This dichotomy naturally can lead to concerns over maintaining positive business momentum this year. There are a number of topics that potentially could impact C-suite executives’ ability to keep their respective companies on track in 2019. These include:
International trade clarity: Obviously, public disputes like the U.S.-China tariff war are complicating medtech’s global growth and outreach. But industry professionals know there are continuous challenges to ensure medical products and components are classified appropriately for international transfer without (1) disruption; and (2) unnecessary tariff burdens. Every country has its nuances; thus, it’s critical to develop relationships in each country to ensure a “go to” path in case trade issues arise in any region in which a company operates.
Supply chain sustainability: Business growth begets pressure to become a better corporate citizen. One of the “good corporate citizen” issues for multinational medical technology companies is developing a sustainability plan for their supply chains. In previous MPO columns, we have stressed the importance of being aspirational and “measurable” on this topic. Put simply: Don’t just talk about it—have a good corporate citizenship plan and regularly measure successes along the way.
Developing a talent pool: There is a concern among U.S. businesses that America is not adequately training or encouraging a “trade” workforce of skilled labor. For decades, high school students have been urged to attain a college degree. That goal, however, should be considered a crime, as the “college after high school” strategy is a lazy, one-size-fits-all kind of idea. Instead, society should develop a system that allows all individuals to forge their own pathway (by their own choice)—whether it involves business, a trade, a talent, or something else altogether. Foregoing college is not failing. Real failure is losing a young person to the confusion, disappointment, and frustration that ensues when he or she is not provided with the necessary resources to develop along their chosen path for society’s greater good. One of those specific paths is trade schools. One country that walks the trade school-college-talent tightrope fairly well is Germany. Deutschland helps its youth develop their own interests and aptitudes toward college, a trade or skill, or a talent.
Innovation: Clearly, innovation drives disruption. Therefore, it is important to drive new products and technologies, correct? Yes, but that journey must begin with the clinical unmet need. Too many companies still believe that innovation means developing the next great product based on their current technologies and capabilities. That is the wrong answer because it often leads to developing a new “hammer in search of a nail.” It is essential that medtech companies determine the clinical unmet need(s) for their market segment. Only by addressing and understanding unmet clinical needs can companies develop truly innovative technologies. For an added bonus (in terms of faster adoption), ensure the new product or technology operates within existing clinical workflows. The medtech innovation Hall of Fame highway is littered with excellent technologies that never were adopted due to refusal by clinicians to change their workflow behaviors and/or habits. Clinical behavior can be changed, but it has to be tied to superior patient outcomes. Reimbursement can be a particularly effective way to drive behavioral changes (as reinforcement); without that incentive, clinicians are unlikely to change their routine for a product or technology.
Global expansion: Despite claims to the contrary, the world is big. As such, it offers companies a huge opportunity for growth—but not all countries are market movers. Determining the best expansion location can be difficult, considering the plethora of medtech hubs that now exist on the planet. Determining the best site for growth depends on a number of key issues, including market size, regulatory environment, reimbursement policies, channel structure, and clinical practice methods. Companies also should figure out whether a “make local-sell local” strategy is a viable option, as this approach can help ensure long-term growth and profit sustainability.
Regulatory: It’s impractical to even discuss maintaining positive business momentum without considering regulatory matters. Companies must fully understand and be prepared to follow the regulatory processes within their targeted markets (local or regional). Medtech firms also should ensure their design files are ready for review and identify the quickest path to new product approval. For previously commercialized devices, companies should be regularly performing post-market reviews to confirm long-term product viability. Most importantly, however, device establishments should keep in mind that regulatory requirements will inevitably change, so they should divide their markets to better manage all the different rules.
Market verticals: Globalization has made it fairly easy to overlook the obvious. In addition to international expansion, companies should also consider markets closer to home—even those in their own backyards—for growing their products and services. Moreover, they must determine whether they are maximizing current sales channels for all products. If not, then corporate managers should analyze whether adjacent spaces exist to develop a channel for increased sales across verticals.
Sales: Higher sales is difficult to achieve without market share growth, proper (sales) channels, and the right geographical coverage. Other growth initiatives include expanding into new regions or improving coverage in existing areas. Teamwork is paramount, though. Every day of procrastination in addressing a sales team productivity issue is a lost revenue forever. Companies that do not solve sales team issues effectively forfeit part of their market share to competitors.
Reimbursements: It is essential that companies track reimbursements for their products. Suppliers should pay close attention to the reimbursement pathway as well, since positive reimbursements will ultimately create additional sales momentum for OEM products and indirectly sustain the need for contracted services. OEMs, on the other hand, are well aware how critical these reimbursements are to driving adoption and market share for their products.
Margins: This is the bottom line of any business plan. Companies that want to maintain their momentum should monitor their profit levels and determine the activities necessary to drive growth. Once these activities have been identified, medtech firms must devise a plan for implementation that takes dependencies and other factors into consideration. In addition, companies must decide if they can improve margins on their own or enlist cost-conscious efforts like customer approvals (to drive down expenses).
IP: Companies entering the market with a new device are quickly schooled on intellectual property (IP) matters. Those firms obtaining patents “close” to a competitive offering are often not met with a legal challenge until they begin to sell their (now protected) innovation. At that point, competitors will usually take legal action if they think they have a solid legal case. Companies should be ready with multiple plans of action ranging from a full defense to licensing competitive patents to allow for market continuity for the technology in question.
Employee engagement: Companies with higher levels of employee engagement have higher levels of employee satisfaction—and therefore—employee retention. The retention of satisfied employees leads to increased organizational productivity per employee, which often is a key metric of successful companies.
Regardless of which particular issues are impacting medtech’s 2019 business energy and outlook, true momentum is gained through identifying the opportunities that need to be addressed; communicating key initiatives for alignment (early and often); and, perhaps most importantly, execution.
Many companies spend time on various activities throughout the year, but long-term success depends largely on implementing a plan that allows the organization to achieve its goals. We wish all medtech companies much success in executing their business plans in 2019 and hope they will enter 2020 with more momentum than ever.
Florence Joffroy-Black, CM&AA, is a long-time 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 can be reached at email@example.com.
Dave Sheppard, CM&AA, is a former medical technology Fortune 500 executive and is now a managing director at MedWorld Advisors. He can be reached at firstname.lastname@example.org.