MedTech Transformation: A Shift From ‘Doing Digital’ to ‘Being Digital’

Feb 14 2023
  • Written By
    Gargi Sykam, Engagement Manager

    She is a passionate strategist with expertise in digital transformation, innovation, and driving impactful outcomes.

    Connect with Gargi on LinkedIn

Explore Icreon’s Digital Transformation Solutions

Rise of MedTech- Insights on Industry Growth and Future Opportunities

In the last few years, we have seen a significant number of technology investments in the MedTech sector. The industry has been growing rapidly with an increase in R&D spending and other business activities. It is expected to reach $600 Billion USD by 2024, an overall sales growth of 4% in 2022, and CAGR of 6% thereafter despite the headwinds.

The reason behind this massive growth is the increasing demand for data-driven healthcare services andproducts. The rising cost of health care and its growing digitalization are also driving the upward growth of the Medtech Industry market. Medtech companies can benefit from this growth through high profit margins and low competition in the industry. However, it is important to understand that MedTech companies face unique challenges that must be addressed before entering this market.

Challenges in the Medtech Industry

The industry faces its challenges in keeping up with customer demand parallel to the increasing supply costs and challenges in manufacturing such as reducing waste and non-biodegradable materials and research on sterilization technology to ensure reusability. For devices especially, FDA (Food and Drug Administration) has been delaying regulatory approvals due to the submission backlogs.

The solutions can lie in their focus on innovating new products and services. Private capital sectors are investing heavily in the emerging sectors of MedTech such as Digitized health with VC records reaching its high with $30 Billion USD. These investments are expected to continue in the future with an eye for making the first moves.

Why the Medtech Industry is Investing heavily in Digital Transformation

The future of healthcare is digital, and the MedTech industry is no exception. The MedTech industry has been undergoing significant changes over the past few years. The growing number of connected devices, remote monitoring capabilities, and increased connectivity offer numerous opportunities for improving patient outcomes, reducing costs, and improving patient satisfaction.

Medtech companies need to adapt to these changes by adopting a digital transformation strategy that encompasses both their technology infrastructure and customer/patient engagement strategies.

Digital transformation can be achieved by implementing three key strategies:

Tech Infrastructure

Implementing an enterprise-wide IT platform that supports data sharing across departments, providers, and patients. Leveraging IoT technology to create new solutions for monitoring patient health, improving outcomes, and reducing costs is a great example of this.

CX Strategy

A CX strategy can help you to create an engaging patient experience through the use of technology that helps you to understand each patient's needs, improve communication between providers and staff, and improve coordination between different care settings.

Proactive Customer Management

Providing proactive customer management solutions to improve customer service and patient outcomes. By implementing a digital transformation strategy, health systems can empower their clinicians with the tools they need to provide better care while improving patient experience.

The growth outlook for the Medtech industry is positive, with an increase in demand for new products that improve health outcomes for patients and reduce costs for healthcare providers. The industry’s size and potential for innovation have attracted increased interest from investors, as well as large companies looking to diversify their portfolios with high-growth opportunities.

Trends of Growth in the MedTech Industry

To really understand a market, it's important to look at the trends. The MedTech industry has been touted as a sector that has been on the rise for a handful of years now. The growth that this sector is experiencing is truly impressive on a global scale, with the sector booming in Asia, Europe and the United States. In fact, the MedTech industry is reaching heights that have arguably never been seen before. 

Let's look at some applicable trends that impact the MedTech industry.

Record Deal Activity

Med tech companies executed 288 M&A deals, the highest since 2007. Globally, life sciences technology companies, private equity, and other financial investors are focusing on the value of digital and data assets as they evaluate potential targets. As the market is fragmented, the opportunity acquires to achieve cost synergies and create value through scaling and platform creation is relatively simple.  

Continued consolidation is expected of digital health players along the lines of the Ginger-Headspace merger as well as additional acquisitions by Big Tech and Big Pharma such as Oracle’s acquisition of Cerner to bring complementary datasets, expertise and capabilities from different segments, regions, and specialties in-house to enhance product and service offerings.

