5 disruptors that could cost the medical device industry $34B

Medical device companies could miss out on $34 billion in potential revenue by 2020 because of disruptive change in the industry, according to a study by global management consulting firm A.T. Kearney.

Based on interviews with 30 global medical device industry executives from 20 leading medical device manufacturers, the study identifies the following five disruptive forces that will have a negative economic effect on the medical device industry if they aren't addressed. Medical device company executive teams should consider each of these factors and what they are doing to deal with these issues, according to the study.

1. New care delivery models. Under healthcare reform, providers are looking to deliver higher-quality care while simultaneously lowering costs.

2. A shift in power of choice from clinicians to payers and providers. The traditional business model of clinician choice is changing, and payers and providers have begun assessing medical device options based on cost and value in addition to safety and effectiveness.

3. Limited innovation. Regulatory and reimbursement issues have led medical device companies to focus on improving already approved products, and start-ups and small companies face challenges in obtaining the funds to introduce new innovations.

4. More regulatory scrutiny. Food and Drug Administration audits have gone up by 40 percent in the past year, and warning letters have increased by 24 percent during the past two years, according to the study.

5. The need to reach new markets. In order to grow, medical device companies need to target less affluent market segments through new business models, lower price points and more value-based products.

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