research into commercial solutions can be longer and may present challenges in terms of ownership of intellectual property.
Barbella: How has virtual interaction benefited medtech R&D? Do you expect it to continue?
Parikh: Wherever the pandemic may take us in the future, it’s my belief that remote work is here to stay. While it has challenged us to introduce new and unique ways of working and innovating, there remain ample opportunities to improve efficiency. One of my biggest worries with remote work is the mental health implications for employees. For all the benefits of working from home and eliminating commuting, there are also real drawbacks. Many miss the social interaction of work and the opportunity to collaborate in person, while for others, remote work can blur the line between home and work. It’s certainly something we’ll need to continue to address as an industry.
Barbella: How will approaches to R&D evolve in the future?
Parikh: The overarching landscape of business and health care is continuously evolving. R&D also needs to pivot to meet these future changes. Front and center to that evolution will be the same core tenants of R&D that we have always abided by. In order to be successful in R&D, one must fully understand customer needs, identify the problems that matter the most, and resolve them systematically by providing appropriate solutions quickly. This will be the key to success and future growth.
The virus that has killed more than 6.5 million individuals worldwide led to a major boost in R&D spending in 2020, with the top 10 medtech companies collectively investing more than $15 billion, Evaluate Vantage data show. And while that figure rose to $17.4 billion last year, the financial news analyst organization expects R&D investment to slow in 2022 and rise only moderately through 2028.
“However, even modest growth year over year represents a record level of spending,” David Stuart, Life Sciences senior analyst, director, wrote in a Fall 2022 Industry Outlook for RSM, a London-based accountancy network. “We expect the trend of record R&D spend will continue as companies jockey for technical superiority and the pace of innovation continues to accelerate. There are no viable substitutions; if medtech companies don’t maintain strong R&D spend, they risk being left behind in a highly competitive and segmented industry.”
Substantial R&D investment has long been tied to healthy product innovation and market capitalization. Whether R&D spending levels stay consistent or falter in the near future remains to be seen, but medtech firms will most certainly have maintain robust research and development pipelines to ensure their future success.
MPO’s R&D feature details the trends and market forces driving medtech research and development. Samir Parikh, Global Vice President, R&D and Clinical Affairs at Hologic, was among the experts interviewed for the feature; his full input is provided in the following Q&A:
Michael Barbella: How has COVID-19 changed companies’ approach to R&D, if at all? Why did it change the approach to R&D?
Samir Parikh: The most significant change brought on by COVID-19 has been the introduction of remote R&D work. To ensure our employees’ safety during the onset of COVID-19, we transitioned to a remote work environment. As a company, we had minimal experience with facilitating remote R&D work, particularly for capital equipment. Our team dedicated a lot of energy to ensuring everyone felt comfortable working remotely, putting the proper technologies in place to ensure success, and doubling down on our communication pathways to help work continue. While our foundational approach to R&D has remained the same, remote work challenged us to collaborate more and communicate in new ways to ensure ongoing innovation.
Barbella: In your observations and customer dealings, what areas of healthcare are companies focusing their R&D on (for example, diagnostics, cardio, robotics, etc.)? Why are companies investing in these particular areas?
Parikh: With the onset of COVID-19, innovations in diagnostics have taken center stage in the global health care market, including R&D. The global pandemic created a challenging time for diagnostic R&D, but already fostered a lot of opportunities for innovation and unique collaborations to address the numerous diagnostic challenges we’re facing as a society today.
Another prominent R&D focus is remote connectivity for physicians. For example, in breast health, radiologists are increasingly interested in reading remotely. This demand is driving R&D to deliver on remote connectivity toolkits with a more comprehensive and focused approach than previously seen. This also feeds into remote diagnostics and treatment, where AI and automated robotics are poised to help physicians provide personalized care more quickly and, most notably, remotely. In the future, this could redefine what kind of care is centralized in hospitals and what can be facilitated in outpatient centers.
Barbella: In your observations/customer dealings, are companies allocating their R&D dollars more into transformational or incremental innovation? What is the reason (or reasons) behind their choice?
Parikh: In R&D, we always strive to maintain an appropriate balance between transformational and incremental innovation. As we transition into a “new normal” since the onset of the pandemic, we find ourselves in an environment uniquely positioned to support a lot more transformative innovation in order to address the new and ever-changing challenges we’re facing. I anticipate we’ll see more resources directed to transformational innovation than ever before, but incremental innovation will undoubtedly remain a foundational element of any company’s R&D strategy.
Barbella: Is there an ideal or best R&D outsourcing strategy that companies should employ when pursuing new innovation? Please explain your answer.
Parikh: R&D outsourcing strategies need to strike an appropriate balance between internal teams and external partnerships. It is my belief that organizations should define their core R&D competencies and strengths, then build upon these internally. As priorities shift and the industry changes over the years, that internal “core” can also shift and evolve by augmenting with additional expertise. On the other side, external R&D collaborations and partnerships are best suited for bringing in talent and technologies in areas outside of your core work focus or for offloading some of the more basic tasks such as testing or sub-system design—that allow your internal team to accelerate innovation to drive growth while serving the needs of the customer.
Barbella: When does it make sense—if ever—NOT to outsource medtech R&D?
Parikh: Companies should generally avoid outsourcing medtech R&D for their core competencies. They should also be careful not to outsource work that may ultimately slow down internal innovation due to the support required to bring external companies up to speed on projects. R&D outsourcing needs to be balanced with internal work. The goal for R&D is to provide customer need-based solutions in an accelerated and efficient manner. If anything throws off that balance, it should be avoided.
Barbella: What benefits do an academic partnership bring to R&D?
Parikh: There is intrinsic value in academic partnerships, particularly for their unique viewpoints and thought-provoking research. However, the journey of translating academic research into commercial solutions can be longer and may present challenges in terms of ownership of intellectual property.
Barbella: How has virtual interaction benefited medtech R&D? Do you expect it to continue?
Parikh: Wherever the pandemic may take us in the future, it’s my belief that remote work is here to stay. While it has challenged us to introduce new and unique ways of working and innovating, there remain ample opportunities to improve efficiency. One of my biggest worries with remote work is the mental health implications for employees. For all the benefits of working from home and eliminating commuting, there are also real drawbacks. Many miss the social interaction of work and the opportunity to collaborate in person, while for others, remote work can blur the line between home and work. It’s certainly something we’ll need to continue to address as an industry.
Barbella: How will approaches to R&D evolve in the future?
Parikh: The overarching landscape of business and health care is continuously evolving. R&D also needs to pivot to meet these future changes. Front and center to that evolution will be the same core tenants of R&D that we have always abided by. In order to be successful in R&D, one must fully understand customer needs, identify the problems that matter the most, and resolve them systematically by providing appropriate solutions quickly. This will be the key to success and future growth.