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1、September 2023Medtech Pulse:Thriving in the next decadeMedtech Pulse:Thriving in the next decadeThe medtech industry has had a tremendous impact on society and has improved quality of life for billions.Innovations have changed treatment paradigms for complex conditions,expanded access to care,and pr

2、ovided more options to healthcare providers and patients for improved disease management.The past few years have challenged the medtech industry in unprecedented ways.The lasting impact of the COVID-19 pandemic has led to permanent shifts across the healthcare landscape.Macroeconomic and geopolitica

3、l uncertainties continue to loom.Shareholder returns have started to stagnate.Resilience has become increasingly important.This is the time for leaders to act boldly in anticipation of the next wave of value creation.As you embark on this journey,consider these questions:What strategic shifts could

4、position your organization to capture the next wave of growth?Against a backdrop of persistent market uncertainties,where can you invest to capitalize on new value pools?What new capabilities will your organization need in order to deliver on the industrys potential?What actions are you taking perso

5、nally to effectively lead and bolster the resilience of your organization?With this report,we seek to provide insights and perspectives to inform the journey ahead,starting with a look at shifting the value creation equation and how it influences medtechs next act.We follow with an examination of to

6、pics that are of paramount importance to medtech leaders and that,we believe,will propel the next decade of value creation.Letter to medtech leaders Copyright 2023 McKinsey&Company.All rights reserved.Karsten DalgaardStockholmFlorian ThenVancouverGerti PellumbiWashington,DCKevin Wu BeijingPeter Pfei

7、fferNew JerseyDelphine Nain ZurkiyaBoston ContentsIntroduction:Medtechs value-creation imperativePatients in need and uncertain shareholders have medtech leaders plotting their strategies for a new wave of value creation.Reimagining R&D to drive sustainable growthTo unlock sustainable long-term grow

8、th,medtech companies should aim for significant improvements to R&D and product development.Cracking the code of software innovationSoftware development calls for an entirely different approach from traditional product development methods.Medtech companies can borrow a page from leading software fir

9、ms.Bringing hardware and software together into digital health ecosystemsMedtech companies can expand their role in digital healthcare ecosystems by combining devices and data to improve care outcomes.Building a next-generation medtech commercial model Commercial models must evolve to support new ty

10、pes of offerings,adapt to changing customer expectations,and position companies to succeed in the decade ahead.Reimagining operations for the challenges of the next decadeAs medtech companies emerge from the COVID-19 pandemic,leaders are scrutinizing operations to find ways to better serve patients

11、and bolster competitiveness.Committing to ESG as a differentiatorAn environmental,social,and governance(ESG)strategy is not merely a compliance checklist item;it is an untapped opportunity for medtech companies to differentiate their devices.Updating the post-COVID-19 playbook for M&AM&A could help

12、the medtech industry boost value creation,but only if companies can adapt their dealmaking approaches to changing macroeconomic conditions.Competing in China:Medtech multinational companies way forward China will continue to be a critical market for medtech multinational companies despite market unc

13、ertainties.Big moves are in order.446270C H A P T E R 1C H A P T E R 2C H A P T E R 3C H A P T E R 4C H A P T E R 5C H A P T E R 6C H A P T E R 7C H A P T E R 8C H A P T E R 94Introduction:Medtechs value-creation imperativePatients in need and uncertain shareholders have medtech leaders p

14、lotting their strategies for a new wave of value creation.by Richard Bartlett,Colin Field-Eaton,Gerti Pellumbi,and Tommy Reid1Medtech Pulse:Thriving in the next decade5 Westend61/Getty ImagesBillions of patients,families,and healthcare workers around the world rely on the medtech industry every year

15、.Medtech plays a major role in their lives,from an ultrasounds detection of a babys first heartbeat to an electrocardiograms record of a persons last.In between,Band-Aids cover scrapes,stents reopen vessels,and robots resect tumors.For decades,medtech innovations have helped people live longer,healt

16、hier,and happier lives:Since 1980,medtech advancements have added five years to US life expectancy.1 An estimated 10 percent of the US population will have medical devices implanted in their bodies.2 Medtech companies employ more than two million people around the world.3 Medtechs value is cost-effe

17、ctive:since 2009,prices for medical devices have increased at one-seventh the rate of the broader medical consumer price index.4 In 2023,the medtech industry is estimated to grow to nearly$600 billion,5 with rising access to care and new innovations positioning the market for 5 to 6 percent annual g

18、rowth through 2026.6 The industry continues to expand its impact.Consider the mother of two who avoided a stroke thanks to innovations in atrial fibrillation,the diabetic who replaced daily finger pricks with continuous glucose monitors,and the overworked nurse who saved a patients life with the hel

19、p of digitally enabled remote monitoring.All told,medtech companies have created more than two million types of medical devices for patients and caregivers around the world.7 With a focus on patient impact,medtech companies have largely aligned their innovation priorities with areas of highest unmet

20、 need(Exhibit 1).Companies have an opportunity and responsibilityto transform the industryDespite the value created for patients in the past decade,many are still waiting.Across therapeutic areas and geographies,patients remain unserved and are still coping with conditions that medtech could potenti

21、ally ameliorate or cure.In the United States,more than 50 percent of 2021 deaths were preventable,8 patient experience remains highly variable,and the financial burden of cardiovascular conditions alone is projected to grow rapidly,doubling between 2017 and 2035.9 Medtech leaders have the opportunit

22、y and the responsibility to continue to grow,innovate,and create value for patients and caregivers around the world.Additionally,companies should consider how to unlock the next era of value creation for shareholders.Fifteen years ago,the medtech industry faced a wave of disruptions resulting from t

23、he Great Recession and other events.In response,the industry reinvented itself,accelerating innovation on its way to top-tier shareholder returns.Medtech posted a stellar run of value creation for much of the 2010s,outperforming the S&P 500 by nearly twofold in the 201219 period.Since 2019,however,i

24、nvestor skepticism has returned;the S&P 500 has beaten medtech every year,and valuation multiples for the highest-growth companies have been more than halved since(Exhibit 2).Creating value for patients and shareholders over the next decade will require another industry reinvention,with a bias towar

25、d transformation,not incremental improvement.1 Health,United States,2014:With special feature on adults aged 5564,National Center for Health Statistics,May 2015.2“Implantable material and device regulation,”American Medical Association,September 2021.3 McKinsey analysis of 2021 company annual report

26、s of top 20 medtech companies by revenue.4 Gerald F.Donahoe,“Estimates of medical device spending in the United States,”AdvaMed,June 2021.5 McKinsey analysis of growth estimates accessed via S&P Global Market Intelligence,May 20,2023.6 Ibid.7“Medical devices,”World Health Organization,accessed May 2

27、6,2023.8 Excluding COVID-19-related deaths;“Age and cause,”National Safety Council Injury Facts,accessed May 20,2023.9“Cardiovascular disease:A costly burden for Americaprojections through 2035,”American Heart Association,2017.6Medtech Pulse:Thriving in the next decade10 McKinsey analysis of S&P Glo

28、bal Market Intelligence financial data and Food and Drug Administration approvals data,May 20,2023.11 Financial data accessed via S&P Global Market Intelligence,May 20,2023.12 McKinsey analysis of Clinicaltrials.gov.Medtech leaders have multiple transformation strategies to considerAgainst this back

29、drop,leaders could consider pursuing one or more transformation strategies to lead value creation in the future:Create the next frontier of innovation.With millions of patients still unserved and the rising cost of care a chronic concern,demand for medtech innovation remains high.Thanks to advances

30、in miniaturization,new materials,and digitalization,companies are increasingly able to focus on“premium innovation”to meet this demand.For example,new,minimally invasive treatments such as transcatheter technologies are improving outcomes and expanding access for the sickest patients.Remote-monitori

31、ng solutions that shift patients out of intensive care units(ICUs)and into more comfortable care settings are bending the cost curve and improving patient experience.Leading innovators in these and other categories will continue to capture the hearts and minds of patients,healthcare workers,and shar

32、eholders.From 2017 through May 2023,companies in the top quartile of novel product approvals saw shareholder returns almost twice as high as those in the second and third quartiles(and four times higher than those in the bottom quartile).10 As rewards for innovation have risen,so have market expecta

33、tions for what constitutes innovation.R&D spending has accelerated,growing at twice the rate of industry sales since 2019(up from being on par with sales in the 2010s).11 Clinical-trial volumes,which remained flat from 2015 to 2019,are now growing at 11 percent annually,12 and customer expectations

34、for clinical data(safety,efficacy,and,often,cost-efficiency)are rising.As medtech moves into this next generation of innovation,companies will need to consider how best Exhibit 1Web Exhibit of Medtech innovation pipelines mostly align with patient needs.McKinsey&CompanyNote:Figures may not sum to 10

35、0%,because of rounding.1Average percentage of each conditions contributed proportion of all disability-adjusted life years and deaths.2Including all global medtech pipeline products,per GlobalData,excluding those in early development(largely academic).Excluding in vitro diagnostics and hospital supp

36、lies.Source:GlobalData Medical Device Intelligence Center;Institute for Health Metrics and Evaluation(IHME),accessed May 20,20233431Nervous system diseasesCardiovascular and cerebrovascular diseasesOncologyOrthopedic diseasesNutritional and metabolic diseasesRespiratory tract d

37、iseasesWounds and injuriesUrologic diseasesDental diseasesTop medtech focus of innovation,%of pipeline productsUnmet need,%2019 average of disability-adjusted life years and deaths,%7Medtech Pulse:Thriving in the next decadeto participate(organically or inorganically)in premium areas of innovation a

38、nd generate clinical evidence to better serve patients and outperform competitors.Reassess approaches to incremental innovation.Although premium technologies garner headlines,incremental innovation remains critical in responding to user feedback and improving shortcomings in established products.How

39、ever,incremental innovation has recently had an outsize presence in companies pipelines,with limited end-user benefit.In portfolio reviews across the industry,managers justify incremental programs as significant upgrades critical to retaining share,only to be met with skepticism from physicians and

40、price pressure from purchasers.As a result,the slow-growth portion of the market has doubled since 2012.13 With buyer scrutiny heightening,companies will have to be more efficient and creative with their resource allocation.For established products,companies should evaluate digital solutions and ser

