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Health Economics

Health Economics

A need to transform Europe’s medtech model



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Medtech companies have a tremendous opportunity to improve their existing businesses. This should include transforming the commercial model and building a solid case for the value of their products, as well as making value-based health care a tailwind.

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At the same time, the industry has significant room to improve its cost structure and to use the cost savings to “fund the journey” to maximized performance. Consider that the pharmaceutical industry in Europe employs just 20 percent more people than the 575,000 employees who work in the European medtech sector-but its market is more than twice as large as the $100 billion medtech market. Moving simultaneously on these three efforts will go a long way toward improving the industry’s competitiveness.

Transform the commercial model

In order to maximize the opportunity within the existing business, medtech companies must transform their commercial model and build best-in-class commercial capabilities. (See Fixing the Medtech Commercial Model: Still Deploying Milkmen in a Megastore World?, BCG Focus, July 2013.) Six key moves can help companies progress along this path:

  • It is critical to customize the go-to-market strategy. This includes a systematic review that prioritizes the most valuable market segments, determines what is required to win in each segment, and tailors the commercial model for each segment accordingly.
  • Companies should reinvent clinical selling to reflect the changes in how purchasing decisions are made in the market. This includes a move to do less-but more focused-clinical selling.
  • The medtech industry lags behind other sectors when it comes to key account management. Companies must put a greater emphasis on this effort-based on a solid analysis of the business potential and profitability of specific customers.
  • While the sales rep has historically been the driver of the commercial operation in medtech, marketing must now take on the primary role. This is imperative if companies are to successfully build and communicate the case for the value of their products.
  • Securing reimbursement and adequate pricing is more difficult than ever. As a result, developing reimbursement and pricing capabilities is essential, though it is an effort that is just beginning within many medtech companies.
  • A tremendous opportunity exists to offer services that not only bolster revenues but also differentiate a company’s product offering.

Image pulled from original article.

This article first appeared on bcg.perspectives. You can read the full article here.

About the author

bcg.perspectives, produced by The Boston Consulting Group, delivers cutting-edge thinking on business & management issues.

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