By: Kevin McLellan, Senior Partner, Strategy&, PwC
Medtech companies that move beyond their usual business playbook and adopt new approaches to product offerings may be handsomely rewarded in the rapidly evolving world of healthcare over the next decade.
Medtech companies face great opportunities to generate value and experience dramatically accelerated business growth, outpacing historic industry norms, according to a new report from PwC. By 2030, US healthcare spending on medical devices is projected to reach between $300 billion and $400 billion annually, representing as much as 6% of the total $6.8 trillion healthcare spend.
Forward-thinking companies will push past traditional strategies emphasizing incremental product improvements, narrowly focused deals activity, and sales and marketing investments. They will effectively address pandemic-driven supply chain disruptions, healthcare staffing shortages, shifting care settings and the rapid rise in digital health solutions.
Medtech companies will be able to increase their traditional market share by simultaneously focusing on sustaining their core business, navigating disruptive market trends and helping stakeholders attain their larger goals.
Three strategies will help them gain a competitive edge, according to PwC industry analyses.
- Master products and care settings.
Meet the evolving needs of patients and customers by going beyond the traditional incremental medtech approach to product innovation. Deliver products that improve the care setting, yield better patient outcomes, and provide value-chain improvements and efficiencies.
For example, some imaging equipment companies are enhancing the value of their traditional products by connecting to cloud services that improve providers’ experience and capabilities. Advanced surgical tool manufacturers are working to develop fully digital operating suites allowing the connection of equipment used within the care setting. This approach could drive value in operational excellence, data-enhanced workflows, analytics and insights, and data enrichment.
- Create product-enabled services.
Offer services designed to help customers succeed with larger business challenges, not just a single problem. Buyers, no longer interested only in point-solution vendors, are seeking partnerships that bring holistic solutions to broader business challenges. Product-enabled services target pain points and address gaps to better serve a larger share of customers’ needs. Great services complement and increase the value proposition of core products. This shift to a customer success mindset, a concept first developed in the technology industry by software as a service (SAAS) vendors, can help position medtech companies for success.
- Build or participate in an ecosystem.
An ecosystem brings together stakeholders from across the value chain and enables them to build, collaborate on and use solutions to address big, complex healthcare problems. Ecosystems build on the capabilities required for product-enabled services, but the involvement of many diverse players drives increased complexity and requires more sophistication across strategy, development and execution.
The ecosystem model in the medtech industry is in its infancy, with plenty of potential to bring greater collaboration to solve an increasingly complex set of issues for providers, patients and payers. A medtech company can become a leader that brings all the players together or can join one as a contributor. Both roles have economic advantages.
For more information about success strategies, read PwC’s “Future of medtech: Define new markets before they define you.”