41、vices as a new source of value.If the opportunity for adding meaningful value is low,leaders will need to consider shifting resources elsewhere.Going forward,companies should apply more scrutiny to resources dedicated to incremental innovation and consider if a business without“premium”innovation ha

42、s a role in the portfolio of the future.Enable the shift to new care sites.Provider systems are racing to treat patients in new settings to improve outcomes and reduce the cost of care.Medtech innovations could support this shift.Devices that are less invasive result in lower-risk procedures and qui

43、cker postoperation recoveries.Connected-care ecosystems allow caregivers to monitor and communicate with patients outside of ICUs.According to McKinsey Exhibit 2Web Exhibit of Medtech outpaced the S&P 500 in the 2010s,but value creation has since slowed.McKinsey&CompanyAnnualized total shareholder r

44、eturns CAGR,201223,%As of May 2023.The 100 largest publicly traded medtech companies by market cap as of May 20,2023.3All publicly traded medtech companies with a market cap between$0.1 billion and$10.0 billion and with growth expectations in excess of 10%CAGR.4The 30 largest publicly traded medtech

45、 companies by market cap with multiple franchises contributing at least 20%of sales,as of May 20,2023.Source:S&P Global Market Intelligence201219201923All medtechs2Small-capand midcap,high-growthmedtechs3Large-capdiversifedmedtechs42132152103S&P 500=6S&P 500=1113 Lower than 3.5 percent annual growth

46、;Health Resources International 2013 medical devices and diagnostics report.8Medtech Pulse:Thriving in the next decadeanalysis,general acute-care facilities,medtechs largest customer segment,are projected to see slower growth than almost all other healthcare provider types(Exhibit 3).14To date,medte

47、ch companies,especially non-large-cap companies,have struggled to engage newer sites of care.As these sites continue to account for a larger proportion of profitable care,medtech companies should work to refine their value propositions and commercial operations to effectively compete in these segmen

48、ts.Rethink global growth strategies.Geographic strategies have risen to the top of many medtech CEO agendas.Many companies that pursued global expansion now find themselves with unwieldy commercial organizations,complex regulatory challenges,and innovation road maps with competing regional prioritie

49、s.Although Europe remains the source of innovation for many segments,the European Union Medical Device Regulation(EU MDR)has introduced new costs,such as postlaunch surveillance requirements,for companies operating in the region.15 Likewise,hospital-level tendering and contracting policies are incre

50、asing the commercial investment needed to serve European healthcare providers.The United States and Japan,with expertly trained surgeons and care teams on the cutting edge of technology adoption,continue to be priority markets,but competition is intensifying,requiring new levels of innovation and se

51、rvice to effectively compete.China,which grew at double the rate of the rest of the market before the COVID-19 pandemic,16 offers an underpenetrated market of patients and providers.However,it also offers unprecedented short-term challenges for multinational companies,such as increases in volume-bas

52、ed procurement and viable local competition.Exhibit 3Web Exhibit of Hospital profts are shifting to alternate care settings,challenging medtechs to fnd growth by serving new customer types.Share of overall US healthcare provider proft pool,%20238151845Virtual-care and home-care providersS

53、pecialist ofces and ambulatory-care centersGeneral acute-care facilitiesOther(eg,dentists and primary-care physicians)McKinsey&CompanyNote:Figures may not sum to 100%,because of rounding.14 For more on US healthcare profit pools,see Neha Patel and Shubham Singhal,“What to expect in US healthcare in

54、2023 and beyond,”McKinsey,January 9,2023.15 “Regulation(EU)2017/745 of the European Parliament and of the Council,”European Union,April 5,2017.16 Health Resources International 2012 and 2019 medical devices and diagnostics reports.9Medtech Pulse:Thriving in the next decadeCompany leaders should take

55、 action to clarify their global intentions and tailor their strategies to specific geographic regions.This includes reassessing commercial models,increasing or reducing investment,and considering local acquisitions to foster profitable growth.Compete intelligently in digital ecosystems.Medtech compa

56、nies have been experimenting with digital solutions for more than a decade.In many cases,these R&D programs and customer pilots have not materialized,leaving executives and boardrooms skeptical about the so-called digital revolution in medtech.Conversely,companies that have cracked the code are chan

57、ging the care paradigm and realizing better outcomes for patients,providers,and companies.Digital ecosystems that marry capital products with technology are reshaping how companies create products,go to market,and engage with stakeholders.Consider the digitalization of the operating room.AI-based cl

58、inical decision making,fueled by device data,has become an integral part of many spine and general surgery procedures,and patient-monitoring solutions are helping critical-care caregivers wean patients off life-sustaining devices more safely.Some imaging companies are generating up to$1 billion a ye

59、ar from data-related solutions that improve patient care.17As the next decade progresses,some executives may be tempted to ignore digital opportunities because of a history of failed internal attempts.Those companies might reconsider,take note of other companies successes,and collaborate with their

60、customers to build winning solutions based on lessons from the 2010s.Commit to investments in execution excellence.COVID-19-related supply shortages,drops in the number of health system procedures,and hospital staffing challenges have introduced uncertainty to medtech company operations.Following a

61、decade of steady economic growth,one implication of this newfound uncertainty is increased scrutiny of pilot programs and initiatives.Companies that had been experimenting with new commercial models,supply chain investments,or digital offerings are now facing calls to cut funding to reduce costs.Alt

62、hough some medtech companies are reducing resources evenly across programs,we are seeing that firms have more success when they make trade-offs and commit at scale.For instance,one company recently considered two ongoing investments:one in a new digital offering and one in a new,digitally enabled co

63、mmercial model that allows clinical consultants to spend more time with care teams.The company made the bold choice to shut down the new offering while committing to commercial innovation.In addition to providing immediate cost savings and accelerating growth,the choice has delivered the benefit of

64、clarity,aligning the organizations employees in their execution priorities.Companies should perform a detailed review of ongoing investments and use this period of uncertainty to commit to the handful that will drive performance in the long term.Take note of investors increased attention to margins.

65、Medtech companies created significant shareholder value during the 2010s.The industry accelerated growth and innovation,propelling share price appreciation.As performance improved,investors began to“price in”future growth improvements,which created additional share price gains.The result is a new va

66、lue-creation paradigm:in investors eyes,companies chances to beat current growth expectations are low,given that the industry has already doubled its growth rate in the past ten years.Meanwhile,as of the first quarter of 2023,the operating margins for medtech companies are 200 to 400 basis points lo

67、wer than they were in 2021,returning to mid-2010s levels.18 As a result,although revenue growth remains the primary driver of value creation,investors are also increasingly paying attention to profit margin.Since 2019,the correlation between profit margin and medtech valuations has more than doubled

68、(Exhibit 4).1917 McKinsey analysis.18 McKinsey analysis of S&P Global Market Intelligence financial data of top 40 companies by market cap,as of May 20,2023.19 Ibid.10Medtech Pulse:Thriving in the next decadeRichard Bartlett is a partner in McKinseys London office;Colin Field-Eaton is a partner in t

69、he Washington,DC,office,where Gerti Pellumbi is a senior partner;and Tommy Reid is an associate partner in the Austin office.Copyright 2023 McKinsey&Company.All rights reserved.Along with investing in growth,companies should also consider profitability programs as ways to boost long-term value creat

70、ion.In the next decade,patients,caregivers,and shareholders are counting on the medtech industry Exhibit 4Proft margins are increasingly important to company valuations.McKinsey&CompanyCorrelation between performance metrics and enterprise-value-to-revenue ratio(R2 value)1R2 represents the correlati

71、on between two numbers.The closer the R2 is to 1,the higher the correlation.23-year future sales CAGR expectations.33-year future EBITDA change expectations.Source:S&P Global Market Intelligence MarginGrowth2016202300.20.40.60.82016202300.20.40.60.82to find new ways to create value.Companies that tr

72、ansform their innovation,operations,and strategies could successfully reaccelerate profitable growth and meet the next generation of healthcare needs.11Medtech Pulse:Thriving in the next decade12Reimagining R&D to drive sustainable growth To unlock sustainable long-term growth,medtech companies shou

73、ld aim for significant improvements to R&D and product development.This article is a collaborative effort by Josh Copp,Jack Donohew,Stefan Frank,Zherui Huang,and Andr Rocha,representing views from McKinseys Life Sciences Practice.2Medtech Pulse:Thriving in the next decade13 Jasmin Merdan/Getty Image

74、sR&D and product development excellence are foundational for sustainable business growth in medtech.Accordingly,the industry invests substantially in innovation.At the same time,medtech profits are under pressure and demand higher productivity and returns from R&D.In this environment,R&D excellence

75、is a top priority for company leaders.In medtech,R&D spending alone is not strongly correlated with growth.Instead,our research and experience suggest four areas of focus.First,a systematic approach to portfolio management is prerequisite for any R&D organization to stay focused on value-creating in

76、novation.Second,a subset of enablers is associated with delivering world-class productsnamely,empowered product managers,deeply embedded design thinking,and strong system-engineering capabilities.Third,leading R&D organizations have effectively adopted agile principles and are harnessing next-genera

77、tion digital and analytical tools.Finally,R&D organizations outward orientation(for example,working with open development networks)helps boost their pipelines and productivity.To be sure,acting on and excelling in all these areas amounts to a transformational change compared to how medtech R&D organ

78、izations typically operate,but the prize could be a boost in value creation and a sustainable competitive advantage.An innovative industry with opportunities to optimize R&DProlific innovation occurs in the medtech industry.For instance,about 15,000 patent applications were filed at the European Pat

79、ent Office by medtech companies in 2021,significantly more than by pharmaceutical or biotech companies.This level of activity comes at a cost:the largest global medtech companies invest an average of 8 percent of their revenue on R&D.1 Other capital-intense,innovative industries spend much less;for

80、example,in the automotive industry,the figure stands at just 4 percent of revenues.But R&D spending and patents alone dont guarantee proportional value creation.Our analysis of the 70 largest global medtech companies reveals that average R&D spending in the previous three years accounted for only ab

81、out 1.6 percent of the variation in companies growth rates.In fact,the average number of US Food and Drug Administration(FDA)approvals per billion dollars spent has declined by an average of 9 percent per year since 2011(exhibit).2Some medtech companies are falling behind in R&D productivity and ret

