Realignment of theCustomer Base For decades, medtech companies sold many of their products direct

Realignment of theCustomer Base

For decades, medtech companies sold many of their products directly to doctors and hospitals. But the emergence of several trends is creating a fundamental realignment of the customer base to which companies traditionally have sold their wares—increasing the importance of some customer channels while reducing the significance of others.

Hospitals are being pressured to cut costs as governments in most major markets attempt to reduce ballooning healthcare expenses. These pressures, along with reduced margins from the 2008 recession, have triggered a spate of hospital mergers over the last four years, and a greater

reliance on technology assessmentcommittees as well as group purchasing organizations to consolidate and standardize purchasing decisions. Surgeons and other physicians who have always had free reign to choose the devices they preferred to work with now are finding their options limited. In many cases, hospitals are imposing price caps and/or reducing the number of vendors from which they will purchase.

Going forward, medtech companies that habitually relied on close relationships with doctors to sell their products will need to rethink the kinds of products they sell, the ways in which they sell those products, and even the way in which they develop their products, according to the Ernst & Young report.

The “new normal” strikes again.