OUR PERSPECTIVE

Much like pharmaceutical companies, medical technology companies face profit pools shifting away from the historically-innovative players to lower-margin sectors. While a few sectors of stability remain, the majority of the medical technology industry’s tried-and-tested formula for success is fundamentally changing. Three trends, in particular, are transforming the way the sector generates value in the largest historical profit pools:

• The maturing pace and relative differentiation of innovation
• The diminishing role of physicians in the purchasing process
• The reduced ability to charge a premium for incremental healthcare product features and benefits

With disruptive changes altering the basis of competition, medtech companies may seek new opportunities to redefine business models, enter new markets and deploy their scale advantages in new ways. To thrive in this emerging environment, Bain’s teams of experts help medtech companies across the globe address a new set of priorities, including:

• Recasting the understanding of the customer base. Medical technology companies must refresh their understanding of how they segment customers and update the segmentation over time dynamically, as opposed to static or snap-shot segmentation, which is less useful in this rapidly evolving market.
• Developing a new, flexible commercial model that balances physician and administrative engagement. The new model must meet the needs of a diverse and evolving marketplace while simultaneously reducing the cost of sales and strengthening the role of the physician as innovator, advocate and customer.
• Moving to a more efficient R&D model. Successful medtech companies will focus on both internally and externally sourced innovation. They will shift from a design-to-ideal approach to a design-to-value one in commoditized medical product markets.
• Investing to win in the remaining white spaces. Medical technology companies still have the opportunity to choose a few new areas for disruptive innovation and develop new medical device or equipment markets both therapeutically as well as geographically.

Considering how to win in rapid-growth emerging markets. Emerging healthcare markets are complex, diverse and evolving, but companies operating in these regions can enjoy rapid growth rates. Winning requires carefully assessing where to play, creating the right product portfolios and distribution models, and, in many cases, finding the right deal partners. Rationalizing manufacturing and costs. Companies must maintain a strategic focus on costs in order to shed unnecessary expenses and reinforce areas of strength. A radical redesign of all processes with a zero-based budgeting approach can help change preconceived notions of how things have been done before. We share our clients' ambitions. We work to understand their reality and deliver true results focusing on strategic decisions and practical actions. And we align our incentives with our clients' objectives, so they know we're in it together.