In Pursuit of Growth

How do you grow a business? So many factors come into play. Even when economic conditions are superb, finding the right balance for success is a challenge. You’re providing a product or service that you think the market needs and will demand. You market and advertise to grow demand, and thus increase sales. Then it’s time to expand the product line or perhaps add more services. Maybe more than one location becomes necessary to satisfy customers clamoring for whatever it is you’ve got to offer. That’s a pretty rosy scenario, no? Even a little competition would be healthy in an ideal world like that. Too much business is a problem we’d all like to have, I’m sure.

But what happens when you’ve got a great product in a sluggish economy and your customers are cutting back to save money because they’re having a challenging time as well? Or maybe you have a perfect product and government regulators have moved the goal posts a few times on you, delaying your product’s market launch and allowing the competition to release its version first and gain valuable time and market share. The best mousetrap in the world would be left holding its cheese under those circumstances. How do you grow a business then? I wish I had the answers.

These are the questions that medical device companies have been asking themselves since the recession roller coaster started. There have been some signs of marginal improvement, but more questions than answers remain. In this issue of Medical Product Outsourcing, we conduct our annual review of the top 30 medical device manufacturers (sorted by fiscal 2010 revenue). As you’ll see on pages 52-120, most of the companies on the list managed to grow sales. Granted, most weren’t whopping double-digit gains, but steady growth was still evident. Companies in this installment, just as in years past, continue to innovate. Research and development spending was up. Many firms reshuffled divisions and reorganized—beyond layoffs, which are short-term—to make their companies easier to manage and more nimble in the long run. New product launches were robust.

Despite the tough conditions, management seemed upbeat about future prospects. New markets in growing economies are the name of the game now more than ever before. Countries such as China, India and Brazil—with growing middle class populations and the potential double-digit growth rates—represent one of the best potential avenues for sales expansion. In existing markets such as the United States and Western Europe, game-changing technology spells success, of course, but that kind of growth is harder to come by.

In a recent survey of 1,900 medical device industry professionals conducted by the Emergo Group, an Austin, Texas-based consulting firm (you’ll recognize the name from our monthly Euro News column), more than 50 percent of respondents reported that international sales had increased. The survey was non-scientific, but quickly takes the pulse of our industry peers. A total of 68.2 percent said their companies would expand into international markets in 2011 (and China and Brazil were chosen as thetop destinations).

For example, in Boston Scientific’s 2010 annual report, part of the strategy company executives outlined for 2011 and going forward was to “win global market share.”

According to BSX leadership: “We seek to increase net sales and market share, and leverage our relationships with leading physicians and their clinical research programs. We plan to re-align our international regions to be more effective in executing our business strategy and renew our focus on selling in order to maximize our opportunities in countries whose economies and healthcare sectors are growing rapidly. We expect to invest $30 million to $40 million by the end of 2011 to introduce new products and strengthen our sales organization in emerging markets such as Brazil, China and India.”

Similar goals are repeated on page after page of reports weexamined for this year’s issue.

But, a word of caution. Even though countries such as China and India seem to be high on many companies’ target list in the coming years, interest in these markets may slow as more onerous regulatory requirements (sound familiar?) are put into place—particularly in China, according to Emergo’s experts.

Back to square one. Boy, this game is tiring—but exciting and most definitely worthwhile. The life-saving, life-changing technology these companies develop are success stories for themillions of people they successfully treat—no matter where they happen to live.