PwC Health Research Institute
Medtech companies prepare for an
innovation makeover
Health Research Institute
October 2013
PwC Health Research Institute
About the research
2
• More than 50 unique companies participated in the
research including ...
PwC Health Research Institute
The importance of innovation in medtech is
growing
3
vs. 43% today
51% in 5 years
across all...
PwC Health Research Institute
The market is demanding a different approach to
innovation
R&D-focused innovation no longer ...
PwC Health Research Institute
New entrants are staking their claim
5
18# of non healthcare
companies that have
entered med...
PwC Health Research Institute
Few medtech companies believe they are true
innovation pioneers
6
“I think innovation is whe...
PwC Health Research Institute
The value of a device is no longer solely in the
product itself
Products
(e.g., pacemaker)
S...
PwC Health Research Institute
New integrated services and business models that
address clinician and consumer needs are
be...
PwC
Medtech executives expect a higher level of
innovation over the next three years
…. but they lack formal processes to ...
PwC
Medtech companies have been slower to apply
new social, mobile, analytic, and cloud
technologies
10
Only 18% of medtec...
PwC Health Research Institute
What does breakthrough innovation in medtech
look like today?
11
• Pay-per-procedure busines...
PwC Health Research Institute
Innovation no longer comes only from R&D
12
“It used to be that the value of companies deriv...
PwC
Recommendation #1: Be ambidextrous
13
GE healthymagination
“Industrializing innovation”
Thought
leadership
Incubation
...
PwC
Recommendation #2: Collaborate to get closer to
the patient
"We focus on person-centered care, recognizing that a pati...
PwC Health Research Institute
Recommendation #3: Measure innovation in new
ways
15
Source: PwC Medtech Innovation Survey 2...
PwC Health Research Institute
For more information
Full report is available for download at
www.pwc.com/us/innovationscore...
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PwC's Health Research Institute: MedTech Companies Prepare for an Innovation Makeover

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The medical technology industry was on the forefront of innovation for decades, but now return on innovation investment is declining. The very notion of medtech innovation needs redefining in a new health economy that is focused on higher expectations for value and convenience. For more information please visit: http://www.pwc.com/us/en/health-industries/medical-technology-innovation/index.jhtml

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PwC's Health Research Institute: MedTech Companies Prepare for an Innovation Makeover

  1. 1. PwC Health Research Institute Medtech companies prepare for an innovation makeover Health Research Institute October 2013
  2. 2. PwC Health Research Institute About the research 2 • More than 50 unique companies participated in the research including those doing business in: • In-vitro diagnostics, disposable medical products, medical equipment, diversified life sciences, implantable devices • Other healthcare companies • New players in medtech • Interviews with more than 30 top executives • Survey in summer 2013 of more than 35 medtech companies, almost half of which reported revenues in excess of 1 billion US dollars • Web-based innovation scorecard that assesses companies based on leading practices in organizing, managing and fostering innovation • www.pwc.com/us/innovationscorecard
  3. 3. PwC Health Research Institute The importance of innovation in medtech is growing 3 vs. 43% today 51% in 5 years across all industries Source: PwC Global Innovation Survey, 2013
  4. 4. PwC Health Research Institute The market is demanding a different approach to innovation R&D-focused innovation no longer generating as much growth and profitability VC funding and deal value/activity still below pre-Great Recession levels Increasing competition from emerging markets and new entrants Regulatory reform demanding value not volume Global emphasis on increased access, lower costs, and better outcomes Social, mobile, analytics and cloud disruptive technologies 1 2 3 4 5 6 1
  5. 5. PwC Health Research Institute New entrants are staking their claim 5 18# of non healthcare companies that have entered medtech Are they friend or foe to medtech? Source: PwC Medtech Innovation Survey 2013
  6. 6. PwC Health Research Institute Few medtech companies believe they are true innovation pioneers 6 “I think innovation is when you find something that is disruptive—10x the value or efficiency at 1/10 of the cost. Doing things better, cheaper, faster. To me, that’s innovation.” --- Clint McClellan, Qualcomm Life Source: PwC Medtech Innovation Survey 2013
  7. 7. PwC Health Research Institute The value of a device is no longer solely in the product itself Products (e.g., pacemaker) Solutions (e.g., heartbeats) Point (e.g., OR) Continuum (e.g., surgery to home therapy) Type Value Context 7 Volume (e.g., Sell more, make more) Performance (e.g., outcomes, c ost efficiencies)
  8. 8. PwC Health Research Institute New integrated services and business models that address clinician and consumer needs are becoming more important… 46% of medtech executives say product innovation is top priority over the next year 8 29% across all other industries VS. …but product innovation remains king, at least in the short term Source: PwC Medtech Innovation Survey 2013
  9. 9. PwC Medtech executives expect a higher level of innovation over the next three years …. but they lack formal processes to achieve their goals for new services and business models 9
  10. 10. PwC Medtech companies have been slower to apply new social, mobile, analytic, and cloud technologies 10 Only 18% of medtech companies are truly using these technologies to integrate patient- generated data into clinical workflows and EHRs is a big Source: PwC Medtech Innovation Survey 2013
  11. 11. PwC Health Research Institute What does breakthrough innovation in medtech look like today? 11 • Pay-per-procedure business model • 20-25% in hospital efficiency savings • Decrease in patient throughput and waiting lists • Improved physician, nurse and patient satisfaction Medtronic cath lab program • $300m/15 yr partnership • At risk for outcomesPhilips and Georgia Regents Medical Center • Positive customer feedback • Reduced administrative costs • Increasing salesCovidien mobile sales app • Help hospitals reducieoperating costs instead of discounting pacemakers Medtronic long-term coronary care business model Source: PwC Medtech Innovation Survey 2013
  12. 12. PwC Health Research Institute Innovation no longer comes only from R&D 12 “It used to be that the value of companies derived from what they themselves could invent. I think that the world has changed. It is how you partner in this new era that is going to really determine the winners over time.” -- Sue Siegel, CEO of GE healthymagination "R&D engineers will make 10,000 decisions in a year, but how many of them have the patient at the center of that decision? So to have cross-functional groups that work together with a focus on the patient is really critical.” --- Stan Rowe, Edwards Lifesciences Source: PwC Medtech Innovation Survey 2013
  13. 13. PwC Recommendation #1: Be ambidextrous 13 GE healthymagination “Industrializing innovation” Thought leadership Incubation Venture investing• Companies must operate as a “lean startup” while concurrently maintaining lean six sigma discipline to sustain the core businesses • Innovation is all about fast, frequent, and frugal failure
  14. 14. PwC Recommendation #2: Collaborate to get closer to the patient "We focus on person-centered care, recognizing that a patient is really somebody that is in our hospital or other site of care, but they are people that have lives outside of the healthcare system. They have families and communities that they go back to. How we build a relationship with those we serve in a meaningful way that extends beyond our hospitals is a question we’re continually seeking to answer.” -- Michael McGarry, Ascension Health 14 Source: PwC Medtech Innovation Survey 2013
  15. 15. PwC Health Research Institute Recommendation #3: Measure innovation in new ways 15 Source: PwC Medtech Innovation Survey 2013
  16. 16. PwC Health Research Institute For more information Full report is available for download at www.pwc.com/us/innovationscorecard More information is available at www.pwc.com/us/healthindustries www.pwc.com/us/hri Follow us on Twitter at www.twitter.com/pwchealth 16
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