Laura Westercamp and Selen Karaca-Griffin, Accenture Global Life Sciences Research03.27.23
In today’s rapidly changing healthcare environment, the medical technology (medtech) industry is under increased pressure to meet shifting expectations and improve patient outcomes. Ambulatory and at-home care models are here to stay, presenting challenges and opportunities concerning remote patient monitoring. Furthermore, shrinking margins are creating greater urgency for R&D innovation.
The answer to these challenges? Digital health.
With their unique understanding of therapeutics, patients, and providers, as well as insights gained from digital devices in the hands of patients, medtech companies are well-positioned to lead the transformation to digital health. However, these companies need the right technology foundation to leverage insights crucial to building patient-centric solutions. That means a centered and strong digital core. New forms of technology will help to optimize operations, lead to additional waves of innovation, and thus help to improve access to care, patient experience, and outcomes.
There are positive signs. Approximately 30% of deals within the medical device and digital health segments are non-traditional, indicating that medtech is breaking out of its historically conservative mindset and embracing digital innovation.
For example, global medical technology company Becton, Dickson, and Company announced their acquisition last year of MedKeeper, a provider of cloud-based pharmacy management applications, enabling it to offer cloud-based, connected pharmacy software. Also last year, respiratory care provider ResMed announced the acquisition of a Leipzig-based Mementor to strengthen its digital sleep medicine portfolio in Germany.
To gain a deeper understanding of the drivers behind medtech’s future growth, we interviewed thirty C-Suite medtech and pharma leaders, surveyed more than 150 medtech executives and analyzed over one hundred merger and acquisition deals. The research showed an overwhelming shift of investment in—and reorientation around—building and accelerating digital health. Specifically, we identified five trends that will help medtech transform healthcare through digital health.
Patients are in more control of their health than previous generations. This can be an asset to medtech companies. However, it requires them to re-orient their long-term strategies. They must shift from a “product first” to an “outcomes first” mindset. Just over one-half of the executives we surveyed said that they believe that the customer’s voice needs to be strengthened.
Some successful medtech companies are approaching the challenge by prioritizing hiring high-quality talent. Every business must be able to unlock the potential of its people. Building that technology acumen throughout the organization, combined with the consumer product experience and understanding of the medtech space, the 3-fold combination is critical.
Developing the right connected programs for customers, however, remains a hurdle. We found, for example, that 46% of executives agreed that “implementation complexity” and “not having the right partners” are their primary challenges.
Executives we surveyed confirmed that the decentralization of healthcare impacts their businesses, with remote devices and monitoring technologies having the biggest impact so far. Over 75% of executives expect expanding care settings and delivery models to significantly re-orient their company’s long-term strategy.
They also believe these changes will require them to completely rethink their business approach and growth strategy. For example, smaller, connected instruments with rapid diagnostic tests are being placed in physicians’ offices, instead of in large hospital labs. Similarly, at-home tests with virtual assistance have become quite common due to the pandemic.
The shift to alternative settings will impact payment and contracting models, with implications for the size and incentives of sales teams. For example, consider the large diagnostic instruments that may be sold with a five-to-ten-year contract to large hospitals. Alternatively, small rapid test instruments could be sold to thousands of physicians' offices. Likewise, at-home tests can be sold to millions of consumers.
Embracing this transformation requires the addition of talent focused on design and technology. And it must be partnered with the best of medtech’s core competencies—engineering, regulatory, and therapeutic area knowledge.
With increased investment in digital via R&D and mergers and acquisitions (M&A), a comprehensive plan is key to building capabilities. Medtech executives feel confident in their M&A abilities and they’re confident in their R&D and manufacturing capabilities.
However, our survey suggests most companies need to develop a better understanding of the market and customer behaviors and expectations which are essential to serving them in various care settings.
One major barrier has been fragmented data or not having access to data. For example, almost every hospital has different rules and approaches to risk-taking. This is typical because there is no central guidance on what is appropriate or acceptable to share.
Our research points to the need for a dialogue among medtech players, hospitals, and governments. By working together to form an overarching guideline on data privacy, they can enable digital health products and services while protecting patient data. It also enables all biopharma, device, and lifestyle interventions to be connected and personalized to set up the best possible outcomes.