82、urns,as measured by new product approvals.Our survey of 220 industry leaders in medtech,advanced electronics,and high-tech sheds some light on the challenges.3First,there are gaps in basic R&D execution.Our experience shows that only about 35 percent of medtech projects are developed on time and on

83、budget.The number sinks further within organizations that fail to counter increasing R&D complexity by improving R&D maturity and efficiency.We also find that medtech companies are more likely than their counterparts in other industries to lack foundational elements,such as adequate staffing and pro

84、per definitions of project goals.Moreover,nearly two-thirds of medtech respondents in this survey reported as common occurrences unrealistic project timelines and a lack of specific expertise in product development teams.At the same time,the stakes for timely delivery of innovation are getting highe

85、r:competition is intense in many attractive segments,and the order of product launches can have considerable impact on market shares.Commoditized products are facing intensifying price pressure in many markets.Finally,patients and physicians are urgently awaiting new solutions to diagnose and treat

86、diseases.1 Based on McKinsey analysis of 106 medtech players worldwide.2 The data set includes data from the 18 largest medtech companies by market cap for which data on R&D spending was available in the 19902018 time frame,per S&P Global.510(k)data was retrieved from the FDA.For more on 510(k)s,see

87、“501(k)clearances,”FDA,updated August 31,2021.3 McKinsey R&D Benchmarking Survey,n=220,completed January 2022.14Medtech Pulse:Thriving in the next decadeExhibitWeb Exhibit of The average medtech company has achieved fewer device approvals relative to R&D spending over time.McKinsey&Company1Includes

88、supplementary premarket approvals,original premarket approvals,510(k)approvals,and 510(k)de novo approvals.Source:Evaluate MedTech,R&D spending and FDA approvals,30 largest medtech companies by sales volume,20052022,data accessed March 20,2023Number of US Food and Drug Administration(FDA)approvals p

89、er$billion of R&D spending2005 2006 2007 2008 2009 20000022358274749%per annumThe stakes for timely delivery of innovation are getting higher:competition is intense in many attractive segments,and the order of pr

90、oduct launches can have considerable impact on market shares.15Medtech Pulse:Thriving in the next decadeReimagining medtech R&D for growthIn our experience,medtech companies that outperform their counterparts take a holistic approach to R&D transformation.This means tackling in parallel five areas t

91、hat are critical for R&D excellence.A systematic approach to portfolio managementAn effective approach to developing and managing an R&D portfolio builds a compelling road map to growth and bolsters commercial performance.Companies with effective R&D portfolio management systems share certain charac

92、teristics.First,they have formalized R&D portfolio management processes and a strong decision-making culture in which top management is deeply committed and engaged.Practically,this can mean that global business-unit heads and R&D teams review pipelines on a quarterly basis.Importantly,determining w

93、hat not to do is as crucial as deciding what to pursue.According to our research,the organizations that are the most successful in their R&D portfolio management are unafraid to terminate projects that fail or struggle to advance or those whose business cases have weakened due to changes in the mark

94、et.Another marker of best-in-class R&D portfolio management is a single centralized and frequently updated source of truth for all R&D project data,particularly data that feeds into each projects business case and enables the informed and timely decision-making described above.Importantly,R&D perfor

95、mance management does not end with the commercialization of a new asset:leading R&D teams closely monitor their portfolios throughout the life cycle and continuously learn from their real-world performance.For example,organizations could monitor how a newly launched product performs against the expe

96、ctations that were built into its initial business case.This kind of feedback can help R&Dand commercialorganizations to continuously improve the quality of their predictions and decision making.Medtech leaders know these efforts matter to investors.A senior executive at one large global medtech com

97、pany told industry analysts that their organization doubled the value of the companys pipeline R&D projects and multiplied the number of high-value R&D projects(as measured by net present values)in three years,clearly displaying value creation potential to the public markets.Three“power capabilities

98、”to define world-class productsDelivering world-class products,technologies,and services to healthcare providers and patients is every R&D organizations ultimate purpose.To achieve this,R&D organizations need to excel in three areas.Medtech companies that outperform their counterparts take a holisti

99、c approach to R&D transformation.This means tackling in parallel five areas that are critical for R&D excellence.16Medtech Pulse:Thriving in the next decadeProduct management.In practice,this means empowering product managers to act as business owners for their respective products.To fulfill this mi

100、ssion,product managers need to have a comprehensive set of skills,particularly in leadership and influencing,and a strong understanding of unmet customer needs.Ideally,they also have sufficient technical knowledge to manage product requirements and engage effectively with R&D engineers.Because such

101、talent is rare,organizations should invest in building these skills through in-house capability-building programs;strategic hiring of experienced product managers from outside,including from other industries;and a leadership development model that incorporates product management into an attractive c

102、areer path.Design thinking.Design thinking should be systematically applied to every R&D project.4 Design-thinking methods include closely observing healthcare providers and patients,mapping end-to-end journeys from the perspective of user personas,and rapidly prototyping and iterating product conce

103、pts in partnership with users.In a world in which consumer products set the bar for simplicity,performance,and ease of use,design thinking is key to developing distinctive medtech solutions.It leads to products that engage patients and healthcare providers through intuitive user interfaces and that

104、offer a seamless experience across the user journeyattributes that can provide a decisive competitive edge.Excellence in design correlates strongly with value creation:medtech companies that led the industry in adopting best design practices had 42 percent higher revenue growth and 108 percent highe

105、r shareholder returns compared with the average competitor.5 The impact can also be seen on an individual product level:Distalmotion,a manufacturer of surgical robots,adopted design-thinking best practices when developing its next-generation system and achieved a significant reduction in development

106、 time.6Systems engineering.Systems engineering is an R&D function composed of engineers with extensive experience and deep technical capabilities.This group is usually responsible for new-product concepts,architecture,and specifications.A strong system-engineering function effectively translates use

107、rs unmet needs and requirements into actionable product architectures and technical specifications for entire systems and their components.Input from systems engineers is vital for engineersincluding mechanical,electrical and electronics,and softwarewho design,verify,validate,produce,and launch prod

108、ucts.Agility and speed in product development executionSpeeding up product development is paramount for most medtech R&D leaders.Agile development practices,such as continuous decision making,can help increase speed and effectiveness.7 In our experience,agile development practices are especially inf

109、luential in the R&D of complex systems,where they can reduce time to market by more than 30 percent and increased productivity by about 20 percent.They generally help organizations respond more flexibly to changes or new information and reduce risk by providing transparency into the status of projec

110、ts.Of note,agile development needs to be applied in the unique context of medtech R&D.For example,agile processes will need to be tailored to work in between the typical stage gates of R&D necessary for quality assurance and regulatory compliance.Still,they can significantly improve collaboration am

111、ong R&D engineers and between R&D and other functions.4 For more on design thinking,see John Edson,Garen Kouyoumjian,and Benedict Sheppard,“More than a feeling:Ten design practices to deliver business value,”McKinsey,December 8,2017.5 For more on the link between design practices and business outcom

112、es,see Fabricio Dore,Garen Kouyoumjian,Hugo Sarrazin,and Benedict Sheppard,“The business value of design,”McKinsey Quarterly,October 25,2018.6 For more on design thinking in medtech,see Jack Donohew,Matthew Durack,Maiko Hirai,and Thomas Nilsson,“Accelerating customer-centric innovation in medtech,”M

113、cKinsey,March 7,2023.7“The five trademarks of agile organizations,”McKinsey,January 22,2018.17Medtech Pulse:Thriving in the next decadeThe medtech quality process can likewise be adapted to agile frameworks.Currently,many design control deliverables are still developed and documented manually and re

114、troactively,with the documents approved in batches in quality-management systems.Instead,quality could be embedded in the development process from the outset and tested at each development stage,aided by digital tools.These best practices have streamlined design controls,allowing organizations to cu

115、t in half the time it takes to generate design history files(DHF),a requirement for regulatory approval.In our experience,medtech companies draw the most benefit from agile practices when used in concert with other core agile principles,such as small cross-functional teams and daily rituals.8 Finall

116、y,basic principles of R&D effectivenessfor example,allowing a critical number of engineers to fully focus on one project at a time and investing in project management capability buildingremain important.Next-generation digital and analytical toolsNext-generation digital and analytical tools can help

117、 R&D functions increase productivity and speed in product development and enhance the performance and quality of products.These technologies have already helped reduce development cycle times by more than 50 percent and have reduced costs by 30 percent in other industries,according to our analysis.M

118、edtech companies have begun to adopt these tools to boost efficiency.One medical equipment R&D organization used to rely primarily on paper,needed to be co-located,and took 12 to 18 months to develop new products.New software now allows the team to create digitized design-history files that support

119、collaboration on three continents,and the team cut its development timeline to six months.Another company reduced its R&D costs by 10 percent and increased throughput by 15 percent by using advanced analytics to identify and respond to opportunities to improve R&D productivity.For instance,the compa

120、ny discovered that it could dramatically improve collaboration between functions by altering the composition of product development teams,with more frequent and direct contact between engineering,upstream marketing,and supply chain during stage gate handovers.Digital tools can also enhance the perfo

121、rmance and quality of medical devices and avoid costly reworks.For example,a severe adverse event in a human implant was discovered during animal testing.The traditional approach to design and validation would have delayed the launch by many months.But the R&D team used a digital twin(a virtual repr

122、esentation of the physical medical device)and a deep-learning model to rapidly simulate and validate hundreds of potential alternate designs.9 This approach helped the team quickly converge on an improved design that addressed the issue and kept the launch on schedule.Medtech companies draw the most

123、 benefit from agile practices when used in concert with other core agile principles.8 For more on agile,see Wouter Aghina,Christopher Handscomb,Olli Salo,and Shail Thaker,“The impact of agility:How to shape your organization to compete,”McKinsey,May 25,2021.9 For more on digital twins,see Kimberly B

124、orden and Anna Herlt,“Digital twins:What could they do for your business?,”McKinsey,October 3,2022.18Medtech Pulse:Thriving in the next decadeJosh Copp is a partner in McKinseys Bay Area office,where Jack Donohew is a senior partner;Stefan Frank is an associate partner in the Hamburg office;Zherui H

