According to PwC’s Health Research Institute (HRI) new report, Medtech companies prepare for an innovation makeover, med tech companies may be losing their competitive edge and are in need of a different approach to innovation in a new outcome-based health economy.
The report includes a web-based interactive innovation scorecard to assess medtech companies based on leading innovation practices. Only 14 percent of medtech executives say that they formally manage innovation activities, which is essential to creating new services and business models.
Just 17 percent of med tech executives believe their companies are innovation pioneers. The PwC’s Health Research Institute report outlines how medtech companies need to expand their approaches to innovation outside traditional R&D to remain competitive.
“Historically, medtech innovation has relied on incremental improvement,” said Christopher Wasden, managing director and global healthcare innovation leader, PwC. “But ‘innovation’ needs redefining for an environment that rewards value – measured in affordable patient outcomes and customer satisfaction – over volume. True innovators learn from failure – fast, frequent, frugal failure. Medtech leaders need to change their business models, their corporate DNA, to embrace lean innovation beyond their core operations.”
Key report findings include:
- The value of a device is no longer solely in the product itself but in a company’s ability to help customers solve broader problems.
- New competitors are staking their claim – at least 18 companies have entered the medtech space and are driving innovation at the pace of technology.
- New integrated services and business models that address clinician and consumer needs are becoming more important.
- Medtech executives expect a higher level of innovation over the next three years but lack formal processes to achieve their goals for new services and business models.
- Medtech companies have been slower to apply new social, mobile, analytic and cloud (SMAC) technologies than other industries.
- Medtech companies are looking to open innovation as a key approach to drive future growth.
“Three things are essential to transform today’s medtech companies for the future,” said PwC principal Ed Yu. “Embrace failure – create an innovation operating model that separates breakthrough and radical innovation from incremental innovation. Embrace the disease – select a target area and collaborate with health industry counterparts to get closer to the patient. Finally, measure innovation in new ways with forward-looking metrics and connect the dots for shareholders. That’s the formula for success.”
About HRI’s Medical Technology Company Innovation Scorecard
To assess the state of company-level innovation in medtech, HRI undertook its second global survey, and this year, more than 50 companies participated in the research including those doing business in in-vitro diagnostics, disposable medical products, medical equipment, diversified life sciences, implantable devices, as well as other healthcare companies and new players in the field.
HRI interviewed more than 30 top executives and conducted a survey in summer 2013 of more than 35 medtech companies, almost half of which reported revenues in excess of 1 billion U.S. dollars.
HRI developed a web-based interactive innovation scorecard to assess medtech companies based on leading practices in innovation. The scorecard is a guide for executives to use as they develop and refine their innovation game plan.
For complete information on the stufy, visit HRI’s Medical Technology Company Innovation Scorecard microsite to compare scores by company size and geography.
Medtech companies prepare for an innovation makeover is the second in a series of reports on medtech innovation, the first of which focused on global competitiveness. A full copy of the report and supporting infographics are available for download at www.pwc.com/us/innovationscorecard.