Large players, such as Philips, Baxter, Medtronic, and Smith & Nephew, have leveraged deals with digital health companies to boost their portfolios. For instance, Baxter acquired healthcare software developer True Process to strengthen its personalized care offerings and Philips has acquired over 13 medtech companies in the past five years. With these acquisitions, it can grow its connected care business to transform the delivery of healthcare with integrated solutions.
In the digital health segment, more than half of the nontraditional transactions in the past five years have been with healthcare services companies, and 12% have been with medical device companies.
Pharmaceutical sector companies are also converging in deals with other segments to greatly expand their portfolios. In the past five years, more than 20% of non-traditional biopharma deals were with the medtech segment. Medtech executives see pharma as future customers as they build connected infrastructure to bring meaning to data.
One of the biggest challenges medtech companies face when partnering is ensuring their potential partner has the required level of data privacy and protection compliance. However, evaluating companies that have historically operated outside of varying data privacy and protection guidelines (GDPR and HIPAA) can be very time consuming. A standard global definition of levels of data privacy compliance would save industry partners time and resources, and it would enable them to make products and solutions available to patients faster.
Regulatory bodies have established guidelines, but they remain at a very high level and fail to address the intricacies of digital health solutions that are rapidly being developed. Our survey shows that medtech executives ranked regulatory uncertainty as a barrier having a moderate impact on their digital health agenda.
Given the current state of regulatory guidance, our research highlights the importance of a mindset shift when it comes to thinking about regulations and receiving approvals for digital health products. In the past, health executives thought more about the minimum evidence required to receive approval for their devices. But the better approach is to ask, “How can I ensure this product is safe and effective for healthcare consumers?”
This parallels the shifting mindset of “product-first” to “outcomes-first.” And it underlines the importance of putting the consumer at the heart of product design. It also shows the need to provide evidence that proves outcomes and safety.
Medtech is uniquely positioned to convert perceived regulatory barriers into a competitive advantage. But to win in digital health, companies need to become more comfortable even where there may not be an established regulatory pathway. And they must also collaborate with regulatory bodies to develop new guidance in parallel.
Medtech executives are correct in believing that the future winning strategy involves developing products and solutions to address the entire care pathway. Thanks to their unique understanding of therapeutics and patients, medtech is positioned to lead digital health transformation. However, building a technology strategy with the right digital foundation, a consumer-first mentality, and a willingness to collaborate with partners are needed to get there.
Laura Westercamp is a Managing Director in Accenture’s Life Sciences and MedTech practice. Over 15 years, she has worked across 5 continents, helping pharma and medtech companies rethink and transform their customer experience approach, operating model design, and digital health strategy.
Inspired to work in healthcare by her grandmother, a WWII army nurse, Laura believes in the power of industry to create solutions that will help everyone live healthier, fuller lives.
Outside of Accenture, Laura is actively involved in healthcare innovation as an advisor for MATTER, a healthcare start-up incubator. She is a board member and guest lecturer for the University of Iowa's Entrepreneurial Center and serves as a Venture Mentor, working with healthtech start-ups.
Prior to Accenture, Laura worked in the Investment Banking Division of Goldman Sachs.
Selen Karaca-Griffin is Accenture's Global Life Science Research Lead responsible for building and managing Life Sciences thought leadership and research assets. She has over ten years of experience in the Life Sciences Industry. Prior to this role, she was a Senior Manager in Accenture's Life Sciences Strategy practice, leading C-suite business strategy engagements and served as Life Sciences Offering Development Lead. Prior to joining Accenture, Selen worked at two large biopharma companies as a biochemical engineer and scientific researcher.
Outside of Accenture, Selen serves as a Biotechnology Industrial Advisory Board Member for Northeastern University.
The answer to these challenges? Digital health.
With their unique understanding of therapeutics, patients, and providers, as well as insights gained from digital devices in the hands of patients, medtech companies are well-positioned to lead the transformation to digital health. However, these companies need the right technology foundation to leverage insights crucial to building patient-centric solutions. That means a centered and strong digital core. New forms of technology will help to optimize operations, lead to additional waves of innovation, and thus help to improve access to care, patient experience, and outcomes.