125、uang is a consultant in the Tokyo office;and Andr Rocha is a partner in the Madrid office.Copyright 2023 McKinsey&Company.All rights reserved.External development Unlike their pharmaceutical counterparts,which may derive up to 50 percent of their product development pipeline from external partners s

126、uch as contract research organizations,medtech companies have traditionally focused on in-house innovation.But with disruption from fast-moving digital players and pressure from low-cost providers in commoditized areas,medtech companies could consider accessing ideas,talent,and technologies from ext

127、ernal sources.This broad category includes original development manufacturers and joint development manufacturers.It also includes joint ventures and strategic alliances for new businesses,as well as corporate venture funds,through which companies take equity positions in promising start-ups.For dev

128、elopment efforts that fall outside the companys core businesses and competencies,one approach is to spin off the venture,find co-investors to scale it,and reintegrate it into the parent company later.Among the benefits,the new venturefreed from corporate decision makingcan move more quickly,has acce

129、ss to a larger pool of capital from investors with a higher-risk appetite,and can maintain a strong strategic and operational focus(as can the core business).Medtech companies can get more out of their substantial investments in R&D.Rewiring the function could help make it not only a source of innov

130、ation but also an engine for commercial growth.19Medtech Pulse:Thriving in the next decade20Cracking the code of software innovationSoftware development calls for an entirely different approach from traditional product development methods.Medtech companies can borrow a page from leading software fir

131、ms.by Venky Anant,Shih-Yung Huang,Sreeharsha Konga,and Delphine Nain Zurkiya 321Medtech Pulse:Thriving in the next decadeSoftware is taking on a new,expanded role in medtech.Traditionally,it has performed a basic function within a medical device,such as the reader of an in vitro diagnostic assay.How

132、ever,more companies are discovering that software can be a value-adding differentiator.Consider a spinal cord stimulator,which uses personalized algorithms to enhance the value of the physical device itself.Going even further,some companies are proving that software can be the device itself,as in th

133、e case of Click Therapeutics,whose digital therapeutics products treat patients directly.As software becomes a more significant source of differentiation in medtech,organizations see a need to reimagine their product development processes.Software development has shorter cycles than hardware,necessi

134、tating end-to-end collaboration across a range of functions.The best software products are developed through continual interactions with users,allowing companies to learn as they go and incorporate feedbacka practice not available for hardware products.In fact,according to our recent medtech R&D rou

135、ndtable survey,the top constraints for software development in medtech are related to operating modelsteam capacity,skills,and talentnot technology or demand(Exhibit 1).In this article,we highlight how medtech companies can integrate lessons from leading software companies to excel in software devel

136、opment.Adapting software R&D operating models for successFor medtech incumbents seeking to shift to value-added software or software as a device itself,we suggest three actions to improve their operating model:build a robust tech stack,adopt software development best practices,and strategically sour

137、ce intellectual property and talent.Build a robust tech stackPatients very lives may depend on their medical devices.Unlike in social media or other digital-first industries,end-product failures cannot be tolerated.Healthy functionality begins with a robust tech stack that enables elasticity(to grow

138、),agility(to innovate rapidly),and reliability(to reduce risk).At a high level,the stack has three layers1:The engagement layer is the softwares connection to the outside world(other devices and data sources).Because medtech software will likely need to work with many counterparties,medtech companie

139、s should focus on building a flexible engagement layer that ensures the ability to integrate reliably and securely with partners through APIs.A distinctive intelligence layer harnesses algorithms(a key source of differentiation)and seamlessly aggregates data from proprietary and publicly available s

140、ources.1 In our chapter on ecosystems,we discuss how each layer can add value to patients and clinicians.In this chapter,we highlight where medtech companies need to focus to build strong and functional layers.Weve been using software for over three decades,but its function was to make our instrumen

141、ts run.Now were in the business of using software to deliver actionable insights,using digital tools and data science in the service of patients to drive outcomes.These tools support our core strategy of delivering personalized healthcare as well as our next step:adding insights to that combination

142、of pharma and diagnostics.Global head of information solutions,global pharmaceutical and diagnostics company22Medtech Pulse:Thriving in the next decadeIn many industries,proprietary data can be the most critical differentiator,while algorithms can be seen as more commoditized.In medtech,data is simi

143、larly important,but the thinking on algorithms differs.Given that algorithms make decisions that influence patient care and outcomes,effective algorithms can quickly differentiate companies from one another.In our experience,medtech companies that prioritize algorithms alongside data are most likely

144、 to achieve better outcomes.The infrastructure layer has been the focus of much innovation over the past ten years,thanks to the advent of cloud.The traditional model,which required large,onetime investments in data centers,has been replaced by consumption-driven pricing models that lower barriers t

145、o entry.Although companies often focus on clouds potential to lower infrastructure costs,the true benefits extend further.Global cloud-services providers(CSPs)have made significant investments to develop industry-specific offerings and innovate in the engagement and intelligence layers.To get the mo

146、st benefit,medtech companies should build a new tech stack tailored for the cloud rather than simply retrofit their existing tech stack.Adopt software development best practicesThe good news is that leading software companies have established a tried-and-true method for developing products in a cons

147、istent,efficient manner.For medtech companies to adopt this method,which differs substantially from their standard hardware development processes,following several best practices will be crucial.Rethink product management.Innovative start-ups excel at responding precisely to the most critical unmet

148、needs of customers.They start with an idea but then use their product leadership muscles to rapidly iterate(with customers,product managers,and product developers)to develop and deliver the most desired features.By comparison,product managers within medtech organizations often report to regional mar

149、keting teams and focus largely on gathering requirements.Their interactions with R&D often involve rigid,legacy documentation of market and product requirements rather than more collaborative problem-solving sessions.This disconnected structure leads to elongated development loops,quality issues,and

150、 multiple postrelease refinement cycles,which increase overall R&D costs and erode value.Exhibit 1Web Exhibit of Medtech companies face several constraints in developing software as a medical device.McKinsey&CompanySource:McKinsey Medtech R&D Roundtable25231914127Constraints in software development,

151、%of respondents,n=192Unclear or complicated and long regulatory processLack of management decisionsTechnology constraintsTop constraintsCapacity of R&D teamSkills or talents neededProftability costs and proftability23Medtech Pulse:Thriving in the next decadeThe role of product manager at medtech com

152、panies is often conflated with those of project and program managers.Medtech leaders point to two characteristics of great product managers.First,they carefully track usage data(for example,from product telemetry)and draw on it to know their customers,shape the product road map,determine when to ret

153、ire products,and enable users to capture value more quickly.Active field testing and experimentation enable product managers to aggregate data that supports the products continuous improvement.Second,great product managers have an impeccable“product sense.”Drawing on years of experience and a mindse

154、t unfettered by norms,they have an intuitive ability to understand how technology can address an issue in a new way.The best product managers tap designers,engineers,and data scientists early in the ideation phase to benefit from their unconventional thinking.Promote engineering excellence.Software

155、engineering excellence can unlock significant value across multiple dimensions.In our experience,companies that increase the productivity of engineers,teams,and the whole organization can save 15 to 30 percent in IT operating expenditures,accelerate time to market tenfold,and achieve 55 percent high

156、er innovation from self-organizing,agile teams.For most software-driven companies,engineers are the most expensive resource.Therefore,development velocitythe ability to achieve transformative business performance through software developmentis critical.A McKinsey survey of more than 400 companies fo

157、und that product management,culture,talent management,and development tools have the highest impact on developer velocity(Exhibit 2).2 However,identifying and executing these levers is a difficult challenge.To fully unlock velocity and deliver innovation to the front lines quickly,companies can act

158、in four phases.In the diagnostic phase,companies assess their current development velocity using machine learningbased analysis and benchmarking.In the blueprint phase,companies redesign their organizational structure and product development life cycle.In the frontrunner phase,companies implement a

159、new product and engineering model with one to two teams and an embedded coach.Finally,during the scaling phase,companies systematically scale this new way of working to the broader team.Lead in cybersecurity.Quality and safety requirements already play an important role in medical devices.For softwa

160、re-based solutions,cybersecurity enters the equation.For patients,providers,payers,and other ecosystem partners,the concept of medtech manufacturers handling sensitive patient data is relatively new.Companies that develop leading cybersecurity practices and prove themselves to be trusted partners co

161、uld therefore gain a competitive advantage.Tailor development processes based on regulatory needs.In conversations with medtech executives,we frequently hear concerns about whether their organizations can harness the benefits of software product developmentincluding agility and rapid iterative cycle

162、sin a highly regulated industry.Most of our compliance and quality issues emanate from our inability to gather nonfunctional requirements.Our product teams have never done it.That will not work in a software product.Product managers need to know what,when,how,where,and everything around it.VP of pro

163、duct development,top five global medtech company2 For more on developer velocity,please see Chandra Gnanasambandam,Neha Jindal,Shivam Srivastava,and Dilip Wagle,“Developer Velocity at work:Key lessons from industry digital leaders,”McKinsey,February 22,2021;and Shivam Srivastava,Kartik Trehan,Dilip

164、Wagle,and Jane Wang,“Developer Velocity:How software excellence fuels business performance,”McKinsey,April 20,2020.24Medtech Pulse:Thriving in the next decadeExhibit 2Web Exhibit of Four software development drivers have the greatest impact on overall business performance.The relative importance of

165、software development drivers on overall business performance,1%,n=4401 Calculated using Johnsons relative weights:%importance is relative importance of driver on business outcomes.Total sums to 100%.Higher%indicates stronger impact on business performance.Overall business performance measured as ave

166、rage score for innovation,customer satisfaction,brand,and talent.2Software development and IT operations.Source:McKinsey Developer Velocity SurveyCultureToolsTalentmanagementProductmanagementSecurity andcomplianceInfrastructureand platformEngineeringpracticesOrganizationalagilityTeamcharacteristicsT

167、estingArchitectureOpensource/innersourceAgile teampractices4.34.03.02.42.31.71.01.00.90.90.80.60.5CultureA.Psychological safetyB.Collaboration and knowlege sharingC.Continuous improvement cultureD.Servant leadershipE.Culture of customer obsessionProduct managementA.Project management capabilitiesB.P

