Unbiased Analysis of Today's Healthcare Issues

MedTech in 2013 and beyond

Written By: Jason Shafrin - Oct• 20•13

How will medical technology (medtech) firms face the challenges of an evolving marketplace? Although the global medtech market is expected to grow 4.5% to $455 billion from 2011 to 2018, there is less growth anticipated in developed countries.  Today a review a report from PwC’s Health Research Institute (HRI) that provides some insight.

Getting funding

Having a cool innovation is not enough.  To get funding, you need a clear business model.  “We don’t fund cool science without commercial potential,” said Steve VanNurden, former chair of Mayo Clinic Ventures.  Commercialization is key.


Payers don’t just want medical devices that are innovative, they also have to create value.  Further, the value proposition does not occur in a vacuum; the value must be created either within existing processes or the processes need to be readily modifiable to fully tak advantage of the medical device’s full value.

Scott Young, the senior medical director and executive director of Kaiser Permanente’s Care Management Institute stated that:

We’re a system of care, and we are really good at engineering and optimizing care at Kaiser Permanente. So, we look at how devices fit into our systems of care: where does it fit, does it fit, or is it something so new, so radical that we need to think about adjusting the process for this device?   It goes beyond traditional medical devices—all technologies go through the same scrutiny.

Combining Device and Drug

Is a drug working or is it not?  Is the patient taking the pill?  The answer is not just a diagnostic test but tests that can be integrated with the pharmaceutical.

The PwC study reports that the CEO of Roche is committed to pair 60% of the company’s pipeline drugs with companion diagnostics.

Morphing from a device companies to health care companies

With payers constantly searching for value, creating a useful device is not enough for device makers to have a viable long-term business model.  Device makers must figure out how their product specifically helps payers, providers and patients above and beyond the status quo.  Moving from being strictly a device company to a health care company often requires radical change.

Examples of radical change:

  • Philips recently entered into a 15-year, $300 million contract with Georgia Regents Health System to design a new operating suite
  • After hospital executives repeatedly pressured Medtronic Iberica executives for discounts on pacemakers, Medtronic took a different approach, applying leading practices and industry knowledge to help the hospital system reduce operating cost

New Entrants

Some big name technology companies are also making a play into the medtech space.  The figure below provides some examples.



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