There are positive signs. Approximately 30% of deals within the medical device and digital health segments are non-traditional, indicating that medtech is breaking out of its historically conservative mindset and embracing digital innovation.
For example, global medical technology company Becton, Dickson, and Company announced their acquisition last year of MedKeeper, a provider of cloud-based pharmacy management applications, enabling it to offer cloud-based, connected pharmacy software. Also last year, respiratory care provider ResMed announced the acquisition of a Leipzig-based Mementor to strengthen its digital sleep medicine portfolio in Germany.
To gain a deeper understanding of the drivers behind medtech’s future growth, we interviewed thirty C-Suite medtech and pharma leaders, surveyed more than 150 medtech executives and analyzed over one hundred merger and acquisition deals. The research showed an overwhelming shift of investment in—and reorientation around—building and accelerating digital health. Specifically, we identified five trends that will help medtech transform healthcare through digital health.
1. The Consumer Patient
Healthcare is no longer a one-way interaction where the patient is on the receiving end. Rather, it now requires continuous engagement among patients, providers, and payers. Patients have become consumers—actively demanding and expecting to receive healthcare consistent with their experience in other facets of their lives such as retail shopping and financial services.Patients are in more control of their health than previous generations. This can be an asset to medtech companies. However, it requires them to re-orient their long-term strategies. They must shift from a “product first” to an “outcomes first” mindset. Just over one-half of the executives we surveyed said that they believe that the customer’s voice needs to be strengthened.
Some successful medtech companies are approaching the challenge by prioritizing hiring high-quality talent. Every business must be able to unlock the potential of its people. Building that technology acumen throughout the organization, combined with the consumer product experience and understanding of the medtech space, the 3-fold combination is critical.
Developing the right connected programs for customers, however, remains a hurdle. We found, for example, that 46% of executives agreed that “implementation complexity” and “not having the right partners” are their primary challenges.
2. Care Anywhere Everywhere
Patients are increasingly demanding services in both remote and digital settings. As a result, healthcare is moving from the traditional setting of hospitals to ambulatory and at-home care. However, the industry remains in the beginning stages of building the right platforms and capabilities to meet this new reality.Executives we surveyed confirmed that the decentralization of healthcare impacts their businesses, with remote devices and monitoring technologies having the biggest impact so far. Over 75% of executives expect expanding care settings and delivery models to significantly re-orient their company’s long-term strategy.
They also believe these changes will require them to completely rethink their business approach and growth strategy. For example, smaller, connected instruments with rapid diagnostic tests are being placed in physicians’ offices, instead of in large hospital labs. Similarly, at-home tests with virtual assistance have become quite common due to the pandemic.
The shift to alternative settings will impact payment and contracting models, with implications for the size and incentives of sales teams. For example, consider the large diagnostic instruments that may be sold with a five-to-ten-year contract to large hospitals. Alternatively, small rapid test instruments could be sold to thousands of physicians' offices. Likewise, at-home tests can be sold to millions of consumers.
Embracing this transformation requires the addition of talent focused on design and technology. And it must be partnered with the best of medtech’s core competencies—engineering, regulatory, and therapeutic area knowledge.
3. Rise of Digital Health
As healthcare expands anywhere and everywhere, digital health strategies are needed to generate insights and expand products throughout patient care pathways. Nearly all survey respondents said that the development and commercialization of digital health solutions have accelerated in the past two years.With increased investment in digital via R&D and mergers and acquisitions (M&A), a comprehensive plan is key to building capabilities. Medtech executives feel confident in their M&A abilities and they’re confident in their R&D and manufacturing capabilities.
However, our survey suggests most companies need to develop a better understanding of the market and customer behaviors and expectations which are essential to serving them in various care settings.
One major barrier has been fragmented data or not having access to data. For example, almost every hospital has different rules and approaches to risk-taking. This is typical because there is no central guidance on what is appropriate or acceptable to share.
Our research points to the need for a dialogue among medtech players, hospitals, and governments. By working together to form an overarching guideline on data privacy, they can enable digital health products and services while protecting patient data. It also enables all biopharma, device, and lifestyle interventions to be connected and personalized to set up the best possible outcomes.
