Dr Nirod Kumar, Associate Director–Transformational Health (Healthcare) Practice, Frost & Sullivan
Recently the new medical device regulatory rules have eased norms for obtaining licenses and conducting clinical trials, and also reduced MedTech firm-regulator interface. Henceforth, medical devices will no longer be regulated as drugs and do not need to follow stringent clinical trial guidelines covering four phases, similar to drug trials. This move will boost the government’s Make in India campaign by providing much needed support for domestic manufacturers that could lead to strategic investments. These rules are aimed at harmonizing national standards with international standards.
Buyers of medical devices will be critical by the dual need to expand services to new demographics/enhance existing services for prevailing care target groups, while balancing the need to be compliant to heightened regulatory requirements for service pricing and patient care safety. There will heightened concern associated with the need to control soaring healthcare costs, and the huge need to improve the quality access to healthcare while maintaining the operational efficiency of hospital services. The triple dynamics of cost, access, and care proximity to communities/home is already showing new ways by which medical device companies can engage/reengage population groups.
Increasing number of chronic diseases, compliance required in care and treatment, vigilant government focus on patient safety, and cost-containment at the backdrop of huge unmet need will lead to proliferation of (connected) point-of-care devices. The increasing value of data will be realized when such devices enable care for not just the unhealthy but also proactive engagement of the population within such vulnerable groups like seniors, engaging them in innovative value creation and commerce. The transformation of existing business models in the medical device industry is primarily attributed to four factors:
Cost and pricing pressures. Declining R&D productivity coupled with increasing pricing pressure has resulted in eroding profit margins for medical device manufacturers.
Power shifting to payers and providers. Though medical device companies are facing uphill challenges in adjusting to the new value-based payment models, it provides opportunities for companies to work closely with payers and providers, and provides a holistic approach for patient care.
Digital transformation. Digital technology provides opportunities not just to enhance patient care but also provide data to make informed business decisions. Digital technology such as predictive analytics or patient monitoring features in devices can help companies to proactively identify quality issues and improve device performance.
Healthcare consumerism. Rising awareness among patients increases their choice of choosing healthcare services and enables them to actively participate in the management of their health and wellness that leads to new concept known as do it yourself (DIY) health concepts.
The New MedTech Firms Will be Different
Emerging new firms that have a different DNA will continue to make inroads into PoC settings. Disruptive start-ups with specific solutions focus will emerge addressing specific pain points of both care providers and existing/new customer segments. They will impact cost effective diagnostics and monitoring in unique engagement models with a variety of healthcare stakeholders bringing new rules to the age old game of care delivery, meeting unmet needs like never in the past. Medical device companies that embrace and align their business strategies according to these changes will sustain and remain profitable. Digital health solutions will play a significant role in the medical device industry and customers will not only include physicians and GPOs but also consumers and payers. Scalability beyond traditional product offerings and competing beyond a company’s traditional industry will be important, as more companies begin to converge products and services. Non-core MedTech firms like Apple, Samsung, Google, and IBM will continue to compete outside their domains, pushing traditional healthcare companies to break/change their dominant business models. The preference of regulators, payers and consumers will incline toward companies that help them improve their lives and treatment outcomes in a cost-effective way.