Insights on the MedTech Industry

What were some things that happened in your field in 2022 that you’d like to highlight?

In 2022, we saw the fusion of MedTech and HealthTech. While in the past, the two markets were quite separate, two drivers caused this fusion in 2022. One was the shortage of nurses, and the other was the challenge to inpatient procedures from the pandemic. Healthcare systems are moving inpatient services to outpatient, enabling care delivery and management of patients at home and outpatient centers. One example is drug infusion, such as chemotherapy, which is delivered at an outpatient center, and then the patient is monitored remotely from home using integrated devices. This requires the merger of medical devices and digital health technology. In 2022, companies began using this fusion to find efficiencies.

Supply chain disruptions in 2022 were a major issue, causing just-in-time delivery to be a thing of the past. MedTech companies struggled not only for needed microchips but also critical plastic components, thanks to the rise in oil prices. On the other hand, some companies were actually over capacity. For example, a company may have set up a new production line for ventilators during the pandemic, but now that demand has come to an end. What will they do with that production line?

Disruption also emerged from the hospital side. Hospitals and healthcare systems began asking medical device suppliers to be transparent about where the devices were manufactured – China? Indonesia? India? The hospitals demanded visibility as well as delivery guarantees, and they were prepared to pay a premium for that, because they were dealing with that lack of staff and fewer inpatient procedures I mentioned earlier on top of the supply chain issues. To respond to these demands, MedTech companies invested more in manufacturing and supply diversification, which decreased their profitability. In short, the supply chain issues in 2022 squeezed MedTech from both sides; companies couldn’t get enough supplies to manufacture their products, while buyers demanded more from them.

The third major issue in MedTech during 2022 was that the innovation pipeline was strong, but those innovations did not receive funding. We saw innovations in artificial intelligence (AI) that will have a major impact in the next four to five years. We also saw more people looking at the U.S. market as a lucrative opportunity. But investors were not in the same mindset as in 2020 and 2021. The market in 2022 was fluid, but investing was down due to a range of issues including interest rates, supply chain issues causing indefinite delays in product development and launch, skepticism about valuations, and fear of a market crash. Investors were also more cautious about the actual impact of these innovative products on patients, and were looking for companies making incremental changes rather than breaking new ground.

What are you excited to see happen in 2023?

I believe that in 2023, the MedTech industry will seek to turn the challenges of disruption into opportunities for lasting transformation. There are three keys that a successful MedTech company will need to future-proof against macroeconomic uncertainties and supply chain disruptions.

The first is a proactive business strategy. Companies need to create a post-pandemic-era pipeline of devices, software, and services (and the services can be as fundamental as guaranteeing supplies to healthcare systems) in order to succeed.

The strategy must also be resilient. One way for MedTech companies to do this is targeting long-term contracts with providers and payers to insulate their top line revenue from macroeconomic developments over the next few years (which requires power and is harder for small companies and challengers). They must focus on acquiring and retaining talent to maintain a competitive edge. And they must seek supplier diversification to guarantee quality and delivery.

Finally, the strategy must be competitive. Innovations that take the fusion of medical devices and health technology to the next level, focused on transitioning care from inpatient to outpatient centers or home, will be most likely to succeed. If companies can define the market rather than allowing the market to define them, especially if they focus on the inclusive growth of the whole ecosystem to include providers, payers, patients, and regulators, they will win the day.

This combination of proactive, resilient, and competitive strategies will shape 2023 into a year of sustainable growth for the MedTech industry.

Alira Health’s mission is to “Humanize Healthcare.” What does that mean to you in your role as the leader of the MedTech practice?

Patient engagement in product development, launch, and commercial strategies is critical for the success of medical technologies. For my practice, we consider the patient value story as the cornerstone of our consulting work. In every assignment that we do, the major focus is to see how that particular technology fits into patient pathways. We’re also passionate about bridging the gap between the innovations of tomorrow and patient access today. And we work with technologies that are looking for Medicaid population expansion. We want to make these products available to the most vulnerable, so we consider that when designing a business model.

This is a very exciting time for MedTech. Certainly, there are challenges and risks, but companies can use the market disruptions to their advantage, and we look forward to helping them do so.