Oh, for Medtech’s Sake!

If you’ve been paying attention to the spate of recent reports from industry analysts, forecasters and consulting companies, it seems as if the medical device industry is cruisin’ for a bruisin’ if it doesn’t implement changes to the way it markets its value proposition and innovates its products. The word “innovation” is thrown around so much lately that it is almost hackneyed. For the medical device industry and the hundreds of thousands who toil in its advancement, innovation is less cliché and more characteristic. While innovation may be this industry’s middle name, it also may be time to use some of that creativity to re-invent itself and not just the devices it makes.

“The medical technology industry was on the forefront of innovation for decades, but now return on innovation investment is declining,” wrote market analysts for the Health Research Institute at PricewaterhouseCoopers (PwC) in their recent report titled “Medtech Companies Prepare for an Innovation Makeover” published in early October. “The very notion of medtech innovation needs redefining in a new health economy that is focused on higher expectations for value and convenience. Medtech companies must be ready to compete in the new environment or risk being displaced by companies that can show evidence that their innovations create value.”

So it’s not about building a better device or even a cheaper one anymore. It’s about how technology saves the entire system
money, reduces time and builds synergies across the whole healthcare continuum—in addition, of course, to being safe and effective. How does the device save time in the hospital? Can it be tracked remotely, with information shared electronically or monitored from home? How does it speed recovery time and maybe get patients back to work sooner? These are the devices that will be successful. In addition, medical device firms will have to turn their attention to selling to hospital systems and not just the doctor, who seems to be shifting from the role of primary gatekeeper to just one of many who holds the keys to the gate.

According to yet another study, this one from the Boston Consulting Group (BCG) released during the recent AdvaMed 2013 meeting in Washington, D.C., medical technology companies are making progress in adapting to changes in the healthcare environment, but “a faster pace and bolder moves” are needed.

Medtech companies need to get in tune with what drives the success of their customers—particularly the consolidated hospital systems that make decisions about devices centrally, according to BCG. Although medtech companies traditionally have seen their customers as the clinicians working in the 5,000-plus hospitals in the United States or in private practice, BCG analysts say 200
hospital systems have emerged as the true customers.

“To win with this new customer, you really need to understand its strategy,” said Barry Rosenberg, a former clinician and BCG partner.  “Our research has identified the critical strategies that hospital CEOs are pursuing as the market evolves, concentrates and centralizes. We have found that medtech firms have yet to take the necessary leap to truly understand what drives their customers’ success and to become ‘customer centric’ in how they serve customers.”

The folks at PwC agree.

“[Medtech companies] can create new and distinct sources of revenue by innovating and changing their interactions with
customers and by monitoring patients more closely, in real-time, in their daily lives,” PwC analysts wrote. “The most successful medtech companies in the new health economy will be catalysts for change and critical problem solvers that create value for clinicians as they diagnose and treat patients. They will create innovation that appeals to consumers and their new expectations for a positive patient experience.”

Seem like a lot? Don’t start making your way to the emergency exits just yet. The sector is in good shape and has the tools to adapt. But industry watchers say the time to act is now (if not perhaps a day or two ago).

“Medtech is still a growth industry and will continue to be one of the most attractive sectors for investment for a long time to come,” said Colm Foley, BCG partner and the firm’s global medtech leader. “In the U.S. market in particular, we think employment should go up—way up—given the industry’s advantage relative to global competitors. It is important not to lose sight of that. But the industry must transform to make that happen. Transform commercially. Transform the product engine. Think selectively but aggressively about global markets. And transform operationally.”

Is that all? Sounds like we’d better get started. I guess nobody said it was going to be easy.

Christopher Delporte
Editorial Director
[email protected]