A recent forecast indicates a mostly positive outlook for the international medtech industry but highlights a few areas that will present challenges going forward. The “8th Thinking Ahead! LIMEDex Index Report” was authored by Beatus Hofrichter, found - er and managing partner of conceplus, a medtech think tank based in Switzerland.
According to the report, 68 percent of managers remain confident about the outlook for the medtech industry. Operations seems strong, indicating confidence in managing inventories, project delivery excellence, and cost of goods and services. But the report notes that uncertainties makes it difficult for managers to forecast. “Actual sentiment on export, pricing strength, and competencies as an asset dropped, signaling cautiousness,” it says.
The report points to uncertainty related to the recent U.S. election campaign, which spoke of policy changes such as “trimming back Obamacare, tightening public spending, tighter product listings, and visa and migration restrictions,” but also spoke of decreasing corporate taxes. It notes that anticipated changes in trade policy affected outlook on bottom line growth for the next 24 months. “Trade negotiations between the USA, and both Asia and the EU, may be put on hold, if the incoming US administration follows through on its stated intentions during the election campaign,” the report notes.
On the upside, the report indicates that operational excellence has led to improved cross-functional effectiveness and that managers are still upbeat about operations. However, medtech managers expressed pessimism about market access “due to their portfolio mix and higher regulatory burdens that are causing slow time-to-market and missed timeto- peaks-sales targets, as well as unattractive entry price points.”
The report predicts that consolidation, mergers and acquisitions, and restructuring will significantly intensify in the next 24 months, with niche product positioning being a winning strategy, while a “material specialist centric” model may present fewrer competitive advantages. It also predicts that medtech companies will shift to generic pricing models to alleviate ageburdened portfolio items and reduce incremental maintenance costs.
“Manufacturers and suppliers face a ‘make or break’ period as raw material prices and high-quality services costs soar and providers demand greater price cuts, while merger activities drive portfolio-centric competition,” says the report. “Access to financial resources is becoming expensive, and the right skills are becoming harder to define and to acquire.”
One prediction to watch: Outsiders and adjacent players will begin to occupy medtech’s “white spaces” and “blind spots” as the tendency for medtech companies to implement efficiency initiatives and innovate incrementally keeps traditional medtech management otherwise occupied.
