The medical technology industry must redefine innovation to compete in a health economy with higher expectations for value and convenience. Making incremental improvements to existing devices won't do it anymore, according to a new report from the PwC Health Research Institute.
Traditional medtech companies risk being displaced by competitors that can demonstrate they achieve the same high clinical standards, but are faster, cheaper and more integrated into the care delivery continuum, the report says.
While 64 percent of executives responding to a PwC survey said innovation is a competitive necessity today, 81 percent believe that will be the case in five years as they compete in this this $349 billion global market.
Among the findings:
- The value of a device is no longer in the product itself, but in information, services and assistance to help customers achieve goals such as improving diagnostics, increasing operating room efficiency and monitoring patients remotely.
- Companies from outside the industry are driving technological innovation.
- New integrated services and business models that address clinician and consumer needs are becoming more important.
- Medtech companies have been slower to apply social, mobile, analytic, and cloud technologies than other industries, which might cause them to miss opportunities for growth.
To effectively manage innovation and find new sources of revenue, the report advises:
- Be ambidextrous--Find a healthy balance between making incremental improvements that support the core business and funding a high volume of experiments that are tested in the market quickly, fail fast and frugally.
- Collaborate to get closer to the patient--Medtech companies in the past weren't concerned about patient satisfaction, but with new payment models focused on that, now they have to be.
- Measure innovation in new ways--Use forward-looking metrics and connect the dots for shareholders who need help understanding the new innovation environment.
The report looks at what companies such as Samsung, Verizon and Qualcomm are doing in the market. Qualcomm, for instance, has partnered with San Diego's Rady Children's Hospital to launch a 3G-enabled kit for monitoring the activities of asthmatic children.
Meanwhile, investment in digital health startups continues to grow, attracting $849 million in the first half of the year, but the torrid pace cooled a bit to a growth rate of 12 percent, compared with 73 percent in the period a year earlier.
To learn more:
- find the report