The wheels are turning: What's causing a medtech price war?
Dave Gray signs off with Med-Tech Innovation News by discussing a report claiming nearly three-quarters of medtech firms are stuck in a self-inflicted price war.
An interesting new report claims that 72% of medtech firms believe they’re stuck in a price war of their own making – be it intentional or unintentional.
The report, which comes from global pricing strategy consultancy Simon-Kucher & Partners, finds the trend in price wars in medtech to be well above average amongst all industries – perhaps unsurprisingly given the various complex reimbursement models for medical devices the world over.
What I found most interesting about the report though was a finding that 75% of medtechs surveyed said they were digitising their products in order to cut costs and increase revenue and profit growth. Digital health, as anyone in the medtech industry will tell you, will have a major part to play in virtually every type of medical device in the next couple of years. But in addition to the obvious revenue potential (think added-value), it actually represents a very short-term investment and long-term savings, both for suppliers and HCPs.
In other news, Hampleton Partners recorded an increase in medtech M&A activity in the first half of 2019 (11% more than the second half of 2018). And guess what… the main driver for this activity seems to be… you guessed it, digital health. Preventative medicine software, algorithms, and EHR/hospital management equipment make up a major slice of the pie.
Hampleton Partners says that there are currently 38 VC-backed digital health unicorns worldwide, worth a combined total of $90.7 billion. If VCs and financial buyers are behind the majority of the M&A activity in the market, what makes up the rest? One assumes a significant portion will be from those major brand medtechs seeking new capabilities for cutting costs. Why do the R&D yourself – it’s slow, costly, and chances are, there’s already a startup out there doing just what you need, ready to get scooped up.
On an unrelated note, this issue of Med-Tech Innovation News is my last as editor. I’m leaving the business for pastures new, though I’m pleased to say I’m still going to be working in the rewarding life sciences sector. It’s been a pleasure curating this magazine, and I hope you continue to find it useful in your endeavours.
With many thanks and best wishes,
David Gray