Medtech firms expecting lower profits in 2019, study suggests
Over half of European medtech companies expect business to be stagnant or weaker in 2019 compared to last year, according to the MedTech Barometer.
The study was conducted by strategy and marketing consultancy Simon-Kucher & Partners. The study also found that companies expect a 2.8% profit growth this year compared to 7% from last year.
Joerg Kruetten, senior partner and head of the global life sciences division at Simon-Kucher & Partners, suggested the negative outlook can also be attributed to increasing budget constraints and limiting the providers’ ability to invest.
“Over the past year, the majority of industry leaders changed their positive views to negative ones. While there are several factors contributing to this troubling development, the primary cause appears to be negative global trade dynamics and increased economic uncertainty around the globe.
“Due to narrowing innovation gaps, and the desire to reduce spending, the industry won’t be able to continuously develop more-advanced equipment and technologies, which have proven to drive growth and revenues.”
Medtech companies also face increased competition on the supplier side, as well as ongoing price pressure resulting from procurement centralisation. This means fewer individual buyers enable procurement groups to apply much greater price pressure.
To overcome these market challenges, medtech companies must emphasise revenue-focused profit improvement measures which have a broader, more significant impact than cost-focused measures.
Kruetten added: “Although nearly 80% of companies have dedicated resources in place to systematically drive and monitor profit improvement measures, less than half of them have the necessary tools and mindset to do so.”