In reaction to increased scrutiny by regulators and the complexities around cross-border data transfers, there is a rise in the number of complex strategic MedTech collaborations. Certain healthcare players might also explore alternative structures, such as consortia and alliances, as they pursue their commercial and other strategic goals.

Artificial Intelligence

Recently, there was an increase in clinical tools and care based on Virtual Reality (VR) and Artificial Intelligence (AI), especially in Remote monitoring, radiology, and digital pathology. As medical based training, treatment, marketing, and awareness are made easier by VR technology, market valuations are rapidly rising. It is expected to reach ach $33.72 Billion USD by 2027. The acquisition of British startup Digital Surgery by Medtronic in Feb 2020, and the growth of companies like Oxford VR also show preferences for VR startup in MedTech sector. 

In some specialties, such as mental health and diagnostics, virtual and data-based working is almost permanent. Due to the increase in the above shifts, data protection and cybersecurity became essential for all players.

Shifts Due to Pandemic

After the pandemic, regulators were flexible as patients and health care providers did not commit fraud or abuse as many expected. Due to covid and digital preference, medical sales, marketing, and servicing faced a fundamental shift to virtual channels and will remain that way. Hospitals and clinics too started depending on devices for complex procedures. 

The efficiency, convenience, and utility rose greatly due to the digital shift. Customer engagement, loyalty and satisfaction can be easily achieved if manufacturers focus on digital innovation and build digital systems that are customer centric.

Point-of-care testing close to the patient and innovation around In Vitro as well as traditional diagnostics is still considered important by the market. Telehealth obviously has its limitations in terms of visual assessments, but home-based tools are under development and can help in the future just like a thermometer.

Strong Investor Sentiment

Since the last year, public MedTech valuations made record numbers in both the US and EU by rising to a whopping 55%. Funding in the sector saw the highest rise in this decade, with 34% more than last year, summing up to 9.1 billion USD in just one year. The rise can be explained by the sector’s flexible business models catering to both patients(B2C) and health care providers (B2B). More importantly, MedTech has useful attributes of two main sectors that Investors are interested in: life sciences and technology but without their challenges of longer time to market.

Digital Therapeutics (DTx)

They help to treat and prevent multiple physical and mental conditions through interventions driven by software of high quality. With developments in technology and digital health, DTx is being considered one of the top ten emerging technologies in the digital health segment.

Despite market authorization of 25 products and commercial availability of 23, companies within the MedTech Industry still face challenges for reimbursement because digital tools do not mesh with existing reimbursing structures and it’s hard to prove cost benefit in case of replacement of existing products.   

The Medtech market has grown steadily in the last decade and demand is still rising. CEOs of MedTech firms are thinking about their strategies for survival in the upcoming years. There is no doubt that risk potentials which are due to generic competition and reimbursement pressure will be increasing in them. They will focus on cost control, and brand and product differentiation while working on business development.

The Benefits of a Digital Business Strategies Plan for MedTech

In order to keep up with the increasing demand for their products, manufacturers need innovative business strategies that will help them meet their goals while maintaining high standards of quality and compliance. To stay ahead of the curve and achieve growth, it’s important for businesses in this sector to develop a digital business strategy plan that can help them achieve their goals. A digital business strategy plan can provide manufacturers with a roadmap for achieving these goals in today’s fast-paced environment.

Digital transformation in the Medtech industry is necessary as it provides an opportunity for companies to not only rethink how they operate but also reevaluate their business models completely by integrating new technologies into their operations and processes. With the help of Icreon, you can transform your business with a set of best-in-class technologies that will help you automate every aspect of your processes, from sales and marketing to manufacturing. Our team can help you develop a digital strategy to improve patient outcomes and give your company the tools it needs to succeed. Create a customized digital transformation plan with Icreon that’s right for your business goals.