Business development for Medtech companies as for other businesses is the creation of long-term value for an organization from customers, markets, and relationships.
In defining it, two key points are of utmost importance, which are long-term and value.
Furthermore, business development for Medtech is a long-term activity, which means that a new business does not necessarily have to produce value in the short term but of necessity, it should produce value in the long term.
In case you’re wondering, “What does long term mean in this context?” Well, that is another story(which I’ll still address), but it is not the focal point of this discussion.
That said, it’s worth noting that to leverage business development, your company must give adequate attention to creating value for all the stakeholders (i.e. company, partners, customers, etc…). Consequently, if value creation is Only focused on your company, it could be successful in the short term but not in the long term.
Here are some of the ways a MedTech company can create long-term value:
- Enter a new segment in an already opened market
- Launch a new product for a completely new segment
- Open a new geographic market
- Acquire another company to develop synergies, etc.
In this post, I will explain further on how medical device companies can create long-term value by Focusing On A New Product For A New Market Segment.
How To Assess A Business Development Opportunity
It might seem like an easy and obvious task, but launching a new product in a new market implies some risks. Thankfully, there are examples of product failure in the medical device industry and generally in the business community that we can learn from.
I firmly believe that in our business a prescription for success doesn’t exist; instead, there are multiple ways to do things, and some are better than others.
Having said that, here are some thoughts:
No matter the size of the company, the process is the same for a start-up or giant player; the starting point is to conduct a deep and serious analysis of two areas.
1. The Internal factors
Mission: the mission statement defines the company’s business, its objectives, and how it will reach those objectives.
The vision of the carmaker Ferrari is: We build cars, symbols of Italian excellence the world over, and we do so to win on both road and track. Unique creations that fuel the Prancing Horse legend and generate a “World of Dreams and Emotions.”
It is clear that if Ferrari wants to develop a new product (expected in 2025) to enter the electric car market, it must first be aligned with its mission. And we can say the same for a Medtech company.
Vision: A Vision Statement describes the desired future position of the company.
The vision of Ferrari is: Italian Excellence that makes the world dream.
Again, Ferrari wants to be the symbol of Italian Excellence and a dream for the rest of the world; therefore, any new product should serve the vision.
Core Competencies: the market recognize the core competencies of the company and not the contrary.
These competencies are the foundation of the company and should be considered when searching for a new direction of development. The right question is: What are the core competencies of our company?
Knowledge: successful companies are those that consistently create knowledge and disseminate it throughout the organization.
Hence, an assessment of the company’s knowledge is a good start to evaluate its ability to realize the new product.
Performances: there are important metrics of business performance management to be considered in order to understand how the company is performing in that specific area.
For instance, is supply chain management a key profitability generator, or marketing, or clinical research?
Knowing where you are strong is critical to making mindful decisions.
Business Model: What business model is the company adopting?
After answering that, you’ll also need to think in this line:
Are the new product and new market compatible with the current business model, Or do they require a completely different business model?
Company’s Culture: Understanding the company’s culture, shared values, attitudes, and practices that characterize the organization will help to define what direction to move when deciding on a new development that could shape the future of the company.
2. The External Factors
Market trends: What are the key market trends?
In a complex and dynamic industry like Medtech, there are several established market trends with new ones arising regularly.
Minimally invasive surgery is a long-term market trend in every surgical specialty. Patient self-monitoring for chronic diseases like diabetes and aesthetic treatments, surgical and non-surgical, are all examples of well established long-term trends.
Opportunities: What are the opportunities for a new product and a new market segment?
Maybe there is an already established market segment for a different application of a technology that we master.
Therefore, we can “easily” develop a new product for this market segment.
Regulatory Environment: What are the regulatory requirements for the new product?
Regulatory pathways are becoming more and more difficult at the global level. Key markets like the EU & US are changing and implementing new regulations. Furthermore, registration of a new device requires more time & resources, and the results are in some cases, unpredictable.
Reimbursement: How is the reimbursement landscapefor the new product?
As for regulatory requirements, there is increased attention from the payers. The healthcare systems are adopting measures to contain costs by asking for more detailed clinical value and economic value.
Competitors: Who is going to be your competitors?
Is the market segment highly fragmented? Are there few well-established competitors dominating the market?
The competitive environment investigation is a critical step of the assessment of the external factors.
How To Find The Right Fit
Once the company has performed an assessment of the internal and external factors regarding the opportunity to develop a new product. And to expand its portfolio in a new clinical area, the next step is to define the criteria that the new business development opportunity must meet.
These criteria are specific and owned by the company. Some of the common themes are:
- Market growth and revenue generation potential
- Competition and market dynamics
- Technology fit
- Time and resources required
- Synergy with the current portfolio
- Commercial fit (similar customer, similar business model, etc)
- Manageable regulatory and reimbursement pathway
Bear in mind that it’s only if the new product opportunity meets the acceptance criteria that there will be sufficient alignment and consonance between internal factors and external factors.
This alignment will then increase the chance to generate rewarding and successful products in the new area of focus.
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