The future of medtech

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Tune into this episode of PwC's Next in health to hear PwC Strategy& Principal Igor Belokrinitsky, Director Elena Pretto, and Deals Principal and Medtech Leader James Woods, discuss the forces shaping the future of medtech. Topics include:

  • Various forces shaping the industry including care settings, patient empowerment, provider burn out and reimbursement
  • How medical technology companies can think beyond digital
  • Three business models and growth strategies for medical technology companies to consider for the future

Topics: Healthcare, deals, technology, medical technology, medtech, strategy, innovation, data, medical devices

Episode transcript

Find episode transcript below.


00:00:01:00 Hello and welcome to HRIs Next in Health podcast. I'm Igor Belokrinitsky, a Principal with PwC Strategy& where I get to help leading companies figure out their health care strategies and operating models.

00:00:18:24 And where I also get to talk was really interesting people about the future of health care. And today we're going to talk specifically about the future of medical devices.

00:00:28:04 And so we have two guests who will tell us what's coming up next in that exciting space. Elena Pretto is a director serving our medical devices clients across a broad range of strategic topics. And James Woods is a principal in our deals practice and a leader in our MedTech practice. James and Elena, welcome to the podcast.


00:00:49:02 Hi Igor, excited to be here.


00:00:51:14 Thanks for having us.


00:00:51:14 James and Elena, tell us about the forces that are shaping the future of medical technology.


00:00:58:19 Well, Igor, this is really a unique time in the MedTech business. In the past couple of years, we have seen multiple forces impacting the market. I mean, as an example, we are seeing unparalleled shifts in care settings. This is definitely not new. It was a trend already undergoing probably prior to COVID-19, but it really accelerated in the last couple of years.

00:01:25:05 We are seeing care shifting from hospital NACs all the way into the home. Just to give you some examples. When we think about telehealth, for instance, the use of telehealth in 2019 was 0.3%. And now we are projecting a 40% growth1 so by 2025 in the US.

00:01:45:05 Another area that it's really expanding very quickly, it's remote monitoring, large portions of health systems, US are looking into their patient monitoring strategy are starting to ramp up their capabilities and really understand how and what type of care they want to bring into the home, which is a great opportunity, of course, for our medical devices space.

00:02:08:16 A couple of other trends that we are really seeing recently. I mean, it's definitely the continuation and the relevance of precision medicine as a way to lead into patient empowerment. As an example, we are seeing double digit growth in companion diagnostics.

00:02:27:05 But at the same time, now more than ever, providers are burnt out, it's really a really high. It's another dimension that really fosters the growth of remote patient monitoring as a way and a means to help the providers solve some of their problems and reduce some of the pressures on their staff.

00:02:47:14 And finally, reimbursement continues to bring pressure in the industry. We have seen definitely some increase in reimbursement rates, but they're not able to keep up with the increasing cost structure of the hospitals. And that continues to drive, change and create opportunity. Is there for the MedTech industry.


00:03:09:00 I would agree, Elena. Clearly there are real pressures facing the health care industry, but those pressures are creating, I think, tremendous opportunities for MedTech companies.

00:03:20:00 And we're seeing many companies really grow and thrive in the market. I think those that are really succeeding are the ones who are able to solve problems for their customers, whether it's clinicians or the hospital systems themselves.

00:03:32:12 And as you said, remote patient monitoring I think is a great example. But I think what's key is that in that space, it's not just having a cool device that can track vital signs and run analytics, but really adding to that, a service and a solution to solve a problem like you described around the pressures on staff, nurses and doctors.

00:03:53:00 In this case, establishing a system that not only can track patient vitals, but also combined with a validated sets of alerts, can reduce the number of clinical interventions, which reduces the pressure on the overall system.

00:04:05:23 We've also seen efforts in other clinical areas focused on providing services to reduce the rate of patient readmissions, whether through increased adherence or earlier intervention. And all of those are opportunities for medical device companies to really solve complex problems within health care.