168、roduct telemetryC.Clarity on product visionD.Linkage between strategy and team metricsE.Rapid prototypingToolsA.Planning toolsB.Collaboration toolsC.Development toolsD.DevOps2 toolsE.Low-code or no-code toolsF.AI assistance in developmentTalent managementA.IncentivesB.Capability buildingC.Recruiting

169、D.Team health managementE.Well-defned employee value propositionF.Well-defned engineering career pathsABCDE7.54.43.83.71.9ABCDEF6.25.45.34.61.31.0ABCDEF4.33.33.02.92.42.2ABCDE6.42.81.21.20.625Medtech Pulse:Thriving in the next decadeThe companies that have done so most successfully have recognized t

170、he benefit of“branching”:tiering software features within a given product and tailoring their development accordingly.Highly regulated features follow one branch of the development pathway,while less-regulated features follow another branch.One large medtech company dedicated three months to an“all

171、hands on deck”effort to categorize its software products and develop tailored branches for each category.Some of the most interactive software elements(for example,a phone app that shows status and schedule)were identified as being subject to less-stringent standards.As a result,the company can freq

172、uently update the user interface based on user feedback and still maintain compliance.Source talent strategicallyMedtech companies use advanced recruiting capabilities to attract world-class hardware and engineering talent.However,companies have yet to prove their value proposition and recruiting pr

173、owess when it comes to software candidates.Recently,a council of leading medtech chief information officers(CIOs)and chief technology officers(CTOs)identified the shortage of good technical software talent as the most significant inhibitor of growth and innovation for their organizations.Successful

174、companies can capture substantial benefits,have higher growth potential(Exhibit 3),and ultimately deliver better patient outcomes.Today,medtech companies routinely fill open software positions with contingent labor to close the talent gap.This strategy can be effective to a point,but it can also cau

175、se issues:as contractors become a larger portion of the software team,companies may experience a shortage of in-house strategic capabilities,the loss of a long-term product pipeline,higher operational costs,and quality issues.A company pivoting to a software-focused strategy will likely find value i

176、n restructuring the organization toward a team of in-house talent that will enable long-term productivity and performance enhancements.Not every company will be able to prioritize a wholesale transformation:talent is scarce,and speed to market should remain a priority over waiting until the organiza

177、tion has a fully equipped team in-house.However,companies should be aware of these potential risks when hiring contingent labor.Companies can map their end-state organization and identify which roles will be most strategic(more appropriate for in-house)and which will be primarily execution oriented(

178、more appropriate for contingent).Medtech executives can also build relationships with staffing companies and other ecosystem players to establish a more reliable source for contingent team members.These talent considerations apply not only to sofware developers but also to roles in the product manag

179、ement,quality,compliance,and legal departments.In the next era of medtech innovation,value will be disproportionately skewed toward software.Medtech companies have an in-depth understanding Not all software needs to follow the same standards.In a single meeting,we were able to carve out 20 percent o

180、f our software code that could be released using a continuous integration and continuous delivery pipeline,which we never thought was possible.Program manager,medtech services and product company26Medtech Pulse:Thriving in the next decadeVenky Anant is a partner in McKinseys Bay Area office,Shih-Yun

181、g Huang is an associate partner in the Southern California office,Sreeharsha Konga is a consultant in the New York office,and Delphine Nain Zurkiya is a senior partner in the Boston office.Copyright 2023 McKinsey&Company.All rights reserved.A local university conducted a survey of the most desired e

182、mployers in tech;the first life sciences or medtech company was listed at number 14.When we engaged one-on-one and shared the mission and our role in reshaping the pandemic,we had a majority of the graduating class apply.Weve got to use our beliefs a bit more to get the best of this generation.Chief

183、 technology officer,global medtech companyExhibit 3Web Exhibit of Companies with a higher percentage of digital and analytics employees have higher growth potential.McKinsey&CompanyMedian sales growth projection(CAGR,202225)of the top 25 medtech companies by quintile,%Top 25 pureplay medtech compani

184、es by market cap where data was available.Average market cap in each quintile is inline.Source:LinkedIn data,S&P GlobalAverage digital and analytics employees as%of total12.28.24.73.63.0Top quintileSecond quintileThird quintileFourth quintileBottom quintile12.59.53.73.85.5of products,markets,patient

185、 needs,and regulations,but their R&D will need to be overhauled to support software development at scale.The three levers for transformation will be key.By pursuing this path,medtech companies could also be positioned to expand patient access to higher-quality healthcare services in the years ahead.

186、27Medtech Pulse:Thriving in the next decade28Bringing hardware and software together into digital health ecosystems Medtech companies can expand their role in digital healthcare ecosystems by combining devices and data to improve care outcomes.This article is a collaborative effort by Jason Bello,Jo

187、sh Copp,Mike Ennen,Ari Perl,and Delphine Nain Zurkiya,representing views from McKinseys Life Sciences Practice.4Medtech Pulse:Thriving in the next decade29 oxygen/Getty ImagesMedical devices have become smaller,lighter,safer,and sturdier.Following the lead of other technologiesfrom computers and cel

188、l phones to carsthe next frontier is to make devices smarter.Smart devices form ecosystems,which aggregate data,derive insights to improve experiences,and create loyalty(to that ecosystem over others).In healthcare,ecosystems have advanced significantly in recent years,1 thanks to improved access to

189、 health data(for example,through improved electronic-health-record EHR data interoperability)and an increase in funding in healthcare technology.2To date,large medtech companies have not participated at scale in digital health ecosystems.Medtech companies absence in ecosystems comes despite the comp

190、anies two valuable,relevant assets:medical devices and the data they generate.The previous two chapters explore innovation in each assetdevices and softwareon its own.This chapter explores whats possible when companies bring devices and data together into device-driven ecosystems.McKinsey estimates

191、that the total addressable market for medtech companies in digital health ecosystems will reach$140 billion by 2025,with double-digit CAGR.This opportunity is spread across five areas:clinical-decision enablement,workflow improvement,population health monitoring,chronic-condition management,and pati

192、ent engagement.The basics of a device-driven digital health ecosystemA device-driven digital health ecosystem is a gateway,providing users(patients,clinicians,health systems,care coordinators,and payers)with access to software-based products and services through a single digital platform,connected t

193、o a device.We define ecosystems based on their technology components,the companies involved in a variety of roles,and whether they are“open”or“closed.”Technology components As discussed in chapter 3,“Cracking the code of software innovation,”ecosystems comprise three technology layers:engagement,int

194、elligence,and infrastructure(Exhibit 1).Each layer plays a role in every ecosystem.The engagement layer supports flexible collaboration with the other devices and sources in an ecosystem to curate an end-to-end experience for users.The intelligence layer,in which companies can develop distinctive al

195、gorithms,consists of an analytics platform used to extract and deploy actionable insights from the data.The infrastructure layer,built on a cloud-native tech stack and housed in the cloud,includes a data platform where data is captured,curated,managed,stored,and exchanged.Ecosystems frequently invol

196、ve multiple stakeholders.Medtech and health technology companies often contribute digital solutions and software to the engagement layer(for example,patient engagement apps and wearables)and to the intelligence layer(such as AI and algorithms tied to healthcare data).Technology companies often contr

197、ibute to the infrastructure layer(for example,cloud and edge computing),and patients and providers are often the primary users who contribute to and access the data.Roles in ecosystems Given the complexity of ecosystems and the range of available opportunities,medtech leaders will need to decide wha

198、t role their company will play3:Builder.A builder typically plans to construct a new ecosystem business to provide diversified offerings that constitute a break with tradition.Generally,builders have their own strong core technology,customers,and data.Orchestrator.An orchestrator helps connect compa

199、nies in an ecosystem by developing a series of strategic partnerships and alliances and using digital technology to link them 1 Stefan Biesdorf,Ulrike Deetjen,and Basel Kayyali,“Digital health ecosystems:Voices of key healthcare leaders,”McKinsey,October 12,2021.2 Rock Health Venture Funding Databas

200、e,2021,accessed May 31,2023;McKinsey analysis.3 The ecosystem playbook:Winning in a world of ecosystems,McKinsey,April 2019.30Medtech Pulse:Thriving in the next decade5 “40th annual J.P.Morgan Health Conference,”ResMed,January 10,2022.together,provide products and services,and share customers and da

201、ta.Participant.Participants provide products and services in an ecosystem,acting as a link in a value chain connected through alliances and partnerships and using partners resources and capabilities to enhance their business,upgrade their products to adapt to ecosystems,and better meet user needs.Th

202、e choice of what role to play depends on the companys capabilities,ambition,and risk appetite,among other considerations.Most medtech companies today do not play a role in ecosystems.Those that do generally act as participants,such as imaging companies whose scans(for example,MRIs4)are sent to EHRs

203、and stored digitally for easy,compliant access by healthcare providers.Playing the participant role can be immensely valuable to a company,creating loyalty to that companys device beyond a discrete use and offering the opportunity to collect additional data and glean new insights.Each step up can mu

204、ltiply the value at stake.Two examples show the roles medtech companies can play:ResMed.ResMed orchestrates its ecosystem,which has helped the company build a leading position in sleep apnea.ResMeds AirSense machine connects to its myAir app and provides milestone accomplishments and motivation to p

205、atients,increasing therapy adherence by 17 percent.AirSense also connects to AirView,a provider-facing platform that improves patient monitoring through remote diagnostic tools and feeds data back to ResMed to better personalize care and inform product development.5 Exhibit 1Web Exhibit of An ecosys

206、tem built around a medical device comprises three layers.McKinsey&Company1Augmented reality and virtual reality.Engagement layerIntelligence layerInfrastructure layerSystems of engagement such as apps and stand-alone software that allow users(eg,patients and healthcare providers)to engage with other

207、s in the ecosystem,consume insights,and take actions to improve careSoftware and appsWearablesAR/VRAlgorithms and analytics used to extract actionable insights for users in the ecosystemDescriptive analyticsPredictive analyticsData platform backbone in which data is captured,curated,managed,analyzed

208、,and shared SecurecloudInteroper-abilityData extracted from medical devices,wearables,sensors,or other healthcare data setsMedical devicedataConsumer wearabledataSensordataOtherdata31Medtech Pulse:Thriving in the next decade Johnson&Johnsons Abiomed.Abiomed plays the builder role with Impella Connec

