What high-performing MedTech companies are doing differently

Market Research & Insights: Innovation and product development (I&PD) in the MedTech sector is costly.

A strong I&PD strategy can help MedTech companies drive greater market share and offer value to patients and customers. The key is delivering the right products to the market at the right time.

Deloitte collected data from 14 MedTech companies to understand each organisation’s I&PD spending allocation and performance on key metrics. They looked at:

1. Predictability – How good the company was at achieving its goals for product development projects?
2. Revenue contribution – How much new products contributed to the revenue of the company over time?

Key findings

Top performance neither depends on the types of products a company develops nor the markets it participates in, but instead on how it allocates its spending and manages its product development.

According to the 2020 Deloitte findings, the top MedTech companies:

1. Increased focus on transformational products: Top-performing companies reported allocating nearly twice the amount of R&D budget to transformational products as other companies. This indicates that these companies are actively investing in being innovation leaders in the market in order to drive higher growth.
2. Higher spending on front-end market understanding: Top performers allocated nearly twice the amount of investment in front-end market research than the average. Just as investing in early technical de-risking improves predictability, high-performing companies appear to be investing in understanding the market to de-risk the investments in market-leading transformation products.
3. Less focus on sustaining products: Top performing MedTech organisations spent only a third of their budget on sustaining products compared to companies with lower transformational product revenue, signalling a shift in attention from existing products toward innovation.

What else is helping top performers stand out?

Top-performing Medtech companies do not overload their development pipelines, thus resulting in a more focused allocation of their resources and increased overall productivity.

The top-performing companies also use emerging practices such as agile development methodologies and advanced IT development tools to support engineering and clinical development. Many companies have used agile for software development for years, but MedTech companies have generally been slower to adopt these methods. This is likely based on the misplaced belief that they are incompatible with the risk and regulatory requirements of medical devices. In some cases, the use of these practices by leading companies was focused on accelerating the cycles of early development experimentation to help improve predictability, and in other cases, to accelerate the integration of digital technologies into their product portfolio transformation efforts. Leading companies have, in some cases, even understood how to appropriately adopt these practices into hardware innovation.

The road ahead for MedTech I&PD leaders

• Engage leadership across functions (both business and technical): I&PD is often the most cross-functional activity within an organisation. Having cross-functional leadership alignment on company performance is vital to future improvement success.
• Prioritise performance improvement goals: MedTech leaders should align their appetite for improvement with the level of change they are willing to create. Using comparative data can help guide an organisation to areas that are truly underperforming. It can be easy to “want it all” but not be willing to match the level of change effort needed to achieve the goals. The bigger the goals, the broader and deeper the changes in business practices may need to be.
• Be honest and objective about what business practices you are actually employing: Many organisations may have solid business practices on paper, but their organisational behaviour does not live up to those practices.
• Don’t reinvent the wheel: If a company’s benchmarking data demonstrates a significant gap in a performance metric, they can look at other companies that are already using practices to close that gap. Seeking assistance in understanding those practices and how quickly it might be possible to deploy them can be beneficial.
• Be open to truly leading practices: Emerging practices such as agile methodologies come from outside the MedTech industry. Similarly, advances in information technology in I&PD support systems such as simulation, automation, and clinical evidence generation can open the door to implementing practices that were not operationally viable previously. However, adoption of leading practices depends on how well they can be linked to performance improvement objectives, not just because they seem new and different.