Nearly three quarters (72%) of medtech companies believe they are currently caught in a price war that they started themselves, either intentionally or unintentionally, according to a Global Pricing Study report.
The proportion of companies involved in price wars is much higher in medtech than in other industries, with a cross-industry average of 57%. The study, Global Pricing Study 2019 – MedTech, was conducted by the global pricing strategy consultancy Simon-Kucher & Partners.
When asked about the most important drivers of profitable growth, half of all medtech companies name higher sales figures, while 27% of the medtech companies surveyed see price increases as the most important profit driver.
Nevertheless, the ambitions to raise prices are relatively modest in the medtech industry, as only 18% of companies plan to implement targeted price increases in the year ahead.
Joerg Kruetten, senior partner and head of the Global Life Sciences practice at Simon-Kucher, said: “In most cases, this low ambition amongst medtechs to raise prices is because previous attempts weren’t particularly successful.
“As ever, preparation is key: product value should be the central message whenever prices are increased. Price must always be aligned with corporate goals, and sales needs to be given a clear briefing to enable them to work efficiently.”
To overcome the increasing pressure, companies in the medtech sector are continuing to digitalise their products. 75% of companies have invested in digitalisation initiatives to overhaul their processes and services in the last three years. However, the primary stated goal of 44% of companies is cost reduction, not revenue and profit growth.
This is all the more surprising considering that for 56% of medtech companies digitalisation has had a positive impact on their revenue performance – compared to 21% from the 2017 study.
The study also shows that selling via online channels still hasn’t become well established in the industry. 23% of medtechs do not yet use digital sales platforms.
Dr. Marc Matar, partner in Simon-Kucher’s Global Life Sciences practice in London, added: “It is even more striking that only one in 10 companies have achieved significant numbers of sales through online channels.
“It should be clear to the rest of the industry that a purely conventional sales approach is no longer sufficient today. The many different customer segments can only be addressed effectively through holistic strategies involving different channels.”
