Medical technology companies around the world are shifting their strategy from growth to profit. This is according to the study ‘Future of Medtech 2024’ by Roland Berger. Inside Industry interviewed Janes Grotelüschen, one of the authors of the study, about the results.
Mr Grotelüschen, you believe that a new era has begun for the medical technology industry. What do you attribute this to?
Janes Grotelüschen: A new era is always triggered by significant and fundamental changes. That is exactly what we are currently witnessing in the medical technology industry: key characteristics of the industry are changing, there is a fundamental shift in the strategic agenda, shifting from a previously clear focus on growth to a focus on performance optimisation. This is reflected in the survey for our study, and we are also experiencing it in our projects. For example, the medical technology industry has been known for its highly personnel-intensive sales - and this is where it differs significantly from other sectors. Companies are now putting this characteristic approach, among other aspects, to the test and seeking opportunities for digitalisation and automation of sales.
Are companies prioritising the right things when trying to increase their profits? What do you think are the most important steps?
Janes Grotelüschen: Let's stay with the example of sales, with its strikingly high personnel costs: it has contributed to the growth of the industry in the past, but against the backdrop of a new, more digital world, it is right and important to fundamentally question this approach. This is precisely why most of our survey participants prioritise this area of value creation. Our projects also show that optimisations in the value creation areas of the supply chain and procurement are equally important for optimising profitability. Especially as the consideration of risks and feasibility speak in favour of this. Other value creation steps such as R&D may have a supposedly higher potential, but in the supply chain and procurement, efficiencies are much easier and often less risky to realise. It is therefore perfectly understandable that many companies are prioritising these two areas of value creation in their current initiatives alongside sales.
Where can the use of AI, machine learning or robotics effectively support strategies to increase profitability?
Janes Grotelüschen: New technologies can contribute to increasing profitability, which is also reflected in our study: 78 per cent of respondents consider them important or even very important in order to remain competitive in the long term. However, it has also been shown that efficiency depends very much on the area of application and implementation. There is great potential for optimisation through AI, robotics and machine learning in the supply chain in particular, as well as in production and after sales. The overhead area, on the other hand, offers only limited opportunities to contribute to improving results with new technologies. In addition, we see in our daily project practice that the success of the measures taken often depends crucially on how and, above all, how consistently they are implemented. Temporary external support is often recommended here in order to drive issues forward with the necessary priority and rigour.
Your study is global in scope. Can you recognise differences in strategies between companies from Europe and those from other parts of the world?
Janes Grotelüschen: The fundamental change in strategy described above is actually not only evident regionally in Europe, but in large parts of the world. This is because the cost pressure that most companies cite as a trigger is relevant everywhere. Nevertheless, a closer analysis also reveals differences between the various regions. In Europe, for example, regulatory pressure, including the introduction of the MDR, is an important factor: the resulting increase in costs per additional product or additional product line means that European-focused companies in particular are focussing even more strongly on portfolio streamlining.
If companies concentrate on their core markets and also streamline their product ranges, won't this inevitably have a negative impact on global medical care?
Janes Grotelüschen: In principle, the effects are of course to be expected and are already recognisable on the market in some cases. This applies in particular to portfolio streamlining: They are already noticeable and, in some cases, lead to the discontinuation of entire product portfolios or the reduction of product variants. However, we are receiving feedback from the market that supply is not affected in most cases, as there are sufficient alternatives available. Ultimately, it must be said that good healthcare is dependent on financially healthy medical technology companies that can also invest sufficiently in R&D, for example. In this respect, the current optimisation measures are unavoidable and ultimately also benefit healthcare.
About the person
Janes Grotelueschen is a Partner at Roland Berger's Munich office. Since 2013, he has worked primarily in the healthcare market; in particular, hospitals, medical technology and homecare. His focus lies on defining growth strategies as well as transformation and performance programs. He also regularly supports clients with digitalization and optimization of IT infrastructures. Janes Grotelueschen graduated in Business Administration from HHL Leipzig Graduate School of Management.
