Ongoing cost containment measures, especially in Europe and the US, are putting more pressure on medical technology spending.
The global shift to a value-based health care market and outcome measurement—in which reimbursement and pricing will face much greater scrutiny than in the past—will only increase cost containment pressures for those who do not demonstrate measurable value. Many.
While higher growth rates can still be achieved in emerging markets, many companies are not prepared to exploit these opportunities, whether due to distribution problems, product portfolios that don’t meet patient or customer needs in lower-cost countries, or other strategic issues.
At the same time, growth remains the single most important long-term value creator. The medical technology companies that thrive in this environment are able to deliver outstanding and proven value to patients and providers, rather than just superior technology or features. The right strategy and corporate development support, along with a focused M&A strategy, can address market challenges head-on to create lasting value for investors.
To meet investor expectations and create long-term value with sufficient growth and profitability, medtech companies must further develop their growth strategy, commercial model, and operational model. Growth will increasingly require disruptive products, business model innovation, a solid emerging-market strategy, and oftentimes, mergers and acquisitions.
A refined commercial model with best-in-class sales and account management capabilities; de-averaged channel strategies; and strong market access, pricing, and reimbursement expertise will help to support growth in a profitable way. In addition, medical technology companies will have to improve their approach to operations—allowing them to maintain margins despite price pressures.
How can medtech companies achieve sustainable value? There are essential steps to apply across the board.