In the meantime, medtech executives must adapt to managing their businesses in a substantially different environment. Clearly, all functional areas of device companies are being impacted—from innovation and operations to sales and manufacturing.
With all the changes occurring in the industry within the major business functions, it’s worth considering the tools that are needed for survival.
First, there must be a true understanding of the severity of the COVID crisis. Businesses with operations in China had somewhat of an early preview of the impacts. However, it’s clear now that no one was really prepared for the COVID-19 tsunami that hit U.S. shores in March—even those with the foresight to realize that modern civilized life was about to change.
Once the coronavirus pandemic took hold in the United States, it became obvious that the medtech industry was going to be dramatically impacted and its experiences would be different than most other sectors. While everyone’s business had to deal with major changes, each organization’s encounters with COVID-19 was significantly distinct because it largely depended upon product mix.
For example, respiratory companies’ lives changed dramatically as they likely had customers demanding more supply than they ever could have imagined forecasting in their most favorable pre-COVID-19 sales projections. On the other hand, medtech companies developing products used in elective procedures found their financial viability threatened in ways they never would have anticipated even in their most pessimistic pre-coronavirus revenue forecasts.
Medtech companies offering both respiratory products and those dedicated for elective procedures encountered an interesting dichotomy; these firms may have had to balance the extreme “volume ramp” for one part of their business with the extreme “volume decline” for another part while trying to minimize the resulting consequences on employees.
For the most part, COVID-19’s impact on businesses reverberated globally within a 90-day period from March to May. The medtech industry is now living a new normal defined by uncertainty, risk, flat or low (at best) growth, and supply chain volatility. Since no one—people nor businesses—can exist in perpetual “crisis mode, C-Suite leaders must now work to stabilize their organization’s mindset and processes across all functional areas.
While the impacts are ongoing, some of the more interesting changes in business dynamics include the examples outlined in the table.
The table represents some of the high-level changes occurring in the medtech industry. Detailed articles could be written on the changes occurring within each functional area. In reflecting upon what C-Suite leaders are experiencing as this new normal takes shape, we find that all company executives are grappling with changing dynamics, and their concerns are unique to each business style as well as leadership responsibilities.
CEOs have many industry and organizational undercurrents to address and manage on a daily basis. While they are keeping their eyes on the long term, their main focus must be to ensure their companies’ sustainability, viability, and employee safety.
CFOs share many of the same concerns. They are now more focused than ever on making decisions that positively impact cashflow to allow their organizations the flexibility to sustain the viability of operations.
Chief commercial officers prioritize maintaining/expanding relationships with current customers versus obtaining new ones. This is not to imply they are not being opportunistic about possible new customer attainment; it means survival depends on delivering effectively for current customers. Given that some competitors may be overwhelmed by the struggle to meet demand in certain market segments, this may be an opportunity to gain market share within some larger customers (in dual source situations, for example).
Regulatory leaders have by now realized the U.S. Food and Drug Administration (FDA) has amazing flexibility (i.e., the emergency use authorization process) never before seen. Companies that prioritize their relationships with the FDA and Notified Bodies (for CE) could help their regulatory teams boost the organization’s performance by gaining market access that was not so readily available before the pandemic.
Innovative R&D leaders may be balancing the needs of short-term opportunistic design shifts to quickly get products to market with the longer term pre-COVID-19 R&D pipeline that will still be a winning formula for their organization’s future success. The good news is the implementation of remote activity and team participation in collaborative project software (Slack, Teams, etc.) may be helping groups be more productive than ever.
Those in charge of operations may be continuously adjusting to ensure their respective local operations (on a global basis) are addressing their regional COVID-19 community concerns. The good news is these operations are likely to be considered essential by most governmental authorities. On the flip side, customer essential operations teams will need to work harder than ever to ensure employee safety while meeting the current customer demands.
In the supply chain, it’s likely company executives are spending many odd-hours on Zoom calls because they must now remotely communicate on a more consistent basis with global suppliers to ensure alignment of expectations. The good news and bad news is that Zoom is replacing in-person visits and inspections. Obviously, given there was a reason for the visits, these managers must work hard to ensure nothing is overlooked going forward.
We have been inspired and impressed by the performance of the C-Suite executives during the pandemic. Reflecting on how rapidly the industry (and its respective businesses) have been required to adjust to competing functional dynamics, it is amazing to observe it all in process. The adjustments, however, will continue as the pandemic plays out in the months ahead. Flexibility and smart planning will help ensure medtech companies’ long-term survival.
Florence Joffroy-Black, CM&AA, is a longtime marketing and M&A expert with significant experience in the medical technology industry, including working for multi-national corporations based in the United States, Germany, and Israel. She is currently is CEO at MedWorld Advisors and can be reached at email@example.com.
Dave Sheppard, CM&AA, is a former medical technology Fortune 500 executive and is now focused on M&A as a managing director at MedWorld Advisors. He can be reached at firstname.lastname@example.org.