In the last 3 years, the medical devices industry has begun to experience and realize the benefits of Big Data Analytics, Artificial Intelligence, Augmented Reality and other advanced digital technologies. This has created unprecedented opportunities for these companies to grow their market share, be it through piggy-backing on technological advancements, or evolving consumer expectations, markets, innovative business models, and regulatory changes. This, coupled with the dynamic medical devices ecosystem, which has OEMs, start-ups, tech giants, and universities, play myriad yet significant roles in this accelerated growth.
The backbone (pun unintended) of the medical devices industry is the rapid advancements taking place in medical technologies. This is more meaningful because not long ago, the industry was struggling to implement and adopt advanced technologies apart from wrestling with a number of challenges. The paucity of talent, incomprehensible technical complexities, constantly changing regulations, and limited leadership mind-share on adopting the new technologies were just some of the impediments. To explain how recent this mindset shift has been, a mere decade ago, the integration of new and advanced technologies in the medical devices industry was few and far between as compared to other industries such as Telecom, Retail, and Automotive.
The reality still remains that the medical devices players still lag in adopting advanced technologies such as IoT, Big Data, Artificial Intelligence, Augmented Reality, and Robotics, and are struggling to tap into customer and business model-led opportunities. Only a handful of devices players such as Philips, GE Healthcare, and Siemens have built sizeable businesses around the same. These companies, having realized the strategic value, are foraying into partnerships, collaborations, and acquisitions to stay on the edge of this shift. The need has become more urgent as non-traditional players such as start-ups and the tech-mafia, i.e., Google, Amazon, Baidu, etc., are giving traditional medical devices companies stiff competition.
How Technology Will Pave The Road Ahead
The advancement of technologies has been the enabler of growth and innovation for many industries and is poised to do the same for medical devices industry as well, soon. However, this shift is still in its nascent stage and requires a lot of expertise in implementation.
The impact of advanced technologies can be seen majorly on 4 fronts, namely Consumers, Market, Business models, and Regulations.
1. Shifting Expectations And Behavior Of Consumers
Traditionally, digital healthcare delivery was of low quality, expensive, and unavailable to the masses. Patients were dependent on physicians and healthcare providers for their health management. However, tech-savvy consumers of today are expecting a transformation in their healthcare experience through digital interventions. Patients have become increasingly aware, and their baseline expectations are that of digital services in the near future. This shift in consumer behavior is resulting in increased focus on patient-centric health care and has become a major driver for the adoption of advanced technologies among OEMs. Medical devices players are focusing on personalized healthcare solutions and devices to gain a bigger slice of the market.
2. The Market Is Expanding
R&D spending in the medical devices industry is expected to grow at a CAGR of 5.6% and reach $36.4B by 2021, largely attributable to investments in advanced technologies. An extensive rating done by us – Zinnov Zones ratings gives a comprehensive view of R&D spend across verticals. One thing that emerges clearly is that technology-driven products and solutions will be an immediate focus area for the OEMs to compete in the market of the future.
This has had a direct impact on the rapid growth of emerging markets. The major focus is on developing cost-effective and scalable healthcare solutions to cater to many patients. A fewer number of medical professionals, enablement of telemedicine, homecare, and remote monitoring services are driving healthcare providers to leverage IoT in emerging geographies. OEMs are increasingly leveraging their existing expertise along with developing new-age digital capabilities to cater to the fast-growing market in emerging geographies.
3. Business Model – Building New Frontiers
With increased connectivity between devices, physicians, and consumers, there is a demand for high quality, personalized, and patient-centric care. Today, the healthcare industry is witnessing a tectonic shift in business models, where volume-based fee-for-service models are shifting to new incentive models that focus on value-based metrics. Traditionally, OEMs have been able to compete with conventional business models without requiring much differentiation. However, a long-term strategy would necessitate OEMs to create innovative and sustainable business models that will lead to efficient healthcare delivery, reduced costs, and improved medical outcomes.
4. A Practical Guide To Regulations
Currently, there are terabytes of health-related data being generated, creating fundamental questions about patient privacy and safety. Regulatory authorities are still evaluating out the implications of new technologies on patient security and care, albeit incrementally. The reality is that data breaches not only cost a lot of money to the healthcare providers but also compromises patient safety as well. According to a report by Protenus, the year 2016 witnessed 450 data security breaches, compromising the safety of more than 27 million patient records in the US alone. The need to find a balance between advancements and to protect patient security and safety is, therefore, paramount.
The Lay of the ‘Medical Devices’ Land
Leaders becoming more proactive than reactive
With increasing competition, leaders in the medical devices industry are becoming more proactive than reactive, as far as developing innovative products and solutions are concerned.
The Big Three, the leaders, i.e., GE Healthcare, Philips Healthcare, and Siemens Healthineers are ahead in the game with their innovative and intelligent offerings.