The development prospects of medical device companies seem optimistic, but medical costs are unsustainable, and there are new competitive forces participating , indicating that the future pattern of the industry may change. Today's manufacturers face a dilemma and risk commoditization if they fail to establish themselves in the evolving value chain. Staying ahead is about delivering value beyond the device and solving medical problems, not just contributing.

The medical device industry in 2030——be part of the solution< /span>

Reshape business and operation model, reposition, restructure value chain

"The days of simply manufacturing equipment and selling it through distributors to healthcare providers" are gone exist. Value is the new synonym for success, prevention is the best outcome, and intelligence is the new competitive advantage. This article explores how medical device companies can succeed through a "three-pronged approach" strategy in 2030.

Reshape business and operating model

Medical device companies should take a hard look at their existing organizations and reshape traditional business and operating models in the following ways to Adapt to future development:

· Incorporate intelligence into product portfolio and services to positively impact the course of treatment and connect with clients, patients Connect with consumers.

· Provide services beyond equipment, intelligence beyond services—— truly realize from cost to intelligence transfer of value.

· Invest in enabling technology —— to make the right decisions and support Multiple parallel business models developed by the patients (potential patients) respectively--and ultimately serve to achieve the financial goals of the organization.

Repositioning

Think "from the outside in" to prepare for the future. By 2030, the external environment will be full of variables, and medical device companies need to reposition themselves in the new competitive landscape and deal with the interference forces from the following aspects:

· New entrants, including competitors from unrelated industries.

· new technology, because technological innovation will continue to outpace clinical innovation.

· New markets, as developing countries continue to maintain a high growth trend.

Refactor value chain

The value chain of traditional medical devices will evolve rapidly, and by 2030, enterprises will play very different roles. After reshaping their business and business models and repositioning, medical device companies need to rebuild their value chain and establish their position in the value chain. "Construction" of various value chains requires enterprises to make fundamental strategic choices. It is now evident that manufacturers will continue to connect directly with patients and consumers, or through vertical integration with healthcare providers and even payers. The choice to restructure the value chain is not intuitive and is likely to vary according to the company's market segment (such as device field, business unit, and geographic region). The situation is further complicated by the dynamic evolution of the value chain itself as other companies attempt to restructure the value chain and achieve strategic goals. However, getting it right will create enormous value for end users and help businesses avoid a future of commoditization.

Industry executives need to challenge conventional thinking and reimagine the role of business in 2030. As such, they need to restructure their current organizations from being value chain players to providing solutions for sustainable healthcare costs.

Beware of a dilemma

Unbearable pressure to upend the status quo

The medical device industry is expected to maintain steady growth, and the global annual sales are forecast to grow at a rate of more than 5% per year, to Sales will reach nearly $800 billion in 2030. These forecasts reflect the continued growth in demand for innovative new devices (such as wearables) and services (such as health data) as habitual diseases become more prevalent in modern life, as well as growth in emerging markets, especially China and India. Great potential has been unleashed by economic development.

While the outlook is tantalizing, relentless downward price pressure still looms over the sector. Governments around the world are seeking to reduce healthcare costs—especially in the costliest part of the healthcare system: hospitals. They want to spend less on medical devices and at the same time want to see greater value in achieving better outcomes.

Many purchasing decisions have shifted from healthcare institutions to economic decision makers. Despite short-term reprieves like the two-year moratorium on the U.S. medical device excise tax, pricing only seems to be going in one direction — lower. With the official implementation of EU medical device regulations in 2020 and China's introduction of regulations to encourage local innovation, the industry will face more uncertainties in the future.

The development of these situations has put medical device companies that have long focused on manufacturing and R&D in trouble, and the current medical budget is limited. And the new reimbursement system continues to cut into profits. In addition, new entrants, some from entirely different industries, are disrupting industries by mastering customers, patients, and consumers through data. In today's new and dynamic markets, device manufacturers, as mere commodity producers, are at significant risk of being caught in a dilemma along the value chain.

Evolved value chain

Competing in the future value chain of medical devices

Medical device companies have historically provided value primarily by making and selling products. However, as the pressure on the medical system increases and the medical service model undergoes fundamental changes, the industrial value chain will usher in major changes.

Under the new normal, enterprises need to get rid of the role of traditional manufacturers and combine services and intelligent data with products , providing an overall solution. This requires a "strength contest" in the value chain - while introducing the business-to-consumer (B2C) model, it will consolidate the existing business-to-business (B2B) model and create a new model. The power play is likely to include a litany of dealmaking -- mergers and acquisitions (M&A), strategic alliances and partnerships.

Ultimately, medical device companies will strive to play a more important role in the value chain, getting closer to customers, patients and relationship between consumers. If handled properly, it can not only increase new sources of income, but also shorten the time of visits, reduce costs and reduce the number of visits--thus reducing medical costs.