209、t,a smartphone app that allows healthcare professionals and Abiomeds clinical support team to monitor a patients status without having to sit at their bedside.The ecosystem improves patient care by sending notifications when urgent care is needed.It also enables collaborative patient management betw

210、een the Abiomed support team and clinicians,fostering streamlined communication based on real-time data.6Open and closed ecosystems Beyond a companys role in an ecosystem,the value of an ecosystem will also depend on whether it is open or closed(see sidebar,“Considerations for open and closed ecosys

211、tems”).Open ecosystems.Open ecosystems use proprietary data from medtech devices as a source of insights,and they integrate and share data and insights to and from other devices and systems.This multifaceted lens can generate a more 6 “Impella Connect,”Abiomed,accessed May 31,2023.Considerations for

212、 open and closed ecosystemsMedtech companies can assess their open and closed ecosystem opportunities with their device portfolios and data types,as well as the ecosystems raison dtre,in mind.For instance,a monitoring device may lend itself to an open ecosystem when several products and data compone

213、nts are required to get a holistic view of the patients condition and because it would be easier to partner than to build out each ecosystem component.By comparison,when the device and data are more self-contained and readily accessible from a single medtech company,such as in cardiac-rhythm managem

214、ent,a medtech company could more easily build a closed system(see table).Each type has challenges.An open ecosystem relies on collaboration from different partners.Closed ecosystems can be difficult to maintain because competitors are often offered incentives to interject their products and services

215、.Based on recent ecosystem successes,it has become clear Web Exhibit of Open and closed ecosystems vary based on device type and reliance on data.McKinsey&CompanyPatient-reported outcomes.2Electronic health record.3Picture archiving and communication system and laboratory information management syst

216、em.Ecosystem platformOpenClosedExamplesExamplesBasis for ecosystems of monitoring and therapeutic devicesDevices with complex adherence patterns,requiring physician monitoring and output to other devices or systems of recordDevices in a self-contained care pathway that require limited input and outp

217、ut to other devices or systemsCardiac-rhythm managementSleep apnea and continuous glucose monitoringBasis for ecosystems of interventional devicesInterventional devices and equipment with complex pre-and postoperation clinical workfow(eg,imaging,PROs,treatment planning,and EHR data)Interventional de

218、vices and equipment that operate in a closed-loop system and require limited input and output to other systems for the care pathwayRobotic systems,energy-based devices,and smart instrumentsRadiotherapy treatmentBasis for ecosystems of monitoring and therapeutic devicesDiagnostic devices with data in

219、terpreted in core systems of records(eg,PACS and LIS)or other systems of intelligence or engagementDiagnostic imaging and in vitro diagnosticsDiagnostic and screening devices through which data is mostly interpreted in a closed-loop system,with limited external input and outputEndoscopy32Medtech Pul

220、se:Thriving in the next decadeWeb Exhibit of Ecosystems can have a varied set of open and closed decisions.McKinsey&CompanyHealthcare provider.2Electronic health record.3Continuous positive airway pressure.Sleep care ecosystemRadiotherapy ecosystemEngagementIntelligenceInfrastructureHCP app for pati

221、ent insights and billingPatient app for tracking,education,and HCP supportIntegration into EHR,claims,and order systemsAnalytics to identify data usage events,alerts,and when to resupplyOEM cloud-based secure platform CPAP device,mask sensors,and other devicesHCP application for treatment planning a

222、nd quality assurancePatient app for symptom reporting and educationOncology EHR and information systemsOEM cloud-based data platformCommon data model for interoperability with oncology systems and diagnostic imagingTreatment planning analytics(multimodal analysis)Quality assurance analytics Practice

223、 management and population health analyticsClosed portion of ecosystemOpen portion of ecosystemRadiotherapy devicePatient-reported outcomesDiagnostic imagingOncology system datathat the notion of open versus closed is not always binary;this decision might vary across the three technical layers to cr

224、eate an optimal structure.This could be the case,for example,in an open system used to treat sleep apnea or radiotherapy(exhibit).In the sleep apnea ecosystem,the engagement and infrastructure layers are open to incorporate the required data and insights about the patients chronic-disease state(whic

225、h requires output from and to other devices and systems of record,such as an electronic health record EHR),but the analytics,which dictate how the patient could most benefit from their continuous positive airway pressure(CPAP)device and associated services,could be closed in order to generate target

226、ed pull-through for the medtech company.In the radiotherapy ecosystem,the infrastructure layer had to be even more open,given the need for third-party imaging and broader oncology system data,but the radiotherapy treatment planning and reported patient outcomes could be closed to enhance both patien

227、t value(enabling smarter treatment)and the devices real-world evidence generation(more comprehensive data).The choice between open and closed,overall and within each ecosystem layer,is the critical design principle that medtech companies will need to evaluate,depending on their product and technolog

228、ical capabilities,strategic vision,and the broader group of participants.Considerations for open and closed ecosystems(continued)33Medtech Pulse:Thriving in the next decadecomprehensive view of the patient and the ability to grow distinct value for users.A company may choose to be a builder,orchestr

229、ator,or participant in an open ecosystem.Closed ecosystems.A closed ecosystem is one in which users rely exclusively on data and services from a companys device or devices.In certain scenarios,this option can deliver unique benefits to users(for example,a closed-loop system could generate data that

230、is more accurate and insightful)and to the medtech company(for example,creating a higher likeliness that patients will use the companys device and serving as a source of additional data to improve algorithms).How multiple business models can create valueBuilding ecosystems is an intensive process,an

231、d they require substantial capital,technology,and expertise.As such,getting the business model right is critical to ensure medtech companies can earn a commensurate return on their investments.Companies can typically monetize ecosystems in two ways(Exhibit 2):Stand-alone revenue.This entails chargin

232、g for a portfolio of products separate from the device,typically through a subscription-based software offering or charging other manufacturers and participants for use of the platform to enable their solutions.Pull-through device value.Companies capture additional device revenue because the ecosyst

233、em offers more benefits to users and patients who use the device more often and in combination with more of a companys products.Whether or not companies can generate stand-alone software or software-as-a-service(SaaS)revenue tied to the ecosystem offering depends on the additional value they bring t

234、o the ecosystem(and care pathway),beyond what is already delivered by the primary device.As such,we typically see more stand-alone value captured when companies expand the services and data Exhibit 2Web Exhibit of Two primary revenue streams drive ecosystem business models and the total addressable

235、market.McKinsey&CompanyRevenue streams,ecosystem total addressable market(TAM),2025,$140$150 billion totalSoftware as a service.Source:Health Resources International;Markets&Markets;McKinsey analysisEcosystem use cases Stand-alone revenue(software and SaaS)=$90 billion Device pull-through=$50$60 bil

236、lionClinical-decision enablementAdministrative-and operational-workfow improvementPopulation health monitoringChronic-condition managementPatient or consumer engagementMedical device TAM that can be pulled through when the device is digitally enabled and participates in the ecosystem$30$5$10$40$5Pat

237、ient or consumerProviderPayerTarget customer$506034Medtech Pulse:Thriving in the next decadeJason Bello is a partner in McKinseys Washington,DC,office;Josh Copp is a partner in the Bay Area office;Mike Ennen is a partner in the Silicon Valley office;Ari Perl is a partner in the New Jersey office;and

238、 Delphine Nain Zurkiya is a senior partner in the Boston office.The authors wish to thank Benji Lin,Elea Medina,and Divya Srinivasan for their contributions to this articleCopyright 2023 McKinsey&Company.All rights reserved.they offer through the ecosystem.Furthermore,companies that produce and capt

239、ure large volumes of high-quality data have the best chance to monetize their ecosystems.For example,a medtech company that built an operating room(OR)focused ecosystem around its devices could have third-party developers create tools and applications to enhance the OR experience and,in turn,could r

240、eceive subscription revenues from developers for this access.This type of stand-alone revenue will continue to rise in importance as ecosystems and their value become further solidified.How medtech companies can launch or advance ecosystem initiativesMany medtech companies have already built or are

241、currently building digital point solutions(to serve a discrete purpose)around their devices.To extend into full ecosystems,leaders should focus on several strategy and operating model considerations:Define value concretely and connect it to the users economic model.Understanding the users need is at

242、 the heart of an ecosystems value.Aligning the digital ecosystems economics to user economics can drive adoption,and increased use of ecosystem devices could generate better patient outcomes and lower cost of care.For instance,ecosystem users such as healthcare providers could have value-based-care

243、models with payers in which they earn a portion of cost savings tied to the overall care provided or earn higher reimbursement as patient outcomes improve.Where possible,companies could seek to quantify ecosystem ROI(for example,substantiated through peer-reviewed research and testimonials from key

244、opinion leaders)and use this as the basis for their ecosystem commercial models.Clarify your companys role in the ecosystem.Builders derive more value in ecosystems than orchestrators,who in turn derive more value than participants.However,participants still derive significantly more value than nonp

245、articipants.To capture the opportunity in a timely manner,medtech companies need to be realistic about their potential.Most medtech companies could not act as builders in the near term,but they could readily become active participants and gain a competitive advantage over nonparticipants.Create netw

246、ork effects and reinforce value.Successful ecosystems generate positive reinforcement,both for the users they engage and in the value they create.Consider an ecosystem that uses patient-reported outcomes to inform clinical-decision-making tools.As more users engage with the ecosystem,more data is ge

247、nerated,which can lead to better clinical decisions.This,in turn,entices more users into the ecosystem.Although the level of transformation required by medtech companies to deliver ecosystem offerings may seem beyond reach for many,this is a new frontier of value worthy of consideration.Companies th

248、at choose to build,orchestrate,or participate actively in these device-driven digital ecosystems are well positioned to deliver distinct impact to patients and providers and to create new value for shareholders.35Medtech Pulse:Thriving in the next decade36Building a next-generation medtech commercia

249、l model Commercial models must evolve to support new types of offerings,adapt to changing customer expectations,and position companies to succeed in the decade ahead.This article is a collaborative effort by Ralph Breuer,Marcel Meuer,Abhi Patangay,Julia Samorezov,Maria Strom,and Delphine Nain Zurkiy

250、a,representing views from McKinseys Life Sciences Practice.5Medtech Pulse:Thriving in the next decade37 Eoneren/Getty ImagesIn earnings calls and conference halls,medtech companies are being askedand are asking themselvesthe same question:When will the industry return to prepandemic“normal”?For comm

251、ercial leaders,the answer is likely“never.”In the near term,labor shortages,high inflation,and unpredictable procedure volumes are putting pressure on health systems financial positions.1 More structurally,after three years of digital communication,medtech customersincluding healthcare professionals

252、(HCPs),health system procurement departments,and health system administrators2have higher expectations of their engagements with medtech companies.Innovating engagement models and offerings is decidedly difficult for medtech leaders,especially in the face of mounting cost containment pressures.With

253、R&D often highly protected and gross profit difficult to move,SG&A has been the target of many CFO reviews.From 2012 to 2019,SG&A spend grew slightly faster than sales at major medtech companies,but from 2019 to 2022,spend shrank as a percentage of sales for the first time since the Great Recession.

