Nik Walenda isn’t the only one walking a tightrope these days. Axendia, a leading analyst and strategic advisory firm that specializes in the life sciences and healthcare markets, has released a detailed report on the medical technology (Med-Tech) industry, gleaned from a major research survey of 125 Med-Tech industry executives from 89 companies across 16 countries worldwide. “Walking the Global Tightrope: Balancing the Risks and Rewards of Med-Tech Globalization,” provides an incisive view of a key industry coping with change on an unprecedented scale.
According to the Advanced Medical Technology Association, medical technology encompasses a wide range of products used to diagnose, monitor, or treat every disease or condition that affects humans. Globalization has greatly increased the demand for medical technology. The globalization of design, sourcing, manufacturing, distribution, and sales of medical technology has accelerated the transformation of the Med-Tech industry; the emergence of new economies as key marketplaces for the sale of medical devices has given executives pause as they consider how to serve these markets as well as the developed economies that have long been the principal revenue drivers for their companies. Moreover, these concerns are emerging just as the industry’s business model shifts from “selling products” to “providing integrated solutions” that improve care and enhance health across populations.
Axendia notes that Med-Tech brand owners (i.e., those companies whose names appear on product packaging) need to balance the risks and rewards of globalization as they pursue opportunities in this dynamic new commercial environment. The survey finds that industry executives are facing a crisis of confidence due to lack of visibility and control over their outsourced operations. Three issues emerge as particularly troubling: complying with an increasingly complex regulatory environment, ensuring the quality of products and raw materials across the globe, and maintaining consistent standards across an extended network of internal sites and external partners.
Within this context, industry executives must navigate three primary macro trends:
- The need to manage sustainable global growth:
- Striking the proper balance between developed and emerging economies
- Dealing with increased labor and material costs
- Working to minimize the impact of the US device tax
- Understanding the economic impact of sovereign debt and investment
- The impact of tightening global regulatory environments:
- Increasing cost and time involved in bringing product to market
- Uncertainty generated by 510K reform
- Greater difficulty in accessing innovative medical technology
- Complying with the Foreign Corrupt Practices Act (FCPA)
- The demands of supporting changing healthcare delivery models on a global scale:
- Managing rising price pressures and changing reimbursement strategies
- Setting up systems to support competitive bidding
- Defining comparative effectiveness and ROI analysis to support the provider, patient, and payer
These opportunities and challenges demand new strategies for managing the lifecycle of Med-Tech products in a global, networked environment, where brand owners increasingly rely on a multi-tiered network of partners to perform work traditionally done within the enterprise. Based on Axendia’s research, three broad, strategic categories emerge to enable the balance needed to “walk the global tightrope”:
- Holistic control over governance, risk management, and compliance practices
- Enhanced visibility across the extended global partner network
- Improved collaboration with all constituents in the ecosystem
Each of these categories will be addressed in greater detail in subsequent posts on this blog.
Axendia Medical Technology Globalization Report: Walking the Global Tightrope