Increasing Healthcare Costs

According to L.E.K. Consulting, medical device companies are suffering from unprecedented pricing pressures. Recently, the consulting company published the results of a survey with American hospitals’ CEOs reporting that reducing costs is among their top five most pressing needs. Also, the purchasing process has become more complicated and all supplies and new technologies have to go through a value/cost analysis.

Despite cost pressure, most of the hospitals’ CEOs answered that they are interested in buying additional services from medtech companies, especially in clinical IT and analytics, operations management and efficiency, and education, training, and compliance. They want to see medtech firms prove that their solutions can improve the quality of patient care, lower hospitals’ overall costs, or increase the efficiency of their clinical staffs.

References: http://www.mddionline.com/blog/devicetalk/6-threats-and-opportunities-medtech-new-healthcare-paradigm

Supply Chain Strategies for Medtech Companies

Before the senior director of the global supply chain at Edwards Lifesciences’ presentation at MD&M West 2014 Conference in Anaheim, CA, he talked about the theme of his session which was the best practices for medical device companies on supply chain strategies in the face of regulatory, technology, and margin-pressure challenges, as well as legislative changes.

     The senior director explained that innovation is and will always boost medical device companies. However, one shall notice that there is another key factor in the healthcare industry: operational and supply chain efficiencies, which is requiring transformational strategies for managing the supply chain. In addition, regulatory requirements are becoming more detailed and more constraining. At the same time, there are increasing margin pressures and legislative changes. All of these different factors are forcing companies to reevaluate their operations and supply chain strategies.

The senior director advises that innovation is not enough in the face of regulatory forces, legislative changes and margin pressures. In order to remain leaders in the medical device industry, companies should improve quality, lean manufacturing operations, distribution efficiencies, and inventory optimizations. Some areas to be focus on: global sales and operations planning platform, solid manufacturing improvement program (that includes lean manufacturing principles), determining how to introduce new products to the market and supplier risk management.

References: http://www.mddionline.com/article/supply-chain-strategies-challenging-medtech-landscape-0

Outsourcing and Innovation: Medtech OEMs

Outsourcing seems to be an increasing trend in the medical device industry and it’s expected to grow by 40%, reaching US$ 12 billion by 2018. Due to the pressure companies are under to develop devices that offer real value and not just incremental benefit, OEMs are focusing on innovation and core capabilities.

As a result, medical devices companies are asking more of their contract partners, responsibilities from front-end design to back-end services including warehousing, distribution, and regulatory assistance. According to the Millennium Research Group report, “overall trends in the medical device outsourcing space indicate that [contract manufacturers] are broadening their range of services, growing organically or through acquisition to become one-stop-shop manufacturers.”

     Another trend of OEM strategy is no longer to manufacture devices in China or Mexico for distribution in the United States and Europe. Instead, these companies are making products in emerging countries for regional and local distribution.

“To line up with our global customers, who are manufacturing in Asia for Asia, Europe for Europe, and the Americas for the Americas, we need to have capabilities in each of those geographies.”

Phillips-Medisize president and CEO Matt Jennings

References: http://www.mddionline.com/article/medtech-oems-focus-innovation-suppliers-step-their-services

How Medical Device Industry is Failing

In the recent PricewaterhouseCoopers (PwC) report, “Top Health Industry Issues of 2014”, the company declared that the medical device industry is getting back on track, boosted by the Affordable Care Act, technology advances and changing consumer attitudes. However, the medical device companies are still failing in some areas of this new landscape.

According to PwC report, due to the resistance of the medical device companies to show their consumers what they are getting for their money, more than 50% of them don’t think they have enough information on prices when buying medical devices.

Another indicator of PwC report is that less than 15% of the medical technology executives admit their company formally manages innovation. This demonstrates that the medical technology companies should be more concerned in managing their resources and investing in innovation.

The last indicator of “Top Health Industry Issues of 2014” which shows how medical device companies are failing is the waste of patient data. Few companies integrate patient data captured via apps into clinician workflows, electronic health reports and their R&D systems to drive innovation.

References:http://www.mddionline.com/article/3-ways-medtech-industry-failing

Regulations, 3D Printing and IT in Medtech Sector: trends for 2014

      Since the year is just beginning, it is time to make some predictions of hot trends for 2014. One of the most important fact that the medical device sector should pay attention to is the regulatory system in Europe. Some changes proposed by the current EU-Council could impact the industry severely. The next step is to find a compromise that works for all the member states and that should probably happen before European elections in May.

   3D Printing will continue to impress in 2014. Some patents of the technology will expire in February, leading to more competition and lower prices. For the next five years, it is expected to drop 60% of 3D metal printing costs.

     Finally, one cannot forget the influence of information technology in the medical device sector. After the announcement of Calico by Google and researches that are currently taking place by IBM in cooperation with National Cancer Institute of Milan or the Sloan Kettering Cancer Center in New York, digital healthcare is a key trend for this year. With sensors becoming cheaper and more powerful, one will be able to obtain more precise health related data.

References: http://www.emdt.co.uk/daily-buzz/regulation-3-d-printing-digitalisation-%E2%80%93-what-will-be-important-2014-0

2014: A Good Year for the Medtech Sector

JPMorgan Chase Analyst Michael Weinstein believes that 2014 will be good to the medtech sector. This week, the JPMorgan analyst published a research where he says to expect the medtech sector to grow 4.2% this year, up 0.8% from 2013.

“We see growth broadly accelerating in 2014-2015 as an industry that bottomed in 2011-2012 sees the benefits of new products, new markets, and small to mid- sized M&A. This is particularly true in cardiovascular devices, where we see growth accelerating at all three large cap names and ample room for innovation in small-cap, emerging growth companies – both public and private.”

Michael Weinstein

References: http://www.mddionline.com/article/jpmorgan-chase-analyst-2014-will-be-strong-year-medtech

Apple gets a Patent for a Seamlessly Embedded Heart Rate Monitor

Apple was awarded a patent for a seamlessly embedded heart rate monitor within in an electronic device (an iPhone, maybe?). The patent was granted on December 24, although the the application was made in January 2009. The patent describes an electronic device with an embedded sensor to detect cardiac activity and cardiac electrical signals.

However, Apple is not interested in becoming a FDA-regulated entity, so the company’s purpose is to use the heart rate as a way to authenticate a user’s identity or to determine the user’s mood from the cardiac signals and provide data related to the user’s mood. Anyway, it is not inconceivable that there could be medical applications of this heart rate monitor by third parties, already there are companies using the iPhone to build cardiac monitors.

References: http://www.mddionline.com/article/will-your-future-iphone-come-embedded-heart-rate-monitor