4. Converging Sectors
Although medtech and other industries have largely been siloed, we’ve seen an increasing convergence to develop products and services across the entire care pathway. This is leading to non-traditional deals and partnerships. Nearly nine out of nine survey respondents agreed that future success will depend on companies targeting the entire care pathway rather than specific products and services.Large players, such as Philips, Baxter, Medtronic, and Smith & Nephew, have leveraged deals with digital health companies to boost their portfolios. For instance, Baxter acquired healthcare software developer True Process to strengthen its personalized care offerings and Philips has acquired over 13 medtech companies in the past five years. With these acquisitions, it can grow its connected care business to transform the delivery of healthcare with integrated solutions.
In the digital health segment, more than half of the nontraditional transactions in the past five years have been with healthcare services companies, and 12% have been with medical device companies.
Pharmaceutical sector companies are also converging in deals with other segments to greatly expand their portfolios. In the past five years, more than 20% of non-traditional biopharma deals were with the medtech segment. Medtech executives see pharma as future customers as they build connected infrastructure to bring meaning to data.
One of the biggest challenges medtech companies face when partnering is ensuring their potential partner has the required level of data privacy and protection compliance. However, evaluating companies that have historically operated outside of varying data privacy and protection guidelines (GDPR and HIPAA) can be very time consuming. A standard global definition of levels of data privacy compliance would save industry partners time and resources, and it would enable them to make products and solutions available to patients faster.
5. New Regulatory Pathways
Digital health sits at the convergence of medicine and technology. It’s governed by several different regulatory and legal frameworks, as well as working groups within governing bodies.Regulatory bodies have established guidelines, but they remain at a very high level and fail to address the intricacies of digital health solutions that are rapidly being developed. Our survey shows that medtech executives ranked regulatory uncertainty as a barrier having a moderate impact on their digital health agenda.
Given the current state of regulatory guidance, our research highlights the importance of a mindset shift when it comes to thinking about regulations and receiving approvals for digital health products. In the past, health executives thought more about the minimum evidence required to receive approval for their devices. But the better approach is to ask, “How can I ensure this product is safe and effective for healthcare consumers?”
This parallels the shifting mindset of “product-first” to “outcomes-first.” And it underlines the importance of putting the consumer at the heart of product design. It also shows the need to provide evidence that proves outcomes and safety.
Medtech is uniquely positioned to convert perceived regulatory barriers into a competitive advantage. But to win in digital health, companies need to become more comfortable even where there may not be an established regulatory pathway. And they must also collaborate with regulatory bodies to develop new guidance in parallel.
Medtech executives are correct in believing that the future winning strategy involves developing products and solutions to address the entire care pathway. Thanks to their unique understanding of therapeutics and patients, medtech is positioned to lead digital health transformation. However, building a technology strategy with the right digital foundation, a consumer-first mentality, and a willingness to collaborate with partners are needed to get there.
Laura Westercamp is a Managing Director in Accenture’s Life Sciences and MedTech practice. Over 15 years, she has worked across 5 continents, helping pharma and medtech companies rethink and transform their customer experience approach, operating model design, and digital health strategy.
Inspired to work in healthcare by her grandmother, a WWII army nurse, Laura believes in the power of industry to create solutions that will help everyone live healthier, fuller lives.
Outside of Accenture, Laura is actively involved in healthcare innovation as an advisor for MATTER, a healthcare start-up incubator. She is a board member and guest lecturer for the University of Iowa's Entrepreneurial Center and serves as a Venture Mentor, working with healthtech start-ups.
Prior to Accenture, Laura worked in the Investment Banking Division of Goldman Sachs.
Selen Karaca-Griffin is Accenture's Global Life Science Research Lead responsible for building and managing Life Sciences thought leadership and research assets. She has over ten years of experience in the Life Sciences Industry. Prior to this role, she was a Senior Manager in Accenture's Life Sciences Strategy practice, leading C-suite business strategy engagements and served as Life Sciences Offering Development Lead. Prior to joining Accenture, Selen worked at two large biopharma companies as a biochemical engineer and scientific researcher.
Outside of Accenture, Selen serves as a Biotechnology Industrial Advisory Board Member for Northeastern University.