Trends Impacting the Top 30 Companies (and Everyone Else)

While there are a myriad of issues affecting healthcare development and delivery, the most impactful remain more or less the same.

It’s summertime—the season of sun, sand, surf, and…MPO’s annual Top 30 Companies report. Its publishing always makes for an ideal time to assess these multinationals’ fiscal health and contemplate some of the major issues and opportunities impacting the medtech industry.

While there are a myriad of issues affecting healthcare development and delivery, the most impactful remain more or less the same: (1) value-based care; (2) digital healthcare; (3) robotics; (4) healthcare IT; (5) sensor/wearable solutions; and (6) changing regulatory burdens.

Value-Based Care

The value-based care trend began in the 1990s and has assumed various forms over the years (HMOs, population health, ObamaCare, etc.). Any company developing a new medtech product knows that a better-built “band-aid” alone does not guarantee success. Market adoption is more likely now when an innovative product meets an unmet clinical need and positively impacts its total cost solution. Some Top 30 strategics have been leveraging their size (i.e., Medtronic, J&J, GE Healthcare) and have been facilitating “shared risk” value-based programs for their hospital/ASC (ambulatory surgical center) customers. These shared risk programs allow clients to be treated as partners while introducing them to certain products (or product groups), which in turn, saves the hospital/ASCs money on specified procedures (or a range of surgeries and treatments). All parties agree on a current base cost for patient care. With the hospital/ASC not on the hook for new innovation, both the customer and medtech strategic share in the cost savings. In addition to the large firms, an oncoming wave of entrepreneurial companies are introducing solutions to the market with a similar idea—supplying a product or service and being paid based on the cost savings. Watch this trend to continue with impacts for companies of all sizes.

Digital Healthcare

Those who use the buzzwords (i.e. digital healthcare) are usually referring to an effort to capture data. It has become abundantly clear that data is money but data alone does not entail digital health. The digital healthcare concept can be utilized either very ambiguously or very specifically. Patient engagement software, for example, can be deployed to help patients track their recovery from certain procedures. When done right, this software can capture beneficial data for understanding the impacts of surgeries, treatments, drugs, etc. Ultimately, assessing outcomes (positive or not) can provide clinicians very valuable information for making future treatment decisions. Zimmer Biomet Holdings’ mymobility solution is an example of this type of patient engagement offering.

Robotics

Intuitive Surgical has crushed this landscape for various general, urological, gynecological, and cardiological procedures. In the orthopedic segment, Stryker Corp. has set the tone with its launch of the MAKO robotic solution (first for knees, and now also for hips). While these two companies have gained market share and demonstrated the technological possibilities in their respective segments, they both have only captured a small overall percentage of the surgical robotics marketplace. Beyond surgery, interventional procedures for oncology, neurological, and cardiovascular treatment are increasingly incorporating robotic solutions. Based on these early successes (both financially and for patient outcomes), dozens of companies have been launched to create a better robotics mousetrap across a wide range of surgical procedures and treatments. Organizations without robotic solutions are losing market share and Wall Street credibility. Based on the momentum in this space, a Top 30 robotics companies report is certainly within the realm of possibilities in the near future.

Healthcare IT

There is no other way to describe the recent Oracle-Cerner merger than “game-changing” for the healthcare IT sector. Larry Ellison is determined to make medical records access more seamless. While there has been widespread adoption of EHR (electronic health record) solutions in the past decade, patient data is still very fragmented, with information scattered across a dozen or so separate databases (one for every provider a patient has ever visited). EHR fragmentation causes tremendous problems, and Ellison proposes to solve it by building a system wherein all health records exist at the hospital and national levels (the latter being a unified national health records database). Anyone experienced in this industry understands this will not be easy. Nevertheless, the vision is bold and the execution of that vision will create new opportunities throughout the industry.

Sensor/Wearable Solutions

“Where today people surf the web and check e-mail on their cell phones, tomorrow they will be checking their vital signs,” says Eric Topol, M.D., author of “The Patient Will See You Now.” One of the key themes in Topol’s books and talks is the diagnostic capabilities of smartphones. According to Topol, “Smartphones allow greater access to medical information and will soon give patients much more power to diagnose themselves.” Sensors and wearables have spawned dynamic changes in the healthcare industry, as they ultimately have put more information into patients’ hands (arms, legs, brains, etc.). Items ranging from population health maps and bacteria scanners to vital signs are being included (via apps) or attached to smartphones. While there is still a gap today between the consumer products attached to big brands and U.S. Food and Drug Administration-cleared solutions from traditional medtech firms, sensors and wearables has become an interesting battlefield. A future Top 30 report is likely to include some interesting new entrants like Google (Verily) and Amazon, or perhaps even META. As competition is healthy for any industry, it will be exciting to watch this unfold. The battle for market share also will create new customer opportunities for OEM contract manufacturers as they continue to hone their competencies for the future.

Changing Regulatory Burdens

Over the past 20 years, it seems many countries have decided that using the regulatory process was a good way to tax market entry into their respective republics. While not enjoyable, this trend has been mostly predictable in most cases except for China (which warrants its own article) and the European Union (enough material there for a book). China uses the regulatory process for its own financial gains and the benefit of its IP landscape and local companies, which makes the market difficult to manage. It’s doable but takes time, resources, and persistence. The EU is currently transitioning from the MDD (Medical Device Directive) to the MDR (Medical Device Regulations), which is ultimately going to be disastrous for some companies and some patients as well because some good legacy products will simply not earn a new CE mark. It’s also unfortunate for the industry, as it now takes longer and is more difficult to introduce a product in Europe than in the United States. The top tier companies will have the clout and leverage to work through these issues but it is going to prove difficult for some smaller companies.

These are highly dynamic times in the medtech industry (and this column didn’t even broach the supply chain). Overall, as the markets continue to rebound from the pandemic, there are changes and challenges everywhere. The good news is that change and challenge brings opportunity, and medtech companies should take advantage of these changes to mine significant growth. Happy prospecting. 


Florence Joffroy-Black, CM&AA, is a longtime marketing and M&A expert with significant experience in the medical technology industry, including working for multi-national corporations based in the United States, Germany, and Israel. She currently is CEO at MedWorld Advisors and can be reached at [email protected] or at www.medworldadvisors.com.

Dave Sheppard, CM&AA, is a former medical technology Fortune 500 executive and is now focused on M&A as a managing director at MedWorld Advisors. He can be reached at [email protected].

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Contributing Advisors