Do I detect a trend? As one tweeter noted, “value-based innovation” is one catch phrase that has crossed the Atlantic from the Advamed conference in Boston a couple of weeks ago to MedTech Forum in Brussels this week. In fact, this emphasis on a changing business model is largely a continuation of a theme from last year’s MedTech Forum, albeit with a different tone. What was a necessary evolution in 2011 has taken on greater urgency. While no one said “adapt or die,” to borrow a phrase, the sentiment wasn’t terribly far below the surface.
Change is all around, and it began at the outset with the unveiling Wednesday morning of MedTech Europe, an alliance of European medical technology industry associations. Founded by EDMA, which represents Europe’s in vitro diagnostics sector, and Eucomed, the umbrella organisation also welcomes other European medtech associations, although none have yet stepped forward to my knowledge. Guy Lebeau, Eucomed Chairman; Jürgen Schulze, President of EDMA; and Serge Bernasconi, Chief Executive of EDMA, Eucomed and MedTech Europe, stepped up to the stage to make it official. Eucomed and EDMA will retain their individual identities within the alliance but will present a unified front in making “value-based innovative medical technology available to more people while supporting the transformation of healthcare systems on a sustainable path,” to quote the mission statement.
Sustainability and innovation came up in various guises throughout the sessions on Wednesday, and you might say, innovation ain’t what it used to be. The concept is being reframed in an almost disruptive way under escalating pricing pressure and macroeconomics. Chris Llewellyn, Partner, McKinsey & Co, and an orthopaedic surgeon in a former life, projected a graph showing the percentage of healthcare spend growing relentlessly over the years at a rate that would be unsustainable in the best of times, and these are clearly not the best of times. In the context of austerity measures across Europe, the healthcare business model must change, and he and the other panelists outlined some of the challenges and opportunities medtech companies must face if they are to “win Europe in 2020.”
In the course of his presentation, Llewellyn made note of five trends affecting the medtech industry:
- evolving austerity measures that vary from country to country (and from company to company in terms of how they are dealt with)
- crowded product segments where some culling will be inevitable
- transparency in pricing
- the continued influence of healthcare pathway-based cost effectiveness
- the threat from low-cost manufacturers filling a “no frills” segment of the market.
Coloplast CEO Lars Rasmussen shed some experiential light on these market dynamics. Coloplast is synonymous with ostomy products and has been subjected to some rather dramatic downward price pressure. In Italy, for example, the company has not been able to raise prices for its products since 1993. Despite this, Coloplast has done well, recording 4 to 5% growth, by offering several product portfolios that match varying economic imperatives. Also, the company is adamant about engaging with end users and catering to their needs. Coloplast launches a new product every six months and product development, Rasmussen stressed, is driven by market forces and passionate engagement with end users, not by R&D. The Volkswagen business model, which was bandied about, may not work for everyone, but the intimation was that it could work for a lot more medtech companies than it does today.
Again, it’s a matter of changing your business perspective.
More to come tomorrow on MedTech Forum, which runs through 12 October 2012 in Brussels. If you want updates from the forum in real time, follow me on twitter, @emdt_editor, or use the hash tag #mtf2012.Norbert Sparrow