It's is the beginning of the perfect storm. After years of growth and development, the medical device industry could face a collective revenue loss of $34 billion over the next five years, according to a study conducted by A.T. Kearney, a global management consulting firm.
This change in growth can largely be attributed to five key disruptors that if left unchecked could negatively impact the industry, according to the study.
1. The power is shifting to payers and providers. In addition to cost and value, payers and providers are evaluating medical devices based on safety and procedural efficacy. This change in focus steps away from the traditional model of clinicians choosing preferred devices.
2. Regulatory scrutiny is rising. The U.S. Food and Drug Administration is increasing both the number of audits it conducts and the number of warning letters it distributes. Regulators are revising, strengthening and increasing regulations.
3. R&D efforts are focused less on innovation. According to the survey, R&D is trending toward improving devices that are already improved instead of developing new innovative products, largely due to regulatory and reimbursement issues. What's more, startups and small companies are having difficulty finding the capital to bring entirely new innovations to the market.
4. Healthcare delivery models are changing. The healthcare industry is being pushed to produce better outcomes for less money, which means patient care pathways are more focused outside the hospital.
5. There is a growing need to serve lower socioeconomic classes. For medical device companies to continue to grow, they need to address less affluent market segments, which will require new business models, lower price points and more value-based product offerings.
"The question for executive teams is how they can navigate the disruptors and define their unique path, recognizing that the industry is changing now, and the industry leaders of the future are already defining how and where they expect to compete," said Bill Tribe, principal at A.T. Kearney and co-author of the study.
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