254、3Commercial executives are marshaling their resources to increase efficiency,but most have not pursued a next-generation transformation of the commercial model.In a survey of nearly 1,900 medtech leaders representing a cross-section of business functions,half reported that their companies have artic

255、ulated an intent to invest in a new commercial model.Two-thirds said they had not laid out a customer-centric vision.Eighty percent said they have not yet meaningfully provided incentives to leaders to execute on the people,processes,and technology required to achieve that vision.4 Although the trad

256、itional commercial model still has a place in many product categories,medtech leaders increasingly acknowledge that,for most categories,a new approach is needed.Rising medtech customer expectations Medtech customers expect new forms of engagement and new products from medtech companies.Digital engag

257、ement.The consumerization trend that has permeated nearly every aspect of daily life has extended into B2B healthcare settings.HCPs have high expectations for digital,omnichannel engagement with medtech companiesa trend that began well before the pandemic,intensified during it,and is likely to becom

258、e permanent.Medtech leaders have started to respond to this trend by augmenting the traditional commercial model,which has relied primarily on field representatives to sell products and solutions,with additional roles and channels to provide seamless,convenient,personalized,and on-demand engagement.

259、These channels include self-service portals,webinars,and social media content.HCPs preference for digital and remote interactions with companies has continued to grow:more than two-thirds prefer email interaction with medtech sales reps today,compared with less than half in 2019.5 Severe staff short

260、ages,which leave HCPs with even less time for in-person interactions with medtech representatives,are accelerating this trend.To be sure,in-person interactions are still required(for example,when demonstrating products or supporting physicians in using a new device).But omnichannel engagementcreatin

261、g a unified customer experience across multiple channels with the requisite investments in people,processes,and technologyis quickly becoming a necessity for medtech companies and is associated with improved business performance(Exhibit 1).Indeed,HCPs say the experience of interacting with sales and

262、 customer service is on a par with price as a reason to switch suppliers.6 In short,1 For more,see“The gathering storm in US healthcare,”McKinsey,accessed May 20,2023.2 As used throughout this article,“customers”refers to HCPs,health system procurement departments,and health system administrators.3

263、S&P Global Market Intelligence analysis of top 40 healthcare equipment companies by market cap as of April 4,2023.4 Ralph Breuer,Karen Passmore,Maria Strom,and Delphine Nain Zurkiya,“How medtechs can meet industry demand for omnichannel engagement,”McKinsey,March 28,2023.5 Ibid.6 Ibid.38Medtech Puls

264、e:Thriving in the next decade7 Ibid.8 S&P Global Market Intelligence data of ten information technology companies as of March 25,2023.9 Ibid.Exhibit 1Web Exhibit of Omnichannel maturity is associated with stronger business performance and faster postpandemic recovery.McKinsey&CompanyRevenue growth,2

265、021 to 2022,%From the 1st half of 2021 to the 1st half of 2022.Industries of participating companies included endoscopy,dialysis,drug delivery,imaging,general surgery,orthopedics,and orthotics.Percentage points.Source:McKinsey Omnichannel Maturity Survey,2022(n=1,900);McKinsey analysis of company fl

266、ingsBottom 3rd inomnichannel maturityMiddleTop 3rd inomnichannel maturity2311512IndustrySurveyed companies+11 p.p.3research shows that medtech customers are demanding a modern engagement model.7 Subscription-based offerings.HCPs and procurement leaders also have higher expectations of digital produc

267、ts and solutions from medtech companies.Facing financial pressures,health systems are increasingly expressing a desire to shift their spending away from large capital purchases and toward subscription-based,as-a-service(XaaS)offerings.One director of pharmacy recently stated,“For my next purchase,I

268、am going to do everything in my power to not buy any hardware in favor of an XaaS contract.”Tech companies consistently double to triple their valuation multiples by shifting to XaaS products and solutions with recurring revenue streams via licensing or subscriptions.8 Companies that have adopted Xa

269、aS models have seen improved shareholder value,and capital markets tend to reward medtech companies that show strong growth of new business models and services.9 As a result,more medtech companies are harnessing the power of ecosystem selling and capturing value beyond core medical products by bring

270、ing solutions and services to market with XaaS models.Radiology companies are leading the shift to software solutions,but companies in other medtech categories are also making this transition.39Medtech Pulse:Thriving in the next decadeBuilding a new commercial modelMeeting HCPs rising expectations b

271、y providing differentiated experiences that improve engagement has been demonstrated to be an effective commercial strategy.Medtech companies that invested in omnichannel capabilities experienced two to three times higher revenue growth than their less-advanced industry peers.10 Beyond revenue growt

272、h,medtech companies that deliver omnichannel personalized engagement could increase their customer satisfaction metrics and improve selling efficiency.When revamping their commercial models,medtech leaders can also keep several considerations in mind(Exhibit 2):Master the basicsA strong set of found

273、ational capabilities could be viewed as a self-funding insurance plan for the future.Medtech commercial leaders can start by identifying the most strategic customer stakeholder groups and their beliefs,motivations,unmet needs,and desired buying processes.11 They can augment this research with data-b

274、acked insights including,for example,claims data analysis to estimate procedure volumes at different hospitals.Based on this analysis,medtech commercial leaders could identify their highest-potential market opportunities and develop their customer segmentation strategies accordingly.This step Exhibi

275、t 2Web Exhibit of A next-generation commercial model includes three layers of capabilities.McKinsey&Company1Personalize omnichannel engagement improved customer journeys designed and deployed in areas where there is outsize business opportunity automated recommendation engine for outreach and sales

276、prioritization commercial functions collaborating through agile ways of working2Harness the power of ecosystem selling new business and pricing models to capture value of ecosystem(eg,as a service XaaS)selling model distributed through network of partners best-in-class software sales force and custo

277、mer success organization 3Master the basics deploying digital and inside sales channels in the right parts of the portfolio adopting and creating routines for customer segmentation,account planning,and the use of customer-relationship-management systems pricing processes followed and pricing perform

278、ance measured on ongoing basis10“How medtechs can meet industry demand,”March 28,2023.11 Hayden Lindskog,Maria Strom,and Christian Zerbi,“Using ethnography to translate behavior to value in medical devices,”McKinsey,January 4,2021.40Medtech Pulse:Thriving in the next decade12 Dynamic deal scoring us

279、es advanced analytics to assess deal quality in real time.When combined with incentives and governance,it could empower sales teams and increase deal values.13 “Omnichannel engagement in medtech:The time is now,”McKinsey,May 19,2021.includes deciding which parts of the portfolio to pursue with in-pe

280、rson(versus inside or digital)sales and supporting it with effective account planning and executive oversight.Additional steps toward foundational capabilities include the following:Widely adopt a customer-relationship-management(CRM)system for daily use by in-person and inside-sales teams to holist

281、ically understand and address account and customer needs.Follow a pricing discipline to ensure that none of the hard-earned value identified during product and market development leaks during commercialization.Implementing tools and processes such as dynamic deal scoring12 and pricing councils could

282、 help companies maintain this value-based approach to pricing.Create a measurement system to monitor performance down to the territory and account level and identify coaching opportunities.Dashboards using real-time data feeds could be designed with relevant metrics for different groups,from individ

283、ual sales reps to senior leaders.Personalize omnichannel engagementOnce a medtech company has laid a stable,reliable foundation,leaders can layer on additional capabilities to create a true omnichannel experience.13 With multiple engagement channels in place(inside sales,digital,and in person),it be

284、comes important for a medtech company to seamlessly put them together and deliver a meaningful customer experience(Exhibit 3).This starts with a deep understanding of the customer and designing journeys that not only align with customer preferences but can also be adapted in an agile manner based on

285、 customer actions and behaviors.Medtech leaders who have built omnichannel models agree that several actions are important:Lead from the top,and engage change agents.All the transformative technologies and processes that go into omnichannel primarily support sales reps and the new experiences they h

286、elp create for their customers.Therefore,sales leaders and their teams have an integral role to play in leading the transformation.A strong set of foundational capabilities could be viewed as a self-funding insurance plan for the future.41Medtech Pulse:Thriving in the next decadeExhibit 3Web Exhibit

287、 of Omnichannel engagement orchestrates touchpoints and assets to create a seamless experience in line with customers needs.McKinsey&CompanyRequest for proposal.Reach customers through diverse set of touchpointsCreate integrated view of customer needs and past interactions Present unifed experience

288、tailored to customer needsDigital assets Web portal Digital marketing(eg,email and social media)Past product research history informs recommendations On-demand demos and education build on already shared information RFP needs and customer specifcations loaded into web portal Follow-up services based

289、 on product usage patternsHuman sales Field sales rep Inside-sales rep Field service engineer Customer serviceStrategically choose the starting point and maintain focus on it.Work from this point to test and iterate new methods of engagement.In a McKinsey-led panel discussion at the 2022 AdvaMed Con

290、ference,commercial leaders identified several moments that can act as an impetus to redesign customer journeys with omnichannel and that can be tied to quantifiable business opportunities.These moments include launching a first-in-class product,launching a second-to-market product with room for grow

291、th,enabling procedure innovation(new standards of care),and entering a new care setting or customer segment.Assemble a dedicated customer experience group.This group can study and identify the optimal ways to engage with customers based on their day-to-day activities and behaviors(ethnographic resea

292、rch)and can measure customer responses to various efforts through behavior analysis and by eliciting feedback(customer satisfaction surveys).Shift ways of working.Break down commercial silos to design campaigns across brands,coordinate channels,and learn along the way.A cross-functional campaign tea

