The MedTech industry faces a blend of longstanding challenges and emerging opportunities, many of which have been accelerated by the recent global pandemic. During the crisis, some companies experienced increased revenues and margins by pivoting to produce essential items like masks, specialized clothing, respiratory devices, and equipment tailored for combating Covid-19. Conversely, others suffered from decreased turnover due to postponed medical treatments and operations, necessitated by capacity constraints. Now, as we settle into a new normal, companies are refocusing their efforts towards achieving sustainable growth.
Challenges and Opportunities in MedTech
The MedTech landscape is complex, with notable challenges including high barriers to entry, stringent EU and national regulations, global cost pressures, supply chain complexities, industry consolidation, and the purchasing power of Group Purchasing Organizations (GPOs)
Despite these challenges, there are promising opportunities driven by factors such as an aging population, numerous unmet clinical and non-clinical needs, and the growing demand for data-driven efficiency. However, realizing these opportunities requires overcoming obstacles like high production and R&D costs, coupled with escalating price pressures that can erode profit margins.
The industry is characterized by fragmentation, dominated by a handful of major players who control significant market shares. Additionally, there is a multitude of small and medium-sized companies, often focused on innovation and R&D, which are frequently acquired or merge with larger entities.
“Why Now?” and Industry Trends
The imperative for MedTech companies to embark on digital transformation is multifaceted. The rapidly evolving landscape, marked by consolidation, pricing pressures, cost containment measures, and compliance risks, necessitates a shift towards complex selling models centered on value and differentiation.
Consolidation of the Healthcare Supply Chain
A significant trend disrupting the MedTech industry is the consolidation of the healthcare supply chain, driven by entities like Group Purchasing Organizations (GPOs) and Integrated Delivery Networks (IDNs). GPOs, traditionally focused on negotiating prices, are now expanding their role to strategic procurement, outcomes improvement, and payment advocacy. Similarly, IDNs leverage their size to negotiate price breaks and reduce supply costs for member facilities.
Stalled Value for Large-Diversified Companies
Large, diversified MedTech companies are encountering challenges in creating value, attributed to legacy businesses, the burden of scale, and the slowing pace of therapy adoption. Over a quarter of the total MedTech market is projected to grow at 6% or more annually from 2022 to 2025.
Digitization and Self-Service
The Covid-19 pandemic accelerated the adoption of innovative technologies in healthcare, with notable trends including telehealth/telemedicine, at-home testing products, cloud computing for billing, and biometric devices/wearables. These digital transformations are reshaping patient care delivery and expectations across the industry.
Digitizing Processes: Key to Transformation
Digital transformation entails automating manual processes, extending beyond supply chain operations to encompass selling, billing, invoicing, and pricing. Modern ERP and CRM solutions integrated with tools like CPQ, data warehouses, and pricing solutions are crucial for streamlining operations and enhancing efficiency.
It's surprising that many MedTech companies still rely on manual processes, such as pricing and quoting in Excel, despite the availability of advanced solutions like PROS Smart Price Optimization and Management. Embracing AI-driven optimization can empower sales teams with actionable insights and improve decision-making.
New Go-to-Market (GTM) Models and XaaS
Traditional MedTech business models are evolving towards service-based offerings, including pay-per-use, subscription contracts, financing, and leasing. Deloitte's concept of XaaS (Everything as-a-Service) is gaining traction, particularly among newer market entrants. However, implementing these new models requires comprehensive organizational transformations across pricing, sales, billing, and contract management.
Call to Action
While the discourse around digital transformation and innovative GTM models in MedTech is robust, bridging the gap between theory and practice remains paramount. Adopting digital processes supported by modern CRM, ERP, CPQ, and pricing solutions, augmented by AI capabilities, is essential for future-proofing MedTech operations.
In conclusion, the MedTech industry is at a pivotal juncture, poised for transformative growth through digitalization and the adoption of service-oriented business models.
Embracing these changes will not only drive operational efficiency but also enhance patient outcomes in an increasingly digitized healthcare ecosystem.
