How will my country's medical device industry develop in the next 10 years?
- Time of issue:2021-12-15
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How will my country's medical device industry develop in the next 10 years?
- Categories:Industry Information
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- Time of issue:2021-12-15
- Views:0
The development prospects of medical device companies seem optimistic, but medical costs are unsustainable, coupled with the participation of new competitive forces, indicating that the future pattern of the industry may change. If today's manufacturers fail to establish themselves in the ever-evolving value chain, they will face a dilemma and risk of being commercialized. To maintain a leading position, it is necessary to provide value beyond equipment and solve medical problems, rather than just contributing.
The days of "just relying on manufacturing equipment and then selling to medical service organizations through distributors" are gone. Value is a new synonym for success, prevention is the best result of diagnosis and treatment, and intelligence is a new competitive advantage. This article explores how medical device companies can achieve success through a "three-pronged" strategy in 2030.
Reshape the business and operating model
Re-locate
From the perspective of "from outside to inside", prepare for the future. By 2030, the external environment will be full of variables, and medical device companies need to reposition themselves in the new competitive landscape to deal with the interference forces from the following aspects:
· New entrants, including competitors from unrelated industries.
· New technology, because technological innovation will continue to be faster than clinical innovation.
· New markets, because developing countries continue to maintain a trend of rapid growth.
Restructuring the value chain
The value chain of traditional medical devices will evolve rapidly. By 2030, companies will play a very different role. After medical device companies have experienced reshaping their business and business models and repositioning, they need to rebuild the value chain and establish their position in the value chain. Multiple value chain "building" methods require companies to make fundamental strategic choices. It is now obvious that manufacturers will continue to establish direct contact with patients and consumers, or integrate with medical service providers and even payers through vertical integration. The choice to rebuild the value chain is not intuitive, and may vary according to the company's market segments (such as device fields, business units, and geographic regions). As other companies try to rebuild the value chain and achieve strategic goals, the value chain itself will undergo dynamic evolution, making the situation more complicated. However, the right choice will create tremendous value for end users and help companies avoid a commoditized future.
Industry executives need to challenge traditional thinking and re-imagine the role of companies in 2030. Therefore, they need to restructure the current organization and transform from a value chain participant to a sustainable medical cost solution.
Beware of a dilemma
Unbearable pressure to subvert the status quo
The medical device industry is expected to maintain steady growth. The global annual sales are forecast to grow at a rate of more than 5% per year. By 2030, sales will reach nearly 800 billion U.S. dollars. These forecasts reflect the increasing prevalence of people’s habitual diseases in modern life, the continued growth in demand for innovative new devices (such as wearable devices) and services (such as health data), as well as emerging markets (especially China and India). The huge potential unleashed by economic development.
Despite the attractive prospects, the relentless downward pressure on prices still hangs over the industry like a haze. Governments all over the world are striving to reduce medical costs-especially in the most costly part of the medical system: hospitals. They want to reduce expenditures on medical devices, and at the same time want to see greater value in achieving better treatment results.
Many purchasing decisions have been transferred from medical institutions to economic decision makers. Despite a short-term moratorium such as the two-year suspension of the US medical device excise tax, pricing seems to be only moving in one direction-lower. With the formal implementation of EU medical device regulations in 2020 and China's introduction of regulations to encourage local innovation, the industry will face more uncertainties in the future.
The development of these conditions has caused long-term medical device companies that have focused on manufacturing and research and development into trouble. The current medical budget is restricted, and the new reimbursement system continues to cut profits. In addition, new players (some from completely different industries) use data to master customers, patients, and consumers, and are disrupting the industry. In today's volatile new market, device manufacturers, as pure commodity producers, are facing a major risk of being caught in a dilemma in the value chain.
The evolving value chain
Competition of strength in the future value chain of medical devices
Medical device companies have always provided value mainly by manufacturing and selling products. However, as the pressure on the medical system increases, the medical service model has undergone fundamental changes. Therefore, the industrial value chain will usher in major changes.
Under the new normal, companies need to get rid of the role of traditional manufacturers, combine services and intelligent data with products, and provide overall solutions. This requires a "strength contest" in the value chain-while introducing the business-to-consumer (B2C) model, consolidating the existing business-to-business (B2B) model and creating new models. This power contest may include a series of transaction activities-mergers and acquisitions (mergers and acquisitions), strategic alliances and cooperation.
Ultimately, medical device companies will strive to play a more important role in the value chain and close the relationship with customers, patients and consumers. If handled properly, it can not only increase new sources of income, but also shorten the time of consultation, reduce costs and reduce the number of consultations-thereby reducing medical costs.
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