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—and slowing—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
Healthcare reform across the globe is further accelerating these changes. While structural differences exist by category and country, macro trends in developed markets like the US and Europe are similar, such as the increased emphasis on comparative effectiveness, while emerging markets focus on low-cost solutions to improve access.