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Medtech Companies Need to Transform While Times Are Still Good

From www.bcgperspectives.com

Times are still good for the medical technology sector. Most companies still have strong gross margins, healthy growth in sales, and high valuation multiples. But the health care industry is undergoing a period of significant change. Medtech companies can take six actions to manage this transition and position themselves for long-term success.

In the first few years of the 2000s—the golden age for medtech—sales grew by double digits. But sales growth has leveled off considerably in recent years and now hovers at around 4%. (See Exhibit 1.) There are many reasons for this, including the pressure to reduce health care costs, the increasing power of economic stakeholders in purchasing decisions, more consolidated and sophisticated health systems, new low-cost competitors, and the ubiquity of information with which to assess value. [...]
Times are still good for medtech—but the health care industry as a whole is undergoing a period of significant change. These changes could create a downward spiral for companies that cling tightly to business as usual. But those that build their capabilities and adapt their business models will find enormous opportunities to grow and thrive. In this report, we identify the major forces that are reshaping the industry and outline the transformative actions that medtech companies should take in response to them. We also describe how to manage such a transformational effort. By leveraging BCG’s proven transformation framework, medtech companies can improve their financial positions, close performance gaps, and establish a winning position.

rob halkes's curator insight, August 5, 2016 6:45 AM

Times are still good for business in med tech.. for pharma and healthcare provision as well. But the large BUT is indeed health care as a whole is undergoing significant changes. When these (market) and system changes are not paralleled by internal changes in the health industry companies, I guess it will get tricky before 2020. See here how you can cope