293、m can include representatives from digital marketing,product marketing,in-person and remote sales,commercial operations,and the communications and legal departments.Agile sprints could be viewed as a forcing mechanism to test and iterate tactics in early pilots;next,as journeys are validated,they ma

294、y be scaled to the rest of the organization in a way that does not require the same agile iteration.Build data science capabilities.This is a prerequisite for addressing the right customers at 42Medtech Pulse:Thriving in the next decadeCreating and capturing value beyond core medical products allows

295、 executives to further evolve their commercial models for a digital-first future.14 Digital twins are models that help estimate ROI of engagement tactics by simulating customer behaviors.15 A RACI matrix is a diagram that identifies the roles and responsibilities of individuals at each point along t

296、he customer journey.the right time with the right personalized message and offering a relevant,tailored product or solution on all channels.Initially,an omnichannel approach might be manually operated or rules-based,but over time,companies could adopt more sophisticated AI and machine-learning model

297、sincluding digital twins14to glean more predictive and automated insights into customer engagement.Data insights and model outputs can inform marketing campaigns that fill the top of the sales funnel(such as through common marketing automation tools).The same insights can feed into a user-friendly a

298、lert or recommendation system,such as a pop-up function in the CRM system,that alerts sales reps to a recent customer engagement in digital channels and prompts an in-person follow up.Harness the power of ecosystem sellingCreating and capturing value beyond core medical products allows executives to

299、 further evolve their commercial models for a digital-first future.Doing so requires advanced commercial capabilities.First,pricing capabilities should evolve to support XaaS models.This requires pricing XaaS to the value it delivers and developing differentiated subscription offerings to match vary

300、ing customer needs.Second,the commercial organization needs to evolve to include new roles(such as digital talent and reps skilled in XaaS selling)supported by new structures to motivate contract selling.Last,the ecosystem must be underpinned by an expanded customer success function to support solut

301、ion adoption and drive stickiness.One company recently harnessed the power of ecosystem selling by revamping its commercial organization and processes.Because the decision makers for the companys XaaS products and solutions are fundamentally different from those who make decisions for legacy product

302、s,the company created an overlay sales structure and hired teams with experience selling digital products and solutions.It then documented new processes to clarify internal roles at each stage of the customer journey,from lead generation to the first demo to implementation.It also created a RACI mat

303、rix mapped to the entire customer journey,15 enabling legacy product and digital solution sellers to work collaboratively.As a result of these efforts,combined deals tripled in value,compared with a legacy product deal or purely digital deal.In another example,a global leader in specialized in vitro

304、 diagnostics recently started to develop and bring to market digital data,analytics,and 43Medtech Pulse:Thriving in the next decadeA checklist for building a next-generation commercial modelLeaders can keep this checklist in mind as they embark on a commercial-model transformation(see table).Web Exh

305、ibit of Considerations for building a winning medtech commercial model span people,process,and technology.McKinsey&CompanyPeopleProcessTechnologyEcosystem software-selling talent customer success organization as-a-service pricing customer lifetime value measurement real-time data collection technolo

306、gy for customer usage next-gen recommendation engine based on real-time customer usageOmnichannel data scientists data engineers customer experience group linked actions across channels(agile)customer experience measurement(customer satisfaction score)data lake or cloud repository recommendation eng

307、ine in CRM(based on AI analytics)marketing automation toolsBasics remote sales force(captive or through partnership)digital marketers data-driven sales operations regular customer research pricing council disciplined use of customer relationship management(CRM)CRM system confguring pricing and quote

308、 tools software solutions augmenting its core portfolio.By offering,for instance,algorithmic decision-support solutions using a machines test results in an“installation fee plus subscription”model,the company can drive commercial growth directly through its new digital solution.Moreover,it can drive

309、 instrument and reagent sales because the new solution gives it an edge over competitor instruments.In addition,physiciansespecially those who are less experiencedcan use the instruments more frequently because the solution substantially improves the user experience and makes complex results easier

310、to interpret(see sidebar,“A checklist for building a next-generation commercial model”).Building commercial capabilities at the foundational,omnichannel,and ecosystem levels will take time and organizational conviction.44Medtech Pulse:Thriving in the next decadeRalph Breuer is a partner is McKinseys

311、 Cologne office;Marcel Meuer is a partner in the Dsseldorf office;Abhi Patangay is a partner in the Minneapolis office;Julia Samorezov is a partner in the Boston office,where Delphine Nain Zurkiya is a senior partner;and Maria Strom is an associate partner in the Cleveland office.Copyright 2023 McKi

312、nsey&Company.All rights reserved.ConclusionBuilding commercial capabilities at the foundational,omnichannel,and ecosystem levels will take time and organizational conviction.Propelling this evolution will require commercial leaders to articulate a compelling vision that employees throughout the ente

313、rprise can rally around,find champions who can use their influence to continually reinforce the vision,and publicly celebrate even small successes to help create buy-in and support adoption.The three layers offer a commercial model for the medtech industrys next act:foundational practices propel res

314、ilience,omnichannel keeps the customer experience at the center,and ecosystem selling is the force multiplier in a digitally powered future.45Medtech Pulse:Thriving in the next decade46Reimagining operations for the challenges of the next decade As medtech companies emerge from the COVID-19 pandemic

315、,leaders are scrutinizing operations to find ways to better serve patients and bolster competitiveness.by Mohammad Behnam,Tony Gambell,and Orlando Ramirez Cardenas 6Medtech Pulse:Thriving in the next decade47 Constantine Johnny/Getty ImagesWithout operations groups,the medtech industry would consist

316、 of thousands of prototypes and zero patients treated.Operations functionsfrom procurement of raw materials to final delivery of products to end customersallow an idea in an R&D lab to translate to patient impact,at scale.Medtech operations have recently moved into the spotlight.When the COVID-19 pa

317、ndemic suddenly disrupted the global healthcare delivery system,manufacturing organizations mobilized to more than quintuple the US national stockpile of ventilators.2 During raw-material shortages in the second half of 2022,medtech companies continued to supply healthcare providers with the devices

318、 they needed to save lives,demonstrating their supply chain resilience.3As medtech companies grow and devices become more complex,operations could be a source of differentiation.Top companies will scale their innovations quickly and supply their products and services reliably.Those that struggle wil

319、l find themselves mired in increasing complexity.Medtech companies can rethink their operations in targeted ways to become more reliable,robust,and profitable and to deliver better patient care.This includes a balanced portfolio of initiatives across the operations value chain.Rebuilding supply chai

320、ns with resilienceTo prepare for the future,medtech companies can rebuild their supply chains with resilience as a new priority.Research from the McKinsey Global Institute(MGI)suggests that while supply disruptions vary in terms of severity and lead time,a shock lasting more than two months occurs o

321、n average every 3.7 years;within a ten-year period,such shocks could cause some medtech companies to lose approximately 38 percent of one years earnings(Exhibit 1).4Medtech leaders can take a structured approach to building supply chain resilience.They can start by gaining real-time,end-to-end visib

322、ility into the supply chain(to the extent possible),including suppliers across tiers one,two,and three.They can then identify potential vulnerabilities and establish mitigation plans.Finally,they can create a resilience council to provide governance,regularly reassessing risks and stepping in quickl

323、y to make decisions when the need arises.Capturing the full value of digitalization and Industry 4.0Although medtech companies acknowledge the value of digital and Industry 4.0,capturing that value enterprise-wide remains a challenge.In boardrooms throughout the industry,discussions about digital so

324、lutions often focus on increasing commercial efficiency and improving R&D productivity(see chapters 2,4,and 5 of this report).In our experience,though,digitalization use cases are also plentiful in operations,and the value can be substantial even with targeted initiatives that dont require a wholesa

325、le transformation.A leading medical-device company recently digitalized its planning function,investing in real-time dashboards and building a fresh tech stack 1 Mohammad Behnam,Tony Gambell,and Orlando Ramirez Cardenas,Reimagining medtech operations:Bridging medical innovation to better patient car

326、e,McKinsey,2023.To request a copy,please email medtech_opsMcK.2 Marie Baldisseri et al.,“The US strategic national stockpile ventilators in coronavirus disease 2019:A comparison of functionality and analysis regarding the emergency purchase of 200,000 devices,”CHEST,February 2021,Volume 159,Number 2

327、.3 For more on how to increase supply chain resilience,see Mohammad Behnam,Tacy Foster,Tony Gambell,and Shyam Karunakaran,“The resilience imperative for medtech supply chains,”McKinsey,December 18,2020.4 Ibid;McKinsey Global Institute analysis.This chapter is a distillation of the 2023 compendium Re

328、imagining medtech operations:Bridging medical innovation to better patient care.148Medtech Pulse:Thriving in the next decadeExhibit 1Web Exhibit of Over a ten-year period,supply shocks could cost the average medtech company 38 percent of one years earnings.McKinsey&CompanyNet present value(NPV)of po

329、tential losses from supply shocks over a 10-year period,annual EBITDA,%Source:McKinsey Global Institute analysisAerospace(commercial)AutoMiningPetroleum productsElectrical equipmentGlass and cementMachinery and equipmentComputers and electronicsTextiles and apparelMedtechChemicalsFood and beveragesP

330、harmaceuticals675647464243024Typical inventory on hand,days6043259181175to improve both forecast accuracy and product and material visibility.As a result,the company realized a 15 percent increase in forecast accuracy and recaptured$60 million from inventory improvement.Compani

331、es with specific challenges such as lack of supply chain visibility,excessive back-order-supply delays,and inefficient inventory management should build targeted,user-friendly solutions to address them.Driving innovation with a design-to-value approachMedtech companies should seek to advance innovat

332、ionand unlock substantial top-line and bottom-line valuewith a cross-functional,customer-centric design-to-value(DtV)approach.DtV uses fact-based insightsinto what end users and patients value in products and how other companies design offeringsto inform product design decisions.It also uses supplie

333、r insights to reduce costs in areas including packaging and raw materials.Although medtech companies have long relied on design excellence to meet ever-evolving patient needs,the industry has been less mature in using design to manage products through their life cycle to help ensure supply continuity,maintain quality,control cost,reduce portfolio complexity,and respond to changing market needs.Our