Executives experienced in driving medtech innovation understand delivering growth through real innovative solutions is more difficult than often anticipated (harkening the old adage “it is easier said than done”). Achieving growth via innovation is relatively straightforward, however, with the proper strategy and tactical execution plan.
Finding the Right Strategy
The highly dynamic medtech industry requires attention to many “influence” factors when devising a growth strategy by means of innovation. Every business is a “snowflake” (the cold, icy weather-related one) and the opportunities are uniquely their own. The factors that will positively impact one business may negatively impact another. Some of these factors include:
- Market opportunity—regionally and globally, as decided by a company’s aspirations
- Regulatory status can be a key factor on multiple levels, as the tactics for clearance in one region may be completely different than the requirements of another area’s regulatory hurdles
- Product claims—Deciding what to claim for products can significantly influence time to market and the ingredients for success in the above two factors (market opportunity and regulatory)
- Clinical adoptability—There are many great products and technologies that never achieve market success because they require a clinician to do something different or take extra time to perform a task. Keep in mind a product’s success depends on the end user; if the targeted audience will not use a device, its chances of commercial prosperity are virtually non-existent
- Reimbursements—Nowadays, it is almost universally understood payor reimbursement for a new product solution is a “critical to success” factor
- Intellectual property—Whether built on proprietary trade secrets or a patent portfolio, a product franchise is useless without Freedom-To-Operate (FTO) capability
- Operational footprint—Where an organization chooses to build its products can considerably impact both the market opportunity and the margin of possibilities for solutions
- Supply chain—Supply chain development and management can shape the organizational execution of product lifecycle phases
When is the right time to begin thinking about all the aforementioned factors that potentially can impact product innovation? Experience suggests it’s critical to “begin with the end in mind.” For example, a product designed for the emerging markets by a high-end European or U.S. team might be a great solution that will benefit mankind. However, it might never be adopted because it is simply unaffordable for the targeted market.
In considering all these factors (and more), the discussion leads back to determining the right strategy for successful growth through innovation. Surprisingly, while the execution is hard, the strategy is simple in medtech: Find the clinical unmet need and design a solution to fulfill that need.
From a strategic viewpoint, it really is that simple. Organizations tend to over-complicate the matter due to their own established competencies and technologies. The best way to kill a great medical technology is to use it to create a clinical solution without understanding it can actually meet that clinical need. Amid all the interesting new technologies (robotics, AI, etc.), companies must realize that, sometimes, addressing unmet clinical needs may lie in simply updating older technologies.
Obviously, the unmet clinical need a company tackles should relate to its core competency or expertise. Finding unmet clinical needs within core competency areas allows mature businesses to focus on established customer relationships that will increase the likelihood of future product adoption. For a startup, the focus will be on the entrepreneurial skill sets (driven by the unmet clinical need) that led the founders to start the company and develop a solution. The sales channel can be developed later (internally or externally).
Choosing a Tactical Execution Plan
This issue often leads executives to think about what their company is capable of achieving. Basically, there are two main areas of consideration for executing an innovation strategy:
- Internal R&D Activities—Traditionally, this has been the most utilized path for mature companies to create future products and solutions
- External Partnerships—These unions may include (a) acquisition; (b) virtual outside engineering teams; or (c) other types of organizational alliances that maximize the ability of one company to develop a solution and the other company to deliver it to the market
Timing: Is the timing right to begin a new project that will absorb significant resources? Before starting down the path of innovation, medtech organizations must be sure they can commit to long-term product development.
Market opportunity: Is the “executable” market opportunity large enough for a return on the project investment?
Regulatory: Are all regulatory challenges understood? More importantly, companies must be sure they can overcome these challenges to enter the targeted product market.
Product claims: Regardless of its capabilities, a product or technology solution’s initial success may depend solely on this issue. Regulatory pathways will be dependent on the product’s claims, while market opportunities will rely on both marketing assertions and regulatory clearances. Thus, this issue impacts both time to market and marketability. Unfortunately, some companies develop their solution and then think about their claims. It is very important to decide on product claims at the earliest possible stage of development.
Clinical adoptability: Items like “human factors” and “clinician workflow” and “patient outcomes” are key items that need to be considered for clinical adoptability. There are numerous examples of promising technologies that have not been adopted simply because the clinician had to use his or her left hand instead of the right or because it took an extra two minutes to actually implement the solution.
Reimbursement: The above five items will be determining factors in organic innovation regardless of reimbursement. Therefore, it is important companies determine a way to manage these issues as they plan (in parallel) their reimbursement strategies for their targeted markets.
IP: It’s nice to build a proprietary platform or a robust patent portfolio, but companies that fail to clear their FTO status early (and often) in their product development process will have trouble launching their innovations in certain markets. It’s important to understand having a patent is not the same as the ability to have an FTO in a given market. Therefore, this issue is critical to understand and address in parallel throughout the product development cycle.
Operational footprint: In today’s tariff-impacted world, it’s important to understand from the beginning where the product will be manufactured. The ability to profitably sell a solution in the future may depend on manufacturing location(s).
Supply chain: Similar to operational footprint, this issue is also now influenced by tariffs and other global issues. For example, some countries may require “local manufacturing content” to sell products; others may not mandate it but nevertheless charge a tariff for not having local content. Along with its operational footprint, a company’s supply chain strategy will have huge impacts on its future prosperity and product marketability.
All these factors (and more) must be considered early (and continuously) to successfully execute an internal R&D project.
As previously mentioned, it’s also possible to be successful using external innovation partners. In fact, sometimes this route may be the best option if an organization lacks the competencies to either develop the solution or channel the necessary relationships for it.
Using outside partners requires careful consideration of the kind of collaborations that best suit the project. They may include:
- Virtual teams for product development
- Licensing and/or distribution alliances
- Acquisition of the desired innovation
Whether choosing internal innovation, external options, or a mix of both, it’s critical C-Suite executives establish priorities and create a pathway to focus on the projects’ progress. Any major issues that arise should be dynamically addressed with inputs “from the top.” Creating this executive focus will increase an organization’s opportunities for successful innovation and diminish the risk of unpleasant (and costly) project surprises.
Regardless of the chosen path, product innovation is crucial to the medical technology industry—not only for its long-term success, but also for the health benefits it provides to patients. Companies with a patient-centric mindset are in a better position to develop the kind of innovation its customers want and ensure their longevity in a constantly changing industry.
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 can be reached at firstname.lastname@example.org.
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 email@example.com.