00:04:21:23 Elena and James, this is a really fascinating perspective you're giving us, and I'm glad you're going beyond just the technological challenges to also the human challenges are how do we manage the overload of alerts and how do we manage the burnout of clinicians, which are topics we frequently cover here.

00:04:40:00 And in fact, as we were preparing for this conversation, we started talking about going beyond digital. And this is a notion that's important to us. We had Paul Line, one of the coauthors of our Beyond Digital Book, that talks about how different companies can think about their future strategy beyond just the conventional thinking around digital.

00:05:01:00 So with that frame in mind, how are you thinking about companies in the MedTech space and how can they go beyond digital? What does it mean for them?


00:05:10:00 Yeah, it's a great point, Igor. And I would say that really all seven of the imperatives from beyond digital apply here, but those that are most relevant are those that are externally oriented. When you think about MedTech companies, there is a very clear call to action now to reimagine their role in health care, in their place in the world.

00:05:30:00 The concept of ecosystems that I think we're all familiar with in our day to day lives in terms of technology, it's still fairly nascent within MedTech, but there's real potential for those that are able to create an ecosystem that allows for collaboration with other payers across a care pathway.

00:05:46:00 And those types of business models will not only help address the complex problems that we're talking about in health care, but also have the potential to create significant shareholder value by unlocking access to a much larger percentage of total health care spend than where MedTech companies have historically played.

00:06:02:13 Another area that I think clearly applies is the idea of building a set of privileged insights. Companies that are able to listen to their customers, leverage data and generate insights will be best positioned to truly solve problems which will build trust with their customers and really differentiate those companies in a more sustainable way.


00:06:20:07 Very interesting and really helpful advice for the payers in the market out there. Are you in fact seeing organizations changing their course and taking actions and moving in these new directions?


00:06:33:14 Right. Yes, indeed Igor, we really see via translations of these dimensions into three main axes of growth for the MedTech industry and for MedTech companies. We define them, the first one being mastering products and care settings.

00:06:53:14 So we still see companies and we will see companies in the future continue to grow with a strategy that's probably the most familiar to the MedTech space, which is providing a product or an ecosystem of solutions around that product that drives improved patient outcome and customer experience.

00:07:11:14 However at the same time, we do know that there is a limit to really disruptive innovation that can be brought to market. When we look at some of the data, I mean, only 1% of the recently cleared devices from the FDA can be really considered novel2. The majority had a predicate, so innovating from a product and care setting perspective, it's definitely next is a broad, but it's not going to be the only one sort of MedTech space.

00:07:42:05 Some companies are doing it and doing it effectively such as in some of the orthopedics payers branching out from the implant and together with bringing the robot to actually execute the surgery.

00:07:57:05 As well, in some cases bringing in kind of a personalization component to the implant in order to improve the overall surgery outcome and to reduce the recovery time for a patient.

00:08:10:05 A second axes and strategy we are seeing more and more. It's about creating product enabled services. So what it means here, it's not completely getting rid of a product, but still important. The device, it's still an important anchor.

00:08:26:05 But it's the device as a pathway to access, a larger value that can be delivered from a service.

00:08:32:05 We see companies, for instance, extending into pre surgical planning, postoperative management and consultations bring in navigation capabilities. We've seen, for instance, a company that's doing this product enable service very well.

00:08:49:05 As James was mentioned earlier, where they do a have a device that tracks a 1400 plus vital signals for patients and they use it as a way to provide control road type of setup for the hospital so each patient can wear the device that vitals are tracked automatically.

00:09:10:05 The hospital can manage some of the challenges from a staff shortage perspective, having all the vital managed through a control room type of setup and then provide care on an exception basis or going to a patient's hospital that they're on an exception basis when we are off track.

00:09:28:10 Instead of deploying extensive resources just to do individual monitoring. The important part, therefore, to keep in mind with product enabled services, it's really about ensuring that this service solves the problem and helps your customers, whether be in the provider or whether be in the patient. One of a dimension to think about in this context, for instance, is how as an organization you can evolve your operating model.

