Drivers, Forces and New Thinking that Redefine Medtech Market Outlook

From the December 2007 edition of MedMarkets

Never before, or so it seems, have there been so many widely different dynamics in medical technology markets that determine whether a company will be successful, or if successful, to what degree. Science, its application in technology, and its commercialization in healthcare has traditionally been driven by a narrow scope on a limited number of specific functions provided by the product — the expanded coronary artery lumen, the successfully implanted artificial hip, the endoscope that delivers good images. However, as the famous Greek philosopher Heraclitus said, “You can never put your finger in the same river twice.” So, the target changes as businesses seek greater commercial success with products that deliver more functions better. Third party payers strain to ensure coverage even while premiums grow out of control, so they demand better, more cost effective performance from a longer term perspective. Enabling these perspectives, or even driving them, is technology development that increasingly redraws boundaries of what is possible. And the overarching force that accelerates change is globalization of markets. Here we consider in the space allotted just some of the specific drivers and forces that are redefining the medtech market outlook.

Redefining the product. Market opportunity and technology development operate hand-in-hand. In 2007, the development of products is limited in scope seemingly only by imagination, due to the spectrum of opportunities created by materials technology, information technology, product hybridization and others, enabling manufacturers to focus on the fullest possible achievement of clinical outcome delivered by their products. (We have frequently addressed this issue; the dissolution of boundaries between devices, drugs, pharmaceuticals.) Realizing this is necessary means realizing that a whole slew of other companies out there looking at that same clinical outcome, often from a very different perspective. Of course, this sometimes means being opportunistic to recent developments, such as in stent developers adapting development (or maybe just their marketing message) to address a sudden hot button issue like late stage thrombosis. As comfortable as it may be to lean on one’s existing technology platform, unless that platform is predetermined to anticipate the wide range of competition possible, manufacturers must think beyond the platform and focus on the clinical solution, redefining the product in all its forms to simply reach that solution more effectively.

Redefining the process. There is always another way to get the job done, the “job” being the development, regulatory approval, manufacturing, marketing, sales, and distribution of medical products. It is a safe bet to say that no manufacturer has optimized that entire process. And even if a manufacturer has done so, the process remains a moving target, with new options emerging on all fronts. New vendors appear, regional/national/international economics change, and technologies create new possibilities to get the “job” done. Every step of the process then demands regular scrutiny to adjust: what is the appropriate balance between in-house development versus acquired innovation, what are the current sensitivities of regulators as to specific demands for market approval, what new options exist for OEM and how do they measure against the costs, how have marketing channels changed to create opportunities and challenges in product/price/placement/position, what are specific healthcare systems’ new requirements for purchasing new technology, are products reaching the market through distribution channels that optimize the market penetration given associated delivery cost? These questions only scratch the surface.

Never taking an eye off of “cost”. In the most optimistic view, the issue of cost has to be view through the lens of opportunity. Cost must be considered from the most relevant perspective. Can you make the argument that this new device/product is more effective than competitive alternatives? Although you believe your product is not only competitive against similar technologies but is it also competitive against different technologies targeting the same patient population(s) — and do third party payers really see it this way? Can you make an effective case?

Competition is a chameleon. Be careful what you consider to be your competition, because accurate though you may be today, your competition could be entirely different tomorrow. Competition of course is any entity serving the need of your current/potential customers by any method and from any source. You know the companies with like technologies currently going head-to-head with you in the geographic markets in which you market/sell product, but are you considering the bigger picture of any potential alternative technology on the market or under development, currently active in your territories or looking at yours from across the border? The corollary to this is, of course, that one must also look aggressively at those new technologies that will open up patient populations to be served and also look back across those geographic boundaries to markets that are attractive enough, and/or with barriers low enough to make it worthwhile for one to compete there as well.

Do not limit your potential. Once a manufacturer decides the product and market opportunity that will be pursued, it becomes a sort of self-imposed limit. We frequently witness innovative medtech startups who dare to assume that they need not limit their market introduction to the U.S. or Europe, or that even though they have only a handful of employees, they are capable of competing with multi-nationals who who have million- or billion-dollar budgets. To assume any limitation is to make it real, so one best make the biggest reasonable assumptions about market potential.

We must admit that this view of the medtech market outlook can be accused of being myopic, since it only considers a limited number of possibilities in the list of possible market drivers, and only briefly touches on them. Competing in medical technology markets these days can be an overwhelming proposition because all of the possibilities must be explicitly considered or they will be implicitly made so. The most compelling advice to be offered is that the successors in medtech markets rarely view these market drivers as daunting challenges, but instead view them as invigorating opportunities.

New report from MedMarket Diligence:  Worldwide Wound Management 2007

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