Medical technology companies developing customized growth strategies to penetrate emerging markets, finds new report

Greater visibility into global supply chains sought to reduce risk


NEW YORK, June 20, 2012Medical technology companies looking to grow globally are finding that one approach does not fit all markets, and they are developing customized growth strategies to penetrate emerging markets, with products tailored to unique local market needs. The challenge is that companies are also finding that limited visibility into globalized manufacturing and distribution chains is leading to increased risk, according to a major study co-sponsored by PwC US and published today by Axendia, Inc.

The report, entitled Walking the Global Tightrope: Balancing the Risks and Rewards of Med-Tech Globalization, reflects the findings of a survey of 125 executives from medical technology companies, including pharmaceutical, biotechnology, and medical devices companies, in 16 countries. Based on the survey and proprietary research, the report provides an overview of trends in the globalization of design, sourcing, manufacturing and distribution of medical technology products.

“Globalization is the byword for medical technology companies these days – and for most companies going 'global' means going to emerging markets. However, succeeding in emerging markets is not simply a matter of expanding operations into these countries,” said Wynn Bailey, pharmaceutical and life sciences advisory services partner, PwC. “Leading companies are developing tailored supply chain strategies that are designed to respond to the unique needs and expectations of each particular market, thereby giving them the best chance to succeed in realizing their growth ambition.”

Significant global growth opportunities exist for medical technology companies. The report found that nine out of 10 executives surveyed (91 percent) expect their business to grow globally in the next three years, although 88 percent expect increased sales in the BRIC nations and other emerging markets compared to just 69 percent who expect increased sales in the U.S. and other developed markets.

Increasingly, companies competing in emerging markets are seeking to leverage cost and quality as a competitive advantage, and are pursuing a multichannel approach to respond to market needs, the study found. They are offering a range of products that include both brands with advanced functionality and brands with a reduced set of features at a lower price point.

This “platform approach” is similar to that in the automobile industry, where companies produce a range of vehicles appealing to different consumer and price points as well as models designed for different regions. It has the benefit of enabling medical device companies to introduce innovative products in developed markets, and then introduce more cost-effective versions of these products in emerging markets – all the while raising the quality of products for both sets of markets.

Global networking raises concerns about visibility into supply chain

According to the report, the vast majority of executives surveyed face a confidence crisis due to the lack of visibility and control over their global and outsourced operations. Medical technology companies increasingly are networking major parts of their supply chains and relying on outside partners, both to find more cost-effective ways to produce and distribute products and to more efficiently serve new markets. However, using contractors and other vendors from various countries raises concerns that supply chains are becoming more vulnerable to threats including theft, contamination, counterfeiting, loss of intellectual property and other risks. The report shows that medical technology executives share these concerns:

  • Three in five (59 percent) are worried about their ability to maintain consistent quality standards across internal and external sites, and two in three (68 percent) perceive moderate to high risk based on their current visibility into critical suppliers.
  • Similar numbers of executives say that globalization and networking issues “keep them up at night,” with 60 percent saying this of the quality of products, raw materials or services provided and 59 percent saying it of their ability to maintain consistent quality standards across internal and external sites. Nearly seven in 10 said that suppliers have made changes to processes without their prior knowledge.
  • Most executives want greater insight into their global supply chains, with nine in 10 executives saying they would like access to real-time data and on-demand data from critical suppliers, contract manufacturers and other tier 1 suppliers.

While companies are turning to technology to achieve greater visibility into their supply chains, these solutions have not yet reached their potential. Disconnected, stand-alone systems create “data islands,” and fewer than three in 10 executives say their current information technology systems are effective in helping them to gain a global view into their supply chains. In fact, the majority of large organizations still rely on paper to achieve global visibility.

“The reliance on IT systems to help medical technology companies integrate across their organizations and achieve global visibility will succeed only if these systems are shared across the extended value chain of customers, the company, the company’s suppliers, and their suppliers’ suppliers. These systems need to meet the bar of producing high-quality, actionable data. Companies need to implement risk management and supplier relationship management systems that can bridge organizational boundaries and improve quality and reduce risk,” said PwC's Bailey.

Daniel R. Matlis, president of Axendia, said, “We believe the automobile industry, which has developed marketing and product distribution strategies tailored to different local markets and implemented effective cross-border supplier control systems, may offer examples of leading practices for other technology-based industries. Medical technology companies should seek to benchmark themselves, not only against their peers but against other industries.”

Walking the Global Tightrope: Balancing the Risks and Rewards of Med-Tech Globalization includes a number of strategies for medical technology companies to consider implementing to better manage the challenges of operating in the global and networked environment. Complete findings of the study are available for download at:


Axendia ( surveyed 125 individuals from 89 different companies from 16 countries. Seventy-nine percent of respondents were decision-makers with a title of Manger, Director or Senior Executive and nearly 60 percent where at the Senior Executive level. Respondents’ companies provide a variety of products and services and are involved in pharmaceuticals, medical devices and biotechnology. More than one-third of the respondents represent large organizations with annual revenues exceeding $1 billion with another third of the respondents representing midsize companies. The remaining respondents represent organizations with revenues below $25 million.

About PwC’s Pharmaceutical, Medical Device and Life Sciences Industry Group

PwC’s Pharmaceutical, Medical Device and Life Sciences industry group ( and is dedicated to delivering effective solutions to the complex strategic, operational and financial challenges facing pharmaceutical, biotechnology and medical device companies. We provide industry-focused assurance, tax and advisory services to build public trust and enhance value for our clients and their stakeholders. Follow PwC Health Industries at

About PwC’s Health Industries Group

PwC’s Health Industries Group ( is a leading advisor to public and private organizations across the health industries, including healthcare providers, pharmaceuticals, health and life sciences, payers, employers, academic institutions and non-health organizations with significant presence in the health market. Follow PwC Health Industries at

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© 2012 PwC. All rights reserved. In this document, "PwC" refers to PricewaterhouseCoopers LLP, a Delaware limited liability partnership, which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity. This document is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.


Lisa Stearns
The Hubbell Group, Inc.
Tel: + (781) 878-8882