00:09:55:19 Maybe you need to upskill your team or you even build a different type of R&D capabilities within the medical device space to try the faster cycle times with an innovation. The third strategy we're seeing, and this is probably the least absorbed and it's the most emergent strategy in a MedTech space. It's about building or participating in an ecosystem.

00:10:20:15 We're seeing some early examples of emergent ecosystems related more to the emerging space where companies are starting to integrate to their products, where the complementary parts from a partner portfolio. But definitely it's the more in- charted territory in the medical device space and it's still at early stage.

00:10:43:05 I think companies to really evolve and build ecosystems, they'll have to have a strong look into their capabilities and really build that ability to manage the partners in the ecosystem, identifying who they want to partner with and what are the rules to exchange value across the different payers in the ecosystem.


00:11:05:21 I think the thing that I would just add to that, Elena, is that these strategies really aren't mutually exclusive within a company or even a business unit.

00:11:13:21 And then each company is really going to need to evaluate the mix of those strategies, then look at their portfolio of products and how they go to market. I think we fully expect that companies will pursue each of these in parallel across their enterprise. As you can see in those examples that Elena said it early.


00:11:29:01 Excellence and I've been taking notes here and it sounds like there's an opportunity to become a products and care setting master. There's a choice around potentially producing product enabled services. And then there's another choice of potentially either building or participating in ecosystems. And of course, you could also choose some coherent hybrid of these three models.

00:11:54:18 And so that's the future outlook. That's the direction in which organizations will move into in the future. What about tomorrow? If you are picking one of these ways to play, what are some of the things that you should be doing tomorrow as a MedTech payer?


00:12:11:07 Well, I think the first step for a company is it's taking a hard look at their portfolios of products and capabilities and understand what their strengths are and then defining what the aspiration is. Because eventually mastering product in care settings, as we mentioned, it's probably the closest to where they are.

00:12:34:01 But as we move from that to product enabled services and building ecosystems that are most likely more capabilities that companies need to acquire, and there may be also some big bets may need to be made in order to undertake those strategies.

00:12:49:02 So understanding where the gaps are, what tradeoffs the companies are willing to make, and what deliberate choice when big bats companies are willing to make will be essential to get it started.


00:13:01:19 And I think I would just highlight again the point around how companies may seek to close those capability gaps. I think there are going to be cases where companies may be able to reallocate resources or upskill existing employees.

00:13:14:19 But I also think that these strategies will intersect closely with their M&A strategy and the need to potentially close these gaps inorganically.

00:13:22:10 And that's a trend we've seen in recent quarters. Companies have increasingly shifted their M&A activities towards digital capabilities and digital strategies.

00:13:31:19 And one thing that we've observed through that shift is that these types of deals also bring nuance and complexity, both as it relates to the evaluation of a deal and integration in the strategy and diligence of the deals.

00:13:44:10 Companies will need to evolve their thinking about how best to think about value and how to measure the potential value of an ecosystem play, for example.

00:13:53:07 Or while thinking and planning for integration areas like employee retention and culture take on a heightened importance as compared to a more traditional tuck in product type deal where these companies may have operated in the past.


00:14:07:10 Elena and James, really appreciate you joining us today and painting the future for us of greater innovation, of more different ways to compete and win and create great new products through both organic growth as well as through deals.

00:14:24:10 So thanks for joining and sharing your thoughts and we look forward to having you back. For more on these topics and other health industry insights driven by policy, innovation and care delivery changes, please visit our website at Until next time, this has been Next in Health.


00:14:49:01 This podcast is brought to you by PwC, all rights reserved. PwC refers to the U.S. member firm or one of its subsidiaries or affiliates and may sometimes refer to the PwC Network. Each member firm is a separate legal entity. 

00:15:02:05 Please see for further details. This podcast is for general information purposes only and should not be used as a substitute for consultation with professional advisors.




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Jennifer Colapietro

Jennifer Colapietro

Cloud & Digital Leader, PwC US

Igor Belokrinitsky

Igor Belokrinitsky

